In Tuscarora Wayne Ins. Co. v. Hebron, Inc., the Pennsylvania Superior Court analyzed when a policy’s Designated Ongoing Operations Exclusion may be triggered.  In brief, a fire occurred at the insured’s property, when a driver was pumping gas into a vehicle at the insured’s location.  The fire caused damage to the insured’s property, and the surrounding neighbors’ property as well.  The insured’s policy excluded coverage under its Designated Ongoing Operations Endorsement for ongoing operations including “vehicle dismantling”.  On the basis of this exclusion, the insurer commenced a declaratory judgment action seeking a declaration that the policy did not provide coverage for the claimed damages.  On summary judgment, the trial court ruled in favor of the insurer.

On appeal, the insured argued the trial court erred in finding that refueling a vehicle fell within the policy’s language of “vehicle dismantling”.  The Superior Court agreed with the insured.  As the phrase “vehicle dismantling” was not defined by the policy, the court looked to the ordinary meaning of the phrase, which generally involved stripping vehicles of their parts.  Thus, since the only connection the claimed damages had with “vehicle dismantling” was the fact that the fuel, which started the fire, was being pumped into vehicles that had been dismantled, the Superior Court believed this connection was insufficient to trigger the policy endorsement.

Accordingly, this case reveals, Pennsylvania courts will look to the actual operations being performed to determine whether there is a close enough link, as to trigger a policy’s Designated Ongoing Operations Exclusion.

Thanks to Colleen Hayes for her contribution to this post.