The Pennsylvania Superior Court reversed a trial court’s order and found that a policy’s absolute auto exclusion was ambiguous and thus should be construed against the insurer, awarding coverage to the insured. The case is Chris Eldredge Containers, LLC v. Crum, 335 A.3d 1216 (Pa. Super. Ct. 2025).
Background
The case stemmed from an accident where an Eldredge Containers employee, driving an Ottawa Terminal Tractor, backed into a stationary service truck occupied by Craig Logan and owned by Safety-Kleen Systems, Inc. Logan alleged injuries from the collision and filed a personal injury lawsuit against Eldredge Containers.
Eldredge Containers sought defense and indemnification from its insurers, C&F, National Union, and Selective Insurance Company, but they all denied coverage. On April 7, 2022, Eldredge filed a declaratory judgment action to require the insurers to provide indemnification and defense.
Trial Court
On May 4, 2023, C&F, Eldredge’s commercial general liability insurer, filed a motion for judgment. C&F argued that the policy’s absolute auto, aircraft, and watercraft exclusion endorsement was triggered because the service truck that was hit was an auto, and the policy excluded coverage for damage arising out of the ownership, maintenance, and use of an auto.
On July 14, 2023, Selective, Eldredge’s auto carrier, filed a motion for judgment. They argued that the tractor was excluded as an auto under their policy. The excess carrier, National Union, filed a motion for judgment on September 28, 2023. They argued that they had no duty to defend or indemnify Eldredge if the underlying C&F and Selective policies were not triggered.
The Chester County Court of Common Pleas found that the absolute auto exclusion was unambiguous and granted all three motions in favor of C&F, National Union, and Selective. Eldredge appealed the decision.
Superior Court
The case came down to the court’s interpretation of the absolute auto exclusion, which excluded coverage for “bodily injury or property damage arising out of or resulting from the ownership, maintenance, use, or entrustment to others of any aircraft, auto, or watercraft.”
Eldredge asserted that the exclusion was ambiguous because it did not specify a clear causation standard or define whose ownership or use of an auto would trigger the exclusion.
A term is ambiguous when it is “reasonably susceptible of different constructions and capable of being understood in more than one sense.” As we know in insurance, when terms are ambiguous, they are construed against the insurer, since insurers are typically the ones to draft the policy.
In Mfrs. Cas. Ins. Co. v. Goodville Mut. Cas. Co., 170 A.2d 571 (Pa. 1961), the Pennsylvania Supreme Court found that the phrase “arising out of” in an automobile insurance policy was vague and ambiguous and construed the policy against the insurer and liberally in favor of the insured.
In Eichelberger v. Warner, 434 A.2d 747 (Pa. Super. Ct. 1981), they determined that a policy’s absolute auto exclusion should exclude only injuries that are proximately caused by an auto.
In the Eldredge case, the Superior Court determined that the Ottawa Terminal tractor was the proximate cause of the injuries and not the service truck. Since the tractor was not an auto as defined by the policy, but was the proximate cause of the injuries, the court determined that the absolute auto exclusion was not triggered.
The court also determined that the policy’s ownership clause was ambiguous because it did not specify whose ownership or use of an auto would activate the exclusion. Interpreting the clause narrowly, the court held that the exclusion could only apply if the insured owned, maintained, or used the auto in question. Since the tractor owned by the insured was not an automobile, and the service truck was neither owned, maintained, nor used by Eldredge, the exclusion was not triggered.
The court concluded that the trial court erred in granting the motions and reversed the order. As a result, C&F and National Union have a duty to indemnify and defend Eldredge in the underlying suit.
Editor’s Note: This case shows two instances where ambiguity is construed against the insurer, and both were found in the same exclusion: “bodily injury or property damage arising out of or resulting from the ownership, maintenance, use, or entrustment to others of any aircraft, auto, or watercraft.”
First, “arising out of” was held to mean the auto must be the proximate cause of the injury. Since the tractor was the proximate cause of injury and was not an auto, the exclusion was not triggered. Second, the policy did not specify whose “ownership, maintenance, use, or entrustment to others” of an auto would trigger the exclusion. The court held that only an auto owned, maintained, or used by an insured would trigger the exclusion, so again the exclusion was not triggered.
While this case seemed clear at the outset, the determination that the tractor, not an auto, was the cause of the loss was key to the case being overturned.
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