No Coverage While Not Engaged In Business
In Progressive Premier Ins. Co. of Illinois v. Emiljanowicz, SSTS and Emiljanowicz executed a contractor operating agreement in which Emiljanowicz agreed to lease his freightliner to SSTS for the purpose of hauling freight. The president of SSTS, Alex Sandrzyk, stated that pursuant to the agreement the defendant would furnish the freightliner “for the exclusive possession, Control and use of” SSTS and “shall transport only freight of” SSTS. The contractor, however, assumed “complete responsibility for the operation of equipment for the duration of this agreement.” Sandrzyk stated that it was SSTS policy to require its contractors to have their equipment inspected and serviced by a mechanic before transporting freight for the company. The agreement was signed. At that time, Emiljanowicz was instructed to have his freightliner inspected by a mechanic. SSTS also issued decals to Emiljanowicz that had to be placed on his freightliner. The decals indicated the authority to operate the freightliner pursuant to Department of Transportation regulations.
Later that day, Emiljanowicz drove the truck to pick up a friend who would come with him so he could drop off the truck at the mechanic. Emiljanowicz had stated that the truck did not have problems, but he needed to have everything checked before he started his new job. On his way to pick up his friend, Emiljanowicz collided with a vehicle driven by Barbara Karawacki-Horowitz. At the time of the accident, Emiljanowicz was covered by an insurance policy issued by Progressive. Occidental issued a liability insurance policy to SSTS for coverage of all vehicles in service for SSTS, whether owned or leased by SSTS. Barbara Karawacki-Horowitz filed a claim against Emiljanowicz. Progressive defended the claim under a reservation of rights, and the claim was subsequently dismissed pursuant to a settlement. Progressive then filed a declaratory judgment action in which it sought a declaration of coverage under the Occidental policy for reimbursement for the defense and settlement of the Horowitz claims. Occidental filed a counterclaim and alleged no coverage under its policy, since Defendant was not insured because he drove his vehicle to pick up a friend and was not engaged in the business of transporting property on behalf of SSTS at the time of the accident.
The court reviewed whether the corporation’s insurance policy covered the freightliner when the contractor agreement provided that the insured corporation had exclusive possession, control, and use of the vehicle, and at the time of the accident the vehicle was operated on directions from the corporation.
The determinative factor was whether SSTS had exclusive possession, control, responsibility, and use of the freightliner at the time of the accident. Emiljanowicz was instructed to get his freightliner inspected and serviced by a mechanic pursuant to SSTS policy. Approximately three hours later, the accident occurred as he drove to get his friend. Emiljanowicz provided no other reason for driving the freightliner to his friend’s house, and no testimony contradicted him on this issue. The court held that under the terms of Occidental’s policy, Emiljanowicz is a covered insured.
Occidental’s policy contained no specific provision for coverage of leased autos acquired after the policy begins. However, Emiljanowicz’s freightliner was a leased “auto” within the definition of the policy. Occidental’s policy also listed the freightliner as a specifically described auto in the “SCHEDULE OF COVERED AUTOS YOU OWN” section of the declarations. It appeared that SSTS listed all of its leased trucks as specifically described autos. Occidental’s policy was ambiguous insofar as it does not specify whether leased vehicles listed as a specifically described auto could be designated as such after the policy begins. The court found that Emiljanowicz’s freightliner fell within the definition of covered autos for determining coverage acquired after the policy begins. The parties did not dispute that Occidental’s policy covered all of the trucks SSTS leased to transport property. SSTS also added the freightliner within 30 days of the signed contractor agreement with Emiljanowicz. According to the terms of Occidental’s policy, the freightliner is a covered “auto” under Occidental’s policy. Further, the accident occurred as Emiljanowicz was in the process of taking his vehicle to the mechanic. Therefore, he was operating or maintaining his freightliner on behalf of SSTS at the time of the accident. As a result, Progressive’s contingent liability endorsement applies to exclude coverage.
Progressive Premier Ins. Co. of Illinois v. Emiljanowicz, 2013 IL App (1st) 113664, — N.E.2d –, 2013 WL 2326857 (Ill.App. 1 Dist.,2013)
