Liability Policy Only Applies to Property Damage to Others

Clean-up of Vehicle  and Diesel Leak After Accident Not Covered Property Damage

National Wrecker, Inc., (“NWI”) appealed from an order entered granting Progressive Casualty Insurance Company’s (“Progressive”) motion for summary judgment, and denying NWI’s. Central to this appeal is the question of whether a judgment obtained by NWI against Fred Muluya d/b/a Anakiya Trucking (“Muluya”), Progressive’s insured, is covered by Muluya’s automobile insurance contract.

In National Wrecker, Inc. v. Progressive Casualty Insurance Company, 2019 ME 153, Docket: Yor-19-63, Maine Supreme Judicial Court, (October 24, 2019) the court was asked to find coverage for the judgment obtained by NWI.


A. The Accident

Muluya1 owned a large box truck insured by a Commercial Auto Insurance Policy through Progressive, the defendant. In the early morning of December 20, 2016, the Eliot Police Department contacted NWI to respond to an accident involving Muluya’s truck, which had gone off the road and crashed into a ditch on property owned by a third party. The truck had suffered substantial damage and diesel fuel was leaking from the punctured fuel tank.

In an effort to contain the leaked fuel and prevent further leakage, the NWI employees pumped the remaining diesel from the truck and laid absorbent pads over the spilled fuel. NWI also removed debris from the scene. Two NWI wreckers removed the truck from the third party’s property to the roadway and towed it to an NWI facility in Eliot. NWI sent Muluya an invoice detailing these services and requesting payment of $7,440 for the services.

Muluya did not pay so NWI filed a complaint against Muluya seeking “payment of its invoice for recovery and remediation services; assisting of [Muluya] in the clean-up of [the] accident; towing fees; and storage fees.” Shortly thereafter the Superior Court entered judgment in favor of NWI (the “underlying judgment”) and awarded NWI $26,540 in total damages for the services listed on the invoice and the subsequent storage fees for Muluya’s truck.

The Policy

Muluya carried a Commercial Auto Insurance Policy with Progressive at all times relevant to this case. The truck was listed on the “Auto Coverage Schedule” of the policy. The policy provides $5,000 in compulsory property damage liability coverage, and $100,000 in optional property damage coverage.

Liability coverage is provided in Part I of the policy, which contains the following language: “[I]f you pay the premium for liability coverage, we will pay damages . . . for bodily injury, property damage, and covered pollution cost or expense, for which an insured becomes legally responsible because of an accident arising out of the ownership, maintenance or use of an insured auto.”

Pursuant to Maine’s reach-and-apply statute NWI filed a claim against Progressive seeking recovery of the $26,540 judgment it obtained against Muluya.


Standard liability insurance policies provide that the insurer has a duty to indemnify the insured for those sums that the insured becomes legally obligated to pay as damages for a covered claim. The reach and apply statute enables a judgment creditor to have insurance money applied to the satisfaction of the judgment by bringing an action against the judgment debtor’s insurer if the judgment debtor was insured for the liability forming the basis of the judgment.

The parties do not dispute that the basis for the underlying judgment is Muluya’s liability for payment for the services rendered by NWI. Rather, the parties dispute whether there was property damage to the property owned by the third party that is inseparably linked to those services and Muluya’s liability.

Muluya’s policy with Progressive does cover property damage caused by Muluya’s truck to the third-party owner’s property resulting from the accident. However, Muluya has not been sued by the property owner, nor has Muluya’s responsibility for any property damage ever been otherwise established.

There is nothing to establish NWI’s services were a direct result of the unidentified third-party owner’s property damage that would be covered under Muluya’s policy. Progressive was entitled to judgment, as a matter of law, because NWI failed to satisfy its burden of showing that the allegations of the underlying judgment established liability for property damage covered by the policy.

Because NWI has not established that its final judgment against Muluya is for covered damage, it cannot prevail in a reach-and-apply action and Progressive was entitled to judgment as a matter of law.


Had the owner of the property where the truck crashed was damaged and sued Muluya for damages there would have been no problem collecting under the Progressive policy. However, that property owner did not sue, probably because he suffered no damage. NWI’s “damage” was not to property but for services incurred protecting itself from damages because it owned the truck and leased it to Muluya. That cost of doing business was not covered property damage.

© 2019 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.


About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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