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Virginia Supreme Court rules for Nationwide in car accident dispute

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Nationwide Mutual Insurance Co. units are not obligated to provide primary coverage under a commercial general liability policy in a wrongful death case in a car accident because of a policy exclusion, says the Virginia Supreme Court, in overturning a lower court ruling.

Nokesville, Virginia-based EastCoast Insulators Inc. and Rodriguez Construction entered into a subcontract for construction-related services, and EastCoast lent a vehicle to Rodriguez for the performance of the work, according to Thursday’s ruling by the Virginia Supreme Court in Nationwide Mutual Fire Insurance Co. et al. v. Erie Insurance Exchange et al.

In October 2013, while driving the EastCoast vehicle, Rodriguez worker Moises Rodriguez Manzur struck a vehicle operated by Martin Klauber, who later died as a result of the collision. A wrongful death case was filed against EastCoast and Manzur on Mr. Klauber’s behalf.

EastCoast was insured by Erie Insurance Exchange, a unit of Erie, Pennsylvania-based Erie Insurance Group, while Rodriquez had purchase insurance policies from Nationwide Mutual Fire Insurance Co. and Nationwide Mutual Insurance Co., based in Columbus, Ohio, that included a business auto policy, a commercial general lability policy, and a commercial umbrella liability policy.

In August 2014, Erie and Mr. Manzur filed suit against Nationwide and Mr. Klauber’s estate, seeking declaration of the priority of liability coverage between the Erie and Nationwide policies.

The trial court in Manassas, Virginia, ruled in Erie’s favor. It held the priority and coverages were: Nationwide business auto policy, $1 million; Nationwide CGL policy, $1 million; Nationwide commercial umbrella policy, $1 million; Erie commercial auto policy, $1 million; and Erie business catastrophe liability policy, $5 million. Nationwide appealed.

The trial court erred in its ruling, said a unanimous seven-judge Virginia Supreme Court.

“Nationwide’s CGL policy contains a clear exclusion for bodily injury and property damage liability” under a subsection that applies to autos, aircraft and watercraft, said the ruling.

“The policy goes on to describe several exceptions to the exclusions, none of which concern autos,” said the ruling. “Thus, by its plain language, the Nationwide CGL policy excludes from coverage any bodily injury arising out of the use of an auto.”

“Accordingly, the trial court erred in finding the indemnification agreement applied to require all three of Nationwide’s polices to provide primary insurance coverage ahead of Erie’s two policies,” said the ruling.

The ruling said the order of priorities for the applicable insurance policies in the case were the Erie auto policy, then the Nationwide auto policy, followed by the Nationwide umbrella policy and the Erie umbrella policy, on a pro rata basis.