"Regarding a commercial plumbing and HVAC contractor, what are the potential coverage problems that may result from placing the CGL and the Auto with different insurance carriers?"
"I know it is best to write GL and Auto with the same carrier because of potential gaps in coverage but i cannot remember what those gaps are. Can you help?"
"We write the CGL coverage on a moving and storage company but they have their auto coverage with a different allegedly 'neighborly' insurer. Are there pitfalls to this arrangement we can cite to convince them to allow us to write all of their coverages?"
This is a common question we get, so we finally decided it was time to write an article about it. There are at least four primary reasons why insuring both CGL and auto in the same carrier is often advantageous at claim time: (1) loading or unloading exposures, (2) “auto” vs. “mobile equipment,” (3) gray situational areas, and (4) auto exposures covered by the CGL policy.
First, with regard to the loading and unloading of a vehicle, not long ago, we had an “Ask an Expert” question where an independent agency carrier wrote the CGL coverage on a moving and storage company but their auto was written by a captive agency carrier. There was a claim that occurred while property was being unloaded. The ISO CGL carrier pointed at the non-ISO auto carrier and vice versa.
In many instances, there is no question that the claim is covered, it’s simply a matter of determining which policy applies. ISO has designed its CGL and BAP policies to fit together so that, in the vast majority of situations, one or the other responds. In the claim above, the ISO CGL policy did not cover the damage. An ISO BAP would have covered the damage; however, the auto carrier (perhaps not as “neighborly” as they profess to be) said their policy did not cover the damage because it only covered “ownership, maintenance or use” of an auto and, in their opinion, “use” did not include carrying transported property 200 feet from the vehicle. Unlike ISO’s BAP (but like ISO’s PAP), this carrier’s policy did not specifically mention “loading and unloading” or “movement or property.”
Second, some types of vehicles can be autos when driven on the road, then become “mobile equipment” while being operated. And, beginning with the 2004 ISO CGL policy, a vehicle that had formerly been considered “mobile equipment” all of the time, has since been considered an “auto” while subject to motor vehicle laws. At that time, ISO created a bridge endorsement for the BAP until it was revised to reflect this change in 2006. It’s easy to see how you might have different edition dates in conflict between carriers or one carrier may be using a non-ISO CGL or BAP or even a PAP being used, for example, on business by a contractor.
Third, situations can arise where it is not clear which policy applies. To cite a real-life claim example, a school bus arrived at a school, a child jumped/ran off the bus, slipped on an icy sidewalk, and broke her leg. The CGL and BAP were with different insurers and neither was willing to accept responsibility. Was she still in the process of exiting the vehicle or was this a premises slip and fall? When it comes to pure policy interpretation, often that can be done by a judge via declaratory judgment; however, facts are decided by juries when the parties can’t agree on exactly what happened, where, how, and why. If both policies are written with the same carrier, these disputes are far less likely.
Fourth, we all know that CGL policies don’t cover autos, right? Not necessarily. Here’s the relevant stem of the ISO CGL ‘auto’ exclusion:
"Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading".
The exclusion requires that both of two conditions be met in order for it to apply. First, the claim must arise from the “ownership, maintenance, use or entrustment” of an auto. If an insured doesn’t own it, isn’t maintaining it at the time of loss, isn’t using it, and hasn’t entrusted it, then the exclusion doesn’t apply. Second, even if the church, for example, is using the auto, the exclusion doesn’t apply unless the auto is “owned or operated by” or “rented or loaned to” an insured. So, if the church is sued, perhaps vicariously, because of an accident involving an auto not owned by, operated by, rented to, or loaned to an insured, the CGL policy should respond. So, if there is a CGL and an auto policy involved with different carriers, finger-pointing might arise or a coordination of Other Insurance clauses might create problems.
Sometimes it’s not possible to write both CGL and auto in the same carrier, but when it is, it is often the advisable way to go if the scenarios outlined in this article are of concern.
Updated: February 26, 2015
Updated June 17, 2024