Contingent Liability Policy does not Provide Coverage for Damages Involving Leased Truck in Fatal Automobile Accident
In Justin Time Transportation LLC v. Harco National Insurance Company, a fatal vehicle accident occurred involving a leased truck. Hogan Truck Leasing (“Hogan”) owned the truck and leased it to Justin Time Transportation, LLC (“Justin Time”). The driver of the leased vehicle, Derell L. Boyd, lost control of the truck and slid on ice-covered roads. The truck driven by Boyd struck and killed Edwin W. Sargent. Harco National Insurance Company (“Harco”) issued the insurance policy involved with this appeal. The named insured under the Harco policy was Hogan. Justin Time filed a declaratory judgment action against Harco to determine their rights pursuant to Harco’s policy.
The court reviewed whether Hogan’s contingent liability policy with Harco provided them with insurance coverage.
Harco claims that by the plain terms of its policy it owes no coverage to Justin Time. Harco explains that it structured this policy for Hogan as a contingency policy rather than as a primary policy. Harco points to Hogan’s lease, which contractually required its lessees to obtain liability insurance. Because Harco’s policy is contingent, Harco claims that the policies issued by Netherlands Insurance Company and Indiana Insurance Company apply to these accident claims as primary coverage. Harco sold this contingency policy to Hogan at a much lower price than what a primary liability policy would cost. Harco explains that its policy only provides coverage in situations where the other coverage becomes unavailable.
While there is no Illinois case interpreting Harco’s contingent endorsement, the court looked to an Illinois Supreme Court opinion from 1977, which enforced a similar form of contingent coverage that was issued to a truck owner who leases their truck to other motor carriers. The court agreed with Harco’s position that, in a general sense, its policy provided contingency coverage. Hogan’s lease undeniably mandated that Justin Time obtain its own liability coverage. It provided, “Such policy will provide that the coverage is primary and not additional or excess coverage over insurance otherwise available to either party.” A contract is ambiguous if the disputed language, in the context of the entire agreement, is reasonably susceptible of more than one construction giving the words their plain and ordinary meaning as understood by a reasonable, average person. The court held that the plain and ordinary meaning of this provision in the context of the entire agreement only results in one logical construction.
Justin Time Transp., LLC v. Harco Nat’l Ins. Co., 2014 IL App (5th) 130124.
