Fire Damage and Coverage under CGL Form and BAP

Our insured's employee was driving a semi load of bailed corn stalks from the field to another location via a county road. As he was passing another truck coming toward him the other driver informed him that his load was on fire. The employee decided to back into a hay yard owned by our insured in order to unhook the semi tractor to save it from being destroyed. Unfortunately backing into the stack yard was not a wise choice as the fire spread to the bales in the stack yard and thus burned approx. $30,000 of hay that belonged to another party but was in the stack yard to be ground by our insured.

Both the commercial auto carrier and the general liability carrier denied coverage based upon the care, custody, or control exclusion. Do you concur with them? Thank you for your thoughts in this matter.

Iowa Subscriber

We agree with the insurers, but maybe not for the same reason.

As for the CGL form, we are of the opinion that the auto exclusion would apply since the PD arose from the use of an auto owned by the named insured. Since the damage would not have occurred but for the semi being backed into the stack yard and the fire spreading from the vehicle to the bales, that means the PD was caused by the use of the auto.

And as for the BAP, the ccc exclusion does apply to PD to property in the insured's care, custody or control. In this situation, the property can be said to be in the named insured's ccc since the bales were in the stack yard owned by the named insured, held there for processing by the named insured. So, the employee did not have the actual ccc of the bales, but the named insured did and that makes the ccc exclusion in the BAP applicable.

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