Auto Exclusion, the CGL Form, and Auto Repair

This claim situation occurred when our insured, an auto repair shop, installed an incorrect oil filter while performing an oil change on a customer's vehicle. After the vehicle was released to the customer, the oil leaked out and the engine locked up and was damaged. We have a disagreement in the office as to the applicability of exclusion g., the auto exclusion under the CGL form. Some of us believe that this claim is a simple case of products/completed operations coverage and that the auto exclusion does not apply since the auto in question was not owned or operated by or rented or loaned to any insured. Others say that the key word in the exclusion is “any” and that the owned or operated by or rented or loaned to language is not relevant. This side of the disagreement feels that this is a case of the maintenance of any auto and so, exclusion g. applies. May we have your opinion?

Ohio Subscriber

Any part of an insurance policy has to be read in its entirety, and this is especially true of an exclusion. Exclusion g. refers to 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. That phrasing has to be read together. If the owned or operated part of the exclusion were to be considered as irrelevant, the question has to be asked: why was it put in the exclusion? The exclusion could just as easily have been written to exclude coverage for BI or PD arising out of the ownership, use, or maintenance of any auto, period. That is not the case. The phrase about owned or operated, etc., etc. was put in the exclusion for a reason, and that was to try to clarify what type of auto coverage was not to be covered under a CGL form.

And, look at clause (3) of the exclusion, about parking a car. That part of the exclusion also uses the owned by or rented language which strengthens the idea that the phrasing is in the exclusion for a purpose, and that is to modify the word auto.

This is a completed operations claim. The insured worked on property owned by another person and that work damaged the other person's property. The damage occurred after the work had been completed and away from the insured's premises. And even though the work was on an auto and the damage was done to an auto, exclusion g. is not applicable in this instance.

 

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