SW Legal studies in Business

When Policy Clearly Excludes Certain Coverage, There Is No Duty to Defend or Indemnify

Appeals court held that a company's commercial general liability policy expressly excluded auto accidents except for two specific kinds of vehicles. Since those vehicles were not involved in an accident that happened by an employee on the job, the insurer has no duty to defend or indemnify the company.

Topic Insurance
Key Words

Commercial General Liability; Duty to Defend; Duty to Indemnify; Vehicle

C A S E   S U M M A R Y

Blakely, an employee and officer of Blakely Pumping, ran his pickup into Slingerland's car while Blakely was driving while on the job. Slingerland sued for personal injury. Blakely demanded that the company's commercial general liability insurer, NGM, defend him in the suit and indemnify him for any judgments. NGM claimed that the accident was not covered because in the "exclusions" portion of the policy, it disclaimed coverage for damages "arising out of the ownership … or use … of any …auto … owned or operated by … any insured." The policy did cover a "hired auto" (one leased or borrowed for business purposes) and "non-owned auto" (one not owned or borrowed used in connection with business). NGM sued Blakely and Slingerland, seeking a declaratory judgment that it was under no obligation to defend or indemnify Blakely Pumping. The trial court held that the disclaimer was ineffective and NGM must defend and indemnify. NGM appealed.


Reversed. The disclaimer is valid. The accident involved a vehicle owned by an employee while operating his own vehicle that he routinely used while on the job. The policy excluded all vehicle accidents except for ones involving a "hired auto" or "non-owned auto"-neither of which apply here. Blakely routinely used his own pickup while driving on the job. His personal vehicle was not covered by the NGM policy even though he used it in the course of business.


NGM Insurance Co. v. Blakely Pumping, 593 F.3d 150 (2nd Cir., 2010)

Back to Insurance Listings

©1997-2010  South-Western Legal Studies in Business, A Division of Cengage Learning. All Rights Reserved.