In Tuscarora Wayne Ins. Co. v. Hebron, Inc., the Pennsylvania Superior Court reviewed a declaratory judgment action brought by a commercial general liability insurer regarding an incident at the insured’s vehicle dismantling facility. While one of the policyholder’s employees was fueling a flatbed truck, a fire started that caused damage to the facility, as well as neighboring vehicles and businesses. The subject policy contained an endorsement providing that the insurance did not apply to “property damage arising out of” the policyholder’s operations, which were identified as “vehicle dismantling.” The term “vehicle dismantling” was not defined in the policy.
The liability insurer filed a declaratory judgment action contending that it had no duty to provide defense and indemnification regarding the incident. Following discovery, the insurer and policyholder filed motions for summary judgment. The trial court granted the insurer’s motion and denied the policyholder’s motion, on the basis that the fueling was “incidental to the vehicle dismantling business.”
On appeal, the policyholder contended that “vehicle dismantling” was limited to the process of stripping vehicles of its parts, and that the fueling of the truck was unrelated to this process. The Superior Court agreed. The Court noted that the fire occurred after the vehicle dismantling operations ceased for the day. The Court also observed that the only connection between the fueling and the vehicle dismantling process arose from the fact that the fuel was taken from vehicles that were dismantled. However, the fuel was not immediately transferred from the vehicles to the trucks, but kept in a holding tank until needed.
Based upon these facts and the principle that policy exclusions should be construed in the insured’s favor, the Superior Court held that the “vehicle dismantling” exclusion did not apply, and that the liability insurer was therefore required to provide coverage. Accordingly, the Court reversed the trial court’s order granting the insurer’s motion for summary judgment and denying the policyholder’s motion for summary judgment.