Which liability policy applies in a business auto accident?

Coverage Q&A: A car being transported was involved in an accident during the delivery process.

The insured runs a towing business. (Photo: Shutterstock)

Every claim is different, and some insurance policies can be difficult to interpret for unique situations. FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry, makes it simple to find credible answers to your complicated coverage questions. Analysis brought to you by our FC&S experts. 

Editor’s Note: The debate on which liability policy should apply in the event of a business auto accident is not always clear. Such is the case in this week’s question that relates to an accident involving a car being sold and delivered.

Question: We issued a standard business auto policy to an insured who is in the business of towing vehicles. His policy also includes a repair plate endorsement.

He picked up a car on his flatbed to deliver it at a dealership where it would eventually be placed for sale. At the time, there was no insurance on the vehicle. When the car was taken off the bed and driven across the street to its final destination, the insured operator struck a third party vehicle.

Does the liability coverage flow from the business auto policy since the car was still in the process of being delivered? Or is this something a general liability policy should respond to? 

— Massachusetts Subscriber 

Analysis: The coverages under general liability, business auto, auto dealers and garage keepers liability are designed not to overlap; however, a specific claims situation may make it difficult to determine which policy should be used to assign responsibility.

Answer: To learn the answer to this week’s coverage Q&A, please log into your FC&S Expert Coverage Interpretation account.

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