Insurance Coverage and Bad Faith

On September 22, 2023, the U.S. Court of Appeals for the Third Circuit held in a non-precedential opinion that an insurer had no duty to defend a school bus transportation company under an auto policy for an alleged assault of a student on a school bus because the harm did not result from the use of the school bus. In National Liability & Fire Insurance Co. v. Brimar Transit, Inc., 2023 WL 6172886 (3d Cir. Sept. 22, 2023), a three-judge panel unanimously held that the alleged assault of a student on her school bus was not covered because “the allegations in the complaint do not forge a strong enough link between the use of the school bus” and the injuries. The policy in question covered injuries and damages “resulting from the ownership, maintenance or use of a covered ‘auto.’” The Third Circuit found, relying on Ohio Casual Group of Insurance Companies v. Bakaric, 513 A.2d 462, 465 (Pa. Super. 1986), that the “resulting from” language “requires a closer causal connection between the vehicle’s use and the alleged injuries.”

This case arises from the 2016 assault of a student by her classmate on their school bus. The injured student and her mother sued the bus company and school district. The bus company’s insurance carrier, National Liability & Fire Insurance Co., filed a declaratory judgment action arguing that there was no coverage under the policy. The trial court granted the bus company’s and school district’s motions for summary judgment.

On appeal, National Liability argued that the “bus was merely incidental to” the assault as the injuries did not arise from “any reasonably contemplated use of the bus as a bus.” The Third Circuit agreed and its decision reversed and remanded the judgment below for further proceedings consistent with its opinion.