Mobile Equipment Claim or Auto Claim?

Our insured has a piece of equipment attached to a trailer that is not self-propelled. The equipment is used to spray tar when the insured is paving driveways. The spray equipment malfunctioned and damaged the customer's property. A claim was submitted to the general liability carrier but it was denied. The insurer cited exclusion g. which applies to property damage arising out of the use of any auto.

However, there is an exception to the auto exclusion that we think applies to this situation. The exclusion does not apply to property damage arising out of the operation of any of the machinery or equipment listed in paragraph f2 or f3 of the definition of mobile equipment. And, the exclusion for mobile equipment on the CGL form only excludes the transportation of mobile equipment or mobile equipment used during racing, demolition or stunting activities. This would not apply since the insured was not doing any of these activities when the damage occurred.