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Something Borrowed (PA)

April 16, 2021

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<p style="text-align: justify;"><em><a href="">Continental Cas. Co. v. Pennsylvania Nat. Mut. Cas</a>,</em> involved a dispute between two (2) insurance carriers arising out of a motor vehicle accident and its subsequent settlement. Specifically, Continental Cas. Co. (Continental) commenced suit against Pennsylvania Nat. Mut. (Penn National) seeking reimbursement from Penn National, under an equitable contribution theory, for settlement sums paid by Continental. The key issue before the EDPA was whether Penn National’s insured “borrowed” the vehicle involved in the accident, as to trigger Penn National’s liability under its policies.</p>
<p style="text-align: justify;">Ultimately, the EDPA determined that Penn National’s insured did not “borrow” the vehicle. In reaching this conclusion, the court referenced Penn National policy language that provided liability coverage, in pertinent part, for use by an “insured” for a covered auto. An “insured” included “anyone else while using with your permission a covered auto you own, hire or borrow except … the owner or anyone else from whom you hire or borrow a covered auto”. The parties disputed the proper interpretation of the term “borrow” as used in the policy.</p>
<p style="text-align: justify;">In its analysis, the court noted that the term “borrow” was not defined by the policy and was not a technical insurance term with a strict legal meaning. Further, noting the dearth of Pennsylvania jurisprudence on this issue, the court looked to other jurisdictions. Under, what the court deemed the majority view / expanded definition of “borrow”, the court stated that “borrow” was construed to mean more than merely receiving the benefit of another’s use of a third person’s vehicle. Rather, the majority view held that “borrowing” a car also required possession reflecting dominion and control over the vehicle. Noting that the Pennsylvania Supreme Court had not yet ruled on this issue, the EDPA adopted the majority view of the term “borrow”.</p>
<p style="text-align: justify;">Looking to the facts of the instant case, the court concluded that Penn National’s insured, acting through its employee, never acquired control, dominion, or possession of the vehicle such that Penn National’s insured could be deemed to have “borrowed” that vehicle for purposes of triggering the Penn National policies. Thus, the court held, on this basis, Continental was not entitled to equitable contribution from Penn National.</p>
<p style="text-align: justify;">Accordingly, this case offers persuasive case law regarding how Pennsylvania courts will interpret the definition of “borrow” in the context of an auto insurance policy.</p>
<p style="text-align: justify;">If you have any questions or comments, please contact <a href="">Colleen Hayes</a>.</p>


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