Most of the time, when no coverage is owed for a claim under a primary liability policy, there is also no coverage owed under an umbrella policy.  While the umbrella policy can provide broader coverage than the primary, the number of places where the coverage is broader is usually not many.  But sometimes it is.  And that was the lesson in Grange Mutual Cas. Co. v. Milano Enterprises, No. 1644 WDA 2018 (Pa. Sup. Ct. Feb. 10, 2020).

At issue in Milano Enterprises was coverage for Milano, for a fatal injury sustained by Carol Tait, when she was struck by a vehicle driven by Steven Krenke.  Tait’s estate alleged that, at the time of the accident, Krenke was in the scope of his employment for Milano as a pizza delivery driver.

Grange Mutual asserted that it had no obligation to provide coverage to Milano, under a commercial general liability or commercial umbrella policy, as the injury was caused by an automobile accident.  The trial court agreed that no coverage was owed under the commercial general liability policy but the same could not be said about the umbrella policy.  The Pennsylvania Superior Court affirmed.

The decision is neither complicated nor surprising.  The court described the allegations of the underlying complaint as follows: “Tait’s complaint alleges that while he was in the scope and course of his employment with Milano as a pizza delivery driver, Steven Vincent Krenke was operating ‘a vehicle’ on February 14, 2016, when he struck Carol Tait as she was attempting to cross Ohio River Boulevard in Bellevue, Pennsylvania, causing her to sustain fatal injuries.  Tait’s complaint alleges that at the time of the accident, Krenke was driving with a suspended license and was driving under the influence of a controlled substance.

The complaint further alleges the following: [I]t is clear that [Milano] either did not conduct a simple review of Krenke’s criminal docket to discover the driving offenses or [Milano] did conduct a review, but allowed Krenke to drive for their business anyway despite his long history of criminal and driving offenses.

Furthermore, it is clear that [Milano] failed to have any policy or procedure in place to ensure that their delivery drivers had current and valid drivers’ licenses while working as delivery drivers for their business. At the time of this accident, Krenke did not possess a valid drivers’ license and should not have been operating a vehicle at any time and especially in the scope and course of his employment with [Milano].”

The decision, that no coverage was owed under the commercial general liability policy, but could be owed under the umbrella policy, came down to differences in the two policies’ “auto exclusions.”

The “auto exclusion,” in the commercial general liability policy, provides as follows:

This insurance does not apply to:
g. Aircraft, Auto or Watercraft
“Bodily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and “loading or unloading.”
This exclusion applies even if the claims allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by an insured, if the “occurrence” which caused the “bodily injury” or “property damage” involved the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft that is owned or operated by or rented or loaned to any insured.

Now compare this “auto exclusion” to the “auto exclusion” contained in the umbrella policy:

This insurance does not apply to:
f. Auto Coverages
(1) “Bodily injury” or “property damage” arising out of the ownership, maintenance or use of any “auto” which is not a “covered auto[.]”

You can see where this is going.  The “auto exclusion,” in the commercial general liability policy, states that it applies “even if the claims allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by an insured.”

However, the “auto exclusion,” in the umbrella policy, does not contain this expansive language. 

Recall that the Tait complaint alleged that Milano “either did not conduct a simple review of Krenke’s criminal docket to discover the driving offenses or [Milano] did conduct a review, but allowed Krenke to drive for their business anyway despite his long history of criminal and driving offenses.”

Therefore, the “auto exclusion,” in the commercial general liability policy, specifically excluded Milano’s negligence or other wrongdoing in the supervision, hiring, employment, training, etc. of Krenke, while the “auto exclusion,” in the umbrella policy, did not. 

Therefore, the court affirmed the decision of the trial court that no coverage was owed under the commercial general liability policy, but coverage could be owed under the umbrella policy. 

As noted, the number of places where umbrella coverage is broader than primary are not many.  But Grange Mutual Cas. Co. v. Milano Enterprises demonstrates that there are some – and sometimes it makes a difference.