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An insured under the auto dealers coverage form was using one of his trucks to pull a customer's semitrailer from one lot to another when the trailer came loose and struck a car in an intersection. The liability insurance is written with coverage keyed to symbol 21, any auto, but the question we have centers around subparagraph C in Section I, Covered Autos Coverages. This subparagraph states that liability insurance applies to trailers with a load capacity of 2,000 pounds or less.

An adjuster told us that this subparagraph limits liability coverage to small trailers and there is no coverage for this semitrailer accident. What is your opinion?

South Carolina Subscriber

With liability coverage keyed to symbol 21, the insured is protected against claims for bodily injury or property damage (or both) involving any auto. By definition in the policy, an auto includes trailers and semitrailers. Consequently, the extension of coverage in subparagraph C to small trailers is not relevant in this particular situation. Symbol 21 grants automatic liability coverage for the semitrailer.

Subparagraph C can cause some confusion when it comes to coverage but the following information may help.

In certain situations where the covered auto designation symbol does not include a trailer, the automatic trailer coverage in the subparagraph can serve as a helpful tool for the insured. For example, designation symbol 23 is for owned private passenger autos only. If the insured chooses symbol 23 for liability coverage and then bought a trailer or used a borrowed trailer for some reason, the covered auto symbol could be seen as not including that trailer since a trailer is clearly not a private passenger auto. As another example, if the insured chooses symbol 29 for liability coverage (nonowned autos) and then buys a trailer for use in connection with his business, the covered auto designation symbol can be a problem. In both examples, subparagraph C would provide automatic liability coverage for the insured as long as the trailer has a load capacity of 2,000 pounds or less.

In sum, the auto dealers coverage form will provide liability coverage for the exposure of using a trailer with a load capacity of 2,000 pounds or less regardless of the designation symbol that the insured chooses for his covered autos. However, symbol 21, any auto, will provide the liability coverage for a trailer regardless of the load capacity.

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