An insurer is not obligated to provide coverage in a case in which a policyholder’s driver hit a pedestrian with his car while he was primarily running a personal errand rather than conducting business, says an appellate court in overturning a lower court ruling.

Tyler Roush was a ”managing member” of Brash Tygr L.L.C., a Sonic Drive-In franchisee located in Carrollton, Missouri, according to Tuesday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Hudson Specialty insurance Co. v. Brash Tygr L.L.C. et al.

An insurance policy provided by New York-based Hudson Specialty Insurance Co., a unit of Fairfax Financial Holdings Ltd. provided coverage for “non-owned auto liability” arising out of the use of an automobile not owned by the business that was used in the course of business.

In August 2009, Mr. Roush had gone to the bank on a personal errand when a bank employee handed him the deposit bags that the Sonic Drive-In used to make cash deposits. Other Brash Tygr representatives periodically retrieved the deposit bags, which the bank used for advertising, but the company could make Sonic deposits without using the bags, according to the ruling.

In leaving the bank, Mr. Roush struck and severely injured Lloyd Miller in a pedestrian cross walk. Mr. Miller and his wife sued Brash Tygr, among other Sonic defendants, seeking Hudson’s policy limits of $1 million, according got the ruling

Hudson provided a defense, but reserved the right to contest its duty to indemnify any liability to the Millers. The case was eventually settled, with plaintiffs awarded $5.3 million in compensatory damages against the Sonic defendants and $500,000 in punitive damages against Mr. Roush and Brash Tygr, according to the ruling.

The U.S. District Court in Kansas City, Missouri, ruled in favor of the defendants on the coverage issue, holding that Mr. Roush had been using his car in the course of the business.

However, the focus of the 8th Circuit panel’s 2-1 ruling is the “dual purpose doctrine,” which states that if an employee’s work requires him to travel, he is acting in the course of his employment, even though he is simultaneously serving some purpose of his own.

“The undisputed facts established that picking up the bags was a matter of convenience, not necessity, for Brash Tygr and the Sonic Drive-In,” said the majority, in overturning the lower court ruling.

Mr. Roush’s acceptance of the unsolicited bags from a bank employee was an incidental aspect “of a purely personal trip that did not give that trip dual business purpose under Missouri law,” therefore Mr. Roush was not acting in the course of Brash Tygr’s business and Hudson is entitled to summary judgment on the issue of coverage, the opinion said.

The dissenting opinion said the majority says the particular trip was unnecessary although Hudson has admitted the customary manner in which Brash Tygr conducted its business was to use bank deposit bags, and to “occasionally make trips to the bank to retrieve the bags.”