Business Auto Coverage for Employee's Auto?
Our insured owns a van that was parked in a garage on our insured's business premises. An employee of our insured had his vehicle parked beside our insured's car. A fire started around the van and burned down the garage, all the contents, and the two vehicles. An investigation is being held to determine whether the fire was due to our insured's van. We know that there has to be liability on the part of our insured before his business auto policy would respond to a claim, but if this is proven, is there any exclusion to prevent coverage? The workers compensation and employer liability exclusions refer to bodily injury, not property damage so we think there is coverage. What is your opinion?
Pennsylvania Subscriber
If the insured is found to be legally responsible for the damage, the only exclusion to consider is the care, custody, or control exclusion. This exclusion prevents coverage for property damage to property owned by the insured or in the insured's care, custody, or control. What has to be determined in this instance is whether the employee is an insured under the terms of the BAP, or if not, whether the vehicle was in the care, custody, or control of the named insured.
Based on how you describe the loss, the employee is not an insured under the terms of the BAP. He was not using a covered auto owned, hired, or borrowed by the named insured. Besides, if an employee owns such a car, the who is an insured paragraphs specifically exclude the employee from being an insured. So, there is no issue of whether the damaged vehicle was owned by the insured, or by any insured for that matter.
Whether the auto was in the care, custody, or control of the insured depends on the circumstances. If the employee just parked the car in an open garage and kept his keys, the employer does not really have custody or control of the car. On the other hand, if the employee parked his car in a company-owned closed, controlled garage, where he had to turn his keys over to a parking attendant, then the insured employer did, in effect, have care and custody and control over that car. In this case, the exclusion would apply and the employer's BAP would not pay for the damage to the employee's car even if the employer was liable for the damage.
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