The Pennsylvania Superior Court’s recent decision in Wolfe v. Ross illustrates the importance for policyholders to verify potential policy exclusions before agreeing to a consent judgment against their interests.

In Wolfe v Ross, the plaintiff’s estate sued for the wrongful death of their 19 year old son. The decedent attended a graduation party at plaintiff’s home, consumed alcohol, and left the party on the plaintiff’s dirt bike. The decedent lost control of and crashed the bike, ultimately leading to his death. Plaintiff and defendant agreed to a $200,000 consent judgment. When plaintiff attempted to collect from the defendant’s homeowner’s policy, the insurer disclaimed since the policy contained an exclusion for liability arising out of the use of a motor vehicle. Plaintiff argued that the policy did cover liability arising from furnishing alcohol to guests, thus the claim should be covered.

Both plaintiff and the insurer moved for summary judgment. Plaintiff argued that the furnishing of alcohol triggered coverage under the homeowner’s policy, and the insurer argued that the motor vehicle exclusion trumped because Wolfe’s death arose out of the operation of a motor vehicle. The main issue was whether the motor vehicle exclusion was ambiguous for failing to specify whether the exclusion-triggering injuries required proximate causation or only a causal connection to the use of a motor vehicle. The court held that the motor vehicle exclusion was not ambiguous. The court reasoned that in prior decisions, “arising out of” had been construed to mean “casually connected with,” not “proximately caused by.” Thus, the fact that plaintiff’s fatal injuries were related to a motor vehicle was enough to trigger the policy exclusion, regardless of the role alcohol played. The insurer’s denial of coverage was upheld.

This case demonstrates that insurance carriers and policyholders alike can benefit from a policyholders’ familiarity with exclusion provisions in their policies before “resolving” a matter through a consent judgment. This is especially true in Pennsylvania, where exclusions such as the motor vehicle exclusion at issue in Wolfe may be interpreted broadly.

Thanks to Rachel Freedman for her contribution to this post.