Author: VU Faculty
A contractor is rolling an air compressor across a parking lot to load it into his truck. He slips and the compressor rolls into a Cadillac. Is it a Business Auto claim or a CGL (CG 00 01 07 98) claim? The answer may not be as simple as you think. In addition, this actual claim submitted to our "Ask an Expert" service involves two other issues even more important than the coverage!
Here's the claim:
"I write the auto and another agent writes the CGL (different carriers). The insured was pulling a compressor over to his truck. He slipped and let go of the compressor which then rolled into a 2002 Cadillac. Is it CGL (1998 edition) or auto? So far, each carrier has said it belongs to the other."
First of all, we're assuming that the auto policy is an ISO Business Auto form as opposed to a personal auto policy. Care should be taken when writing a PAP for a commercial insured who also has a CGL since these forms, unlike the BAP and CGL, were not designed to "fit" together, including the issue of loading and unloading.
Also, from the description, we can't tell whether the compressor fits the definition of "mobile equipment" or not. If it's a wheeled "vehicle," it probably meets the definition of "mobile equipment;" otherwise, it's just property. The way this is described, it sounds like the insured moved the equipment from a stationary position and was in the process of loading the compressor onto the truck. From the standpoint of pure loading/unloading of "property" (which, broadly defined, could include mobile equipment), that's a BAP exposure.
Here are what the CGL and BAP say about the loading/unloading of an auto...
If the compressor IS "mobile equipment," it's covered by the CGL policy except while being TRANSPORTED by an auto or while used in a racing event. The CGL does have an exclusion for the "loading or unloading" of property onto an auto:
g. Aircraft, Auto Or Watercraft
"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".
In the Definitions section:
11. "Loading or unloading" means the handling of
property:
a. After it is moved from the place where it
is accepted for movement into or onto an
aircraft, watercraft or "auto";
b. While it is in or on an aircraft,
watercraft or "auto"; or
c. While it is being moved from an aircraft,
watercraft or "auto" to the place where
it is finally delivered;
but "loading or unloading" does not include
the movement of property by means of a
mechanical device, other than a hand truck,
that is not attached to the aircraft,
watercraft or "auto".
The BAP excludes the following:
7. Handling Of Property
"Bodily injury" or "property damage" resulting
from the handling of property:
a. Before it is moved from the place where it
is accepted by the "insured" for movement
into or onto the covered "auto"; or
b. After it is moved from the covered "auto"
to the place where it is finally delivered
by the "insured".
8. Movement Of Property By Mechanical Device
"Bodily injury" or "property damage" resulting
from the movement of property by a mechanical
device (other than a hand truck) unless the
device is attached to the covered "auto".
So, if the compressor itself is "mobile equipment," then the CGL probably applies for its "use" (though the property loading/unloading of an auto exclusion in the CGL is pretty strong). If the compressor is property, then the BAP would clearly apply. Based on the limited information provided, our best guess is that this is a BAP loading exposure and most properly covered by that policy since there doesn't appear to be any real "use" of the equipment. Here's what one of our faculty members had to say:
"The compressor 'ROLLED' into the Cadillac, so we must assume it was mobile equipment, right? I don't know. I have seen large compressors that are pulled behind vehicles and small compressors that are on wheels and would be lifted into a P/U truck. If we assume this compressor to be a smaller compressor like you might have at home, the loading would be a BAP exposure. If it was more of a mobile equipment defined compressor, it would be CGL. To meet the mobile equipment definition, there needs to be some sort of "vehicle" module to it, more than just wheels.
"Now, the problem with split accounts. The insurers can always say, 'not mine the others.' In this case we add two agents. Tough battles, with the insured unfairly placed in the middle of a squabble between two companies.
"We also need to know whether the auto is a BAP or PAP. Too many contractors attempt to get away with a PAP which is not a perfect match for the CGL, especially in the area of loading and unloading. The BAP and CGL both define "loading/unloading," but the PAP doesn't."
The most perplexing part of this claim is the apparent unwillingness of either carrier to quickly resolve the claim for their insured. Clearly, at least one of these policies applies to the loss. If these carriers have any sense of fairness to their insured, they will get together and make a decision rather than try to pass the buck to each other.
It's situations like this that give the industry a bad name. This insured is a client of both companies. There's no question about coverage, only WHO covers it. As a matter of sound business practices and ethics, these carriers owe it to their insured (and the innocent third party), aside from the contract, to quickly resolve the coverage issue. On the surface, their conduct appears inexcusable.
Finally, this claim raises the issue of why would anyone insure their auto and CGL exposures with different agents and companies? Not only can this practice result in potential (alleged) coverage gaps of the nature presented by this claim, it can also result in real coverage gaps due to the use of measurably different proprietary policies or those with different edition dates.
If anything, this gives one of the agents an opportunity to resolve the problem and point out why he should write the entire account in the same company to prevent these kinds of disagreements in the future.
Note: Keep in mind that the above claim involved the CG 00 01 07 98. Some mobile equipment is treated differently in the CG 00 01 12 04 and later CGL forms in that road operation may only be covered by the BAP even if off-road operation is still covered by the CGL. For another article specific to the CG 00 01 12 04 , click here.