Last week I received an inquiry from an independent agent who writes the CGL coverage (2013 ISO form) for an HVAC contractor, but the auto is written by a captive agency company. He does not have a copy of the auto policy but was told it was a personal auto policy with a “business” endorsement attached.
Most auto policies cover the ownership, maintenance, and use of covered autos. Some specifically include “loading and unloading,” though there are variations on who (named insured, family members, others) is covered for which coverage (liability, medical payments, etc.). However, the majority of forms I’ve reviewed are silent as to whether “use” includes loading and unloading the vehicle.
The current ISO business auto policy (BAP) makes no specific mention of loading or unloading. Coverage for loading and unloading is governed by liability exclusions 7 and 8 in the BAP. The result is that the ISO BAP covers loading and unloading by hand, hand truck, or mechanical device attached to a covered auto.
The ISO CGL does specifically state that “Use includes operation and ‘loading or unloading.’” The loading/unloading coverage in the current ISO CGL policy is governed by CGL definitions 11 and 16.b. So, the ISO CGL policy covers loading and unloading by a mechanical device other than a hand truck or mechanical device attached to an auto, for example a lift truck.
Insuring a loading or unloading exposure using the ISO CGL and BAP forms significantly decreases the likelihood that a claim will fall into the coverage cracks between two policies, especially if each policy is written through a different insurer.
So, what happens if property is damaged while a covered auto is being loaded or unloaded by hand or a hand truck? CGL definition #11 for “loading or unloading” says that property damage is excluded “While it is being moved from an aircraft, watercraft, or ‘auto’ to the place where it is finally delivered.” The ISO BAP is the policy that covers this exposure. However, in the current situation, we do not know what the captive agency insurer’s policy says.
Several years ago, an agent came to me with a claim involving a furniture company that damaged the interior of an upscale home while employees hand-carried a piece of furniture. The ISO CGL policy did not cover this exposure, but the ISO BAP would have. Unfortunately, the auto exposure was insured through another captive agency insurer and their policy covered “ownership, maintenance or use” of the auto. Their interpretation of “use” was that it did not cover loading and unloading.
Again, this is why it’s usually preferable to cover general liability and auto liability with the same insurer using forms that were designed to work together.