We insure a Business Auto Policy with Symbols 7, 8 and 9 for Property Damage. Our insured is a trash disposal company. The claimant alleges that he left climbing gear on the curb on trash day and our insured picked up the climbing gear and disposed of it in the trash truck. As alleged, would there be coverage for this loss under the Business Auto Policy?
Thank you.

Indiana Subscriber

The ISO Business Auto Policy states “we will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto”.” 

I am assuming that the garbage truck is mentioned on the Declarations page. First, this damage would be considered “property damage” because the claimant suffered from a loss of use of his tangible property.

Next, the trash disposal company picked up the property accidentally, assuming it was garbage, and not knowing that it was valuable personal property. This constitutes an accident.

Unfortunately for the claimant, this is where the coverage analysis stops agreeing with him. The property damage has to result from the use of the covered auto. The garbage collectors were doing their job, taking trash off of the curb and disposing of it in the garbage truck. Had the claimant not put the property out on the curb, the collectors would not have put it in the truck. But for the claimant's putting the items by the trash, there would have been no damage to the property.

It is unreasonable to expect the trash collectors to know that something set out on trash day by the trash is not trash; the claimant bears responsibility here. In many states, once property has been set on the curb it belongs to no one and may be taken by any passerby with no recourse from the person who set it out.

In addition, there is an exclusion for Handling of Property that excludes property damage resulting from the handling of property before it is accepted by the insured for movement into or onto the covered auto, which would exclude any damage that was done to the item when the insured was putting it in the garbage truck.

Some states classify items that are placed on the curb as state property, criminalizing the act of taking items off of the curb as stealing from the state or county. Taking items off of a curb can result in large fines, jail time, or, if a vehicle is involved, the impounding of the vehicle. Taking everything into consideration, it seems clear that this loss is not a covered loss under the garbage truck driver's business auto policy.