Occurrence After Expiration of Policy Not Covered
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Consumers Insurance USA (“Consumers”) sought a declaratory judgment that it had no duty to insure, defend, or indemnify Defendants Huntleigh Dealership Services, Inc., and Huntleigh Bus Sales, Inc. (collectively, “Huntleigh”), for any claims or causes of action arising out of a May 2017 motor vehicle accident (“the accident”). Huntleigh opposed Consumers’ interpretation, and asserted it is covered under the terms set forth in Policy No. AD 29160359-4 (“the Policy”), as well as the subsequent renewal policy.In Consumers Insurance USA v. Huntleigh Dealership Services, Inc. et al., Civil Action No. 19-1853, United States District Court, E.D. Pennsylvania (May 5, 2022) an accident with a vehicle sold to another in an accident two years after expiration of a policy the seller sought coverage from the expired policy.
Huntleigh is in the business of buying and selling new and used buses. It sought an insurance policy for its business from Consumers who issued to Huntleigh a “Garage Policy” that insured Huntleigh’s “garage operations, ” including its inventory of unsold buses. The Policy contained, in relevant part, the following clauses:
The policy was effective from November 30, 2014, until November 30, 2016. After the expiration of the policy Consumers no longer insured Huntleigh in any capacity.
In 2015, while the Policy was still in effect, Huntleigh sold a school bus to FKW, Inc., a/k/a Werner Bus Lines (hereinafter referred to as “Werner”). Huntleigh transferred title of the bus to Werner, which operates a charter bus business in the Philadelphia area.
Nearly two years later, while traveling on Interstate 95 in Maryland, the bus was involved in an accident in which all the children and adults on board were injured.
An occurrence, for purposes of an insurance contract, happens when the injurious effects of the negligence first manifest themselves in such a way that would put a reasonable person on notice of the injury. An occurrence takes place not the time the alleged wrongful act was committed, but is the time when the complaining party was actually damaged.
The Policy Does Not Cover Defendant’s Claim
Consumers logically argued the accident occurred after the Policy expired. Since the accident occurred outside of the relevant policy period, the USDC concluded that coverage should be denied.
An “occurrence” policy provides indemnity and defense to an insured for an accident-occurrence that happens while the policy was in effect. No one was injured as a result of the sale of the bus in question two years before the accident. Therefore, there can be no coverage for defense or indemnity to an insured for a loss that occurred two years after expiration of the policy.