What Pennsylvania Insurance Carriers and Businesses Should Know About the Absolute Auto Exclusion

In a March 18, 2025 ruling, Gawthrop Greenwood, PC has secured significant insurance coverage for a client after years of contentious litigation and an appeal to the Superior Court of Pennsylvania.

The dispute arose when a Chester County business was denied coverage for an alleged workplace accident, despite purchasing Commercial General Liability, Auto Liability, and Umbrella insurance policies. This coverage gap could have left the business exposed to potential personal injury damages in excess of $1 million. Following the Superior Court’s ruling, Gawthrop’s client now has access to $4 million in insurance coverage to cover the claimed damages.

The denial of coverage by the Commercial General Liability insurer was based on the application of an “Absolute Auto Exclusion” endorsement (policy change), which purportedly barred coverage for any claim “arising out of or resulting from the ownership, maintenance, use, or entrustment to others of any . . . auto.”

The lawsuit filed against Gawthrop Greenwood’s client alleged an employee of Gawthrop’s client, while operating a “terminal tractor” or “yard jockey” (specialized equipment designed for industrial container transport on the client’s premises) accidentally backed into a stationary service truck owned by another business, and occupied by an individual who claimed he was injured by the impact. The occupant of the service truck filed a personal injury lawsuit in the Court of Common Pleas of Philadelphia County. That action was stayed to facilitate Gawthrop’s separate lawsuit against the insurance carriers, seeking a determination of coverage. When the insurers attempted to have the coverage matter heard in the United States District Court for the Eastern District of Pennsylvania, Gawthrop prevailed in establishing that the dispute should instead be heard in the Court of Common Pleas of Chester County.

Selective Insurance, the client’s Auto Liability carrier, rejected the claim because its policy extended only to incidents involving an “automobile,” as defined within the Auto Liability policy. The terminal tractor, which was not designed or intended to be operated on public roadways, did not meet this definition and was therefore excluded from coverage under the Auto Liability policy.

Crum & Forster Specialty Insurance Company, the client’s Commercial General Liability carrier, also denied coverage, invoking the “Absolute Auto Exclusion” within its policy. Crum & Forster argued that the presence of the stationary service truck—a vehicle not owned by Gawthrop’s client, the insured—was enough to trigger the exclusion and bar coverage. Under this interpretation, the insured would be left solely responsible for its defense and any resulting indemnity obligation, despite having purchased multiple insurance policies intended to mitigate such risks.

Gawthrop Greenwood’s litigation team, led by attorneys Stephen R. McDonnell and Jeremy Grivensky, successfully argued the policy’s language was ambiguous; and, therefore, under well-established principles of insurance contract interpretation, must be construed in favor of the insured. They presented two primary arguments on behalf of their client: first, that the policy did not expressly define whether the insured needed to own the automobile in question for the exclusion to apply; and second, that the exclusion should only apply where the automobile was a substantial factor (proximate cause) in causing the accident. After filing and briefing the appeal, the Gawthrop team worked closely with insurance coverage litigator James C. Haggerty of Haggerty, Goldberg, Schleifer & Kupersmith, P.C., to present oral argument to the Superior Court.

A three-judge panel of the Superior Court agreed with Gawthrop, finding that the policy’s ambiguity required an interpretation favoring coverage for Gawthrop’s client. Further, because the service truck was stationary at the time of impact, it was not a proximate cause of the claimant’s alleged injuries. Accordingly, the Superior Court panel held that the Absolute Auto Exclusion was inapplicable, compelling Crum & Forster Specialty Insurance Company and the Umbrella insurer (National Union Fire Insurance Company of Pittsburgh, PA) to provide a defense and indemnification to the insured. The relevant policy limits total $4 million.

“We routinely represent insurers as well as businesses, and this case demonstrates the importance of making sure policies provide clarity when it comes to specifying the triggers and scope of exclusions,” said Gawthrop Greenwood partner and litigator Stephen R. McDonnell. “In cases like this where we can demonstrate ambiguity, the greatest protection goes to the insured.”

Litigator, partner and shareholder Stephen R. McDonnell is chair of the management committee at Gawthrop Greenwood as well as head of the Litigation Department. He has represented Fortune 500 companies, mid-sized companies and small businesses in contract disputes, construction claims, employment issues and insurance matters. His extensive trial experience includes more than 50 trials to verdict in the State and Federal Courts of Pennsylvania and New Jersey. For more information, contact Steve at smcdonnell@gawthrop.com or 610-696-8225.

Attorney Jeremy Grivensky is a litigator at Gawthrop Greenwood. He joined the firm in 2022 after graduating magna cum laude from Temple University Beasley School of Law, where he was a Beasley Scholar and an award-winning editor of the Temple Law Review. Jeremy was named to Best Lawyers^®: Ones to Watch in 2024 as well as Top Lawyers by Main Line Today and Daily Local News. For more information, contact Jeremy at jgrivensky@gawthrop.com or 610-696-8225.