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No Liability Coverage for Company Owner Operating Personal Vehicle in Course and Scope of Employment (Illinois Court of Appeals)

In a DJ action filed by a commercial liability carrier, an Illinois Appellate Court held that an insurer had no duty to defend or indemnify a self-employed driver who was operating his personal vehicle during the course and scope of employment. In the underlying negligence claim, the injured plaintiff alleged personal injury and property damage when a truck driven by the owner of a construction company struck the open door of her parked car as she was getting out. The owner’s truck was purchased by him in his own name and insured through his personal auto insurance. 

The owner’s construction company was a named insured on a CGL policy that defined "insured" to include, "an organization" and its "executive officers...but only with respect to their duties [as officers]."  The policy excluded claims "arising out of the ownership, maintenance [or] use ... of any ... 'auto'... owned by or rented or loaned to any insured."

The injured plaintiff argued the truck was not "owned" or "used" by an insured because the driver was acting in his capacity as a company officer at the time of the accident. Since he was not being sued in his personal capacity, the plaintiff argued, he was not an "insured" and the "auto" exclusion did not apply.

In affirming summary judgment for the insurance company, the court found that counsel for the injured plaintiff had made numerous binding "judicial admissions" at the trial court level, and specifically that the driver was acting as an employee of the company at the time of the accident. This is important because as an employee, the “auto exclusion” provision in the insurer’s policy applied to bar coverage. 

Ultimately, as an employee of the company, and with a claim against the company for coverage regarding to an accident that occurred with the owner, the insurer was correct in examining the policy and applying the coverages, and exclusions, to the circumstances of the accident. Here, because owner was driving his personal vehicle at the time of accident, despite being an employee of the company (and even being in the course and scope of his employment), the “auto exclusion” in the insurer’s policy applied to bar coverage.

Erie Ins. Exch. v. Petrovic, 2022 IL App (1st) 210628-U; 2022 Ill. App. Unpub. LEXIS 1876.