A recent federal court decision rendered in July of 2017 highlights the importance of worker classification in the transportation industry and the potential insurance implications. In Spirit Commercial Auto Risk Retention Grp., Inc. v. Kailey, 1 the court determined that an “employee exclusion” in a motor carrier’s automobile liability insurance policy did not exclude coverage for liability resulting from the bodily injury of an independent contractor operating the motor carrier’s tractor-trailer. In April of 2014, a team of two drivers hired by the motor carrier, Kailey Trucking Line (KTL), were involved in a collision while operating KTL’s truck. The passenger in the truck, who was not operating the vehicle at the time, was killed in the accident. Subsequently, the spouse of the decedent filed suit against KTL as well as the driver of the truck.
KTL sought coverage for the suit under its automobile liability insurance policy, issued by Spirit Commercial Auto Risk Retention Group, Incorporated (Spirit). However, Spirit took the position that it had no duty to defend or indemnify KTL, and ultimately filed a declaratory judgment action in United States District Court for the Eastern District of Missouri. The policy issued to KTL provided coverage for damages due to bodily injury or property damage caused by an accident resulting from the ownership, maintenance, or use of a covered auto. However, the policy excluded from coverage any bodily injury to an employee or fellow employee of the insured arising out of and in the course of employment of the insured. Accordingly, to the extent that the decedent qualified as an “employee” of KTL, Spirit had no duty to indemnify KTL in the litigation.
Reprinted courtesy of H. Scott Williams, Saxe Doernberger & Vita, P.C. and Brendan C. Colt, Saxe Doernberger & Vita, P.C.
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