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.

So, we think the damage claim should be covered as a CGL claim. What is your opinion?

Arizona Subscriber

This is a claim due to mobile equipment and it should be covered under the CGL form.

It may be that the insurer is using the December 2004 version of the CGL form, and that version makes any land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law an auto. Perhaps the trailer is subject to a motor vehicle insurance law in your state and the insurer then considers the trailer to be an auto.

However, even if that is so, the spraying equipment is not an auto. The auto exclusion on the CGL form does have the exception that you mention. And, there is another exception on the current version of the CGL form for the operation of equipment that is attached to a land vehicle that would be mobile equipment if it were not subject to a motor vehicle insurance law. And since the damage was done by the insulation spraying equipment and not by the trailer or the vehicle, the CGL form and not the auto form is the proper policy for this claim.

 

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