During my 17-year stint at the Big “I” national association, I received tens of thousands of coverage questions from member agents. One of the most common questions was whether someone needed [insert type of policy here] insurance for certain activities. One that came up on multiple occasions was whether someone with primarily an auto exposure also needed CGL coverage. These questions ranged from concrete and dump trucks to long-haul truckers.
First, virtually all businesses need both CGL and auto coverage, the latter even if the business does not own any vehicles.
Second, not all “trucks” are autos all of the time — some are autos while being driven on public roads, but “mobile equipment,” as defined by most CGL policies, while being operated at a job site. Space in this article does not allow a detailed exploration of what is or isn’t “mobile equipment.”
This issue came up again recently when a friend’s son who is a long-haul trucker asked about an agent’s recommendation that he needs CGL coverage. Specifically, he wanted to know why he should buy CGL coverage, with specific examples of when this coverage might be needed. In the event you should get a similar question, let me recant some of the advice given to agents going back at least 10 years.
The first potential CGL exposure that comes to mind for trucks making deliveries is the loading/unloading exposure. If we’re talking about the ISO Business Auto Policy (BAP) and CGL policy, loading/unloading by hand, hand truck, or mechanical device attached to the vehicle is normally covered by the BAP, not the CGL policy. The CGL policy should cover loading/unloading, for example, by use of a lift truck.
This brings up a second point, in that the ISO BAP and CGL forms are designed to work together to minimize coverage gaps involving vehicles. Over the years, I’ve had dozens of claims in which auto and CGL coverages were split between carriers or under ISO vs. non-ISO forms.
In one case, workers unloading furniture from a truck into a home did damage to sheetrock walls and an expensive tiled floor. The ISO CGL policy was written through an independent agency insurer and the auto was written through a captive agency insurer. Because the furniture was being unloaded by hand from the truck, the ISO CGL policy did not cover the loss, but an ISO BAP would cover the damage. However, the non-ISO auto policy language was different from the ISO BAP and that carrier denied the claim.
The moral of the story is to place both BAP and CGL coverages with the same carrier, preferably through the same agent. This holds true for many policies — use the professional who is familiar with the entire account and the forms being used and otherwise available.
But, back to the issue at hand, what are some other examples of where a CGL policy might be needed instead of an auto policy?
A critically important exposure to remember is that the ISO BAP does not cover completed operations. Returning momentarily to the loading/unloading situation, I was involved in a claim where property was unloaded from a truck and stacked on a loading dock. One stack tipped over and severely injured a warehouse worker. That is not an auto exposure under most policies, specifically the ISO BAP. It’s a CGL exposure.
In another claim, fumes or odors from the cargo delivered by a trucker caused several warehouse workers to become ill, along with contaminating adjacent property. This six-figure claim was covered under a limited pollution coverage endorsement attached to the trucker’s CGL policy.
While I don’t like “general rules,” one that might apply is, if the truck operator EVER leaves his or her vehicle, CGL coverage may come in handy. Claims filed under CGL (and other) policies of trucking companies range from trips and falls at truck stops to injuries sustained by third parties in bar fights and to damage to hotel properties with overnight stays.
Does a truck driver ever enter a premises to sign paperwork? Any business activity not directly arising from the ownership, maintenance, use, or loading/unloading of a vehicle is likely not covered under an auto policy.
Other examples include:
- If the trucker or trucking company has premises open to third parties, there is a CGL exposure. Erroneous delivery of products is often covered via CGL endorsements. Damage to property being transported will usually not be covered by an auto policy (or a CGL policy for that matter). Delivery problems may lead to heated arguments that could involve slander or libel.
- A trucker may assist another owner/operator with a repair or sell a spare part or tire to another party. A bodily injury claim could arise from a driver’s use of force to protect property from theft. In one case, a driver’s dog bit a third party at a truck stop — that may or may not be covered by the auto policy, depending on the jurisdiction.
- A contractual liability exposure may arise from a lease, key stop agreement, etc. that is not covered by the auto policy. There could be allegations involving negligent hiring that aren’t covered by the auto policy but might be under the CGL or other form. And the list goes on.
According to media accounts, the trucking industry is short 80,000 to 100,000 drivers. If you haven’t already, you may be receiving more inquiries from prospects engaging in this industry. Between the COVID pandemic and the increase in online shopping, we’ve seen a dramatic increase in the number of drivers needed and increased exposure in both commercial and personal auto fields. These individuals potentially have many exposures beyond the use of the auto itself.