Tricky Liability Trap in the Business Insurance Policy

Posted by Matt Simon on Aug 9, 2009

Too often, businesses learn a hard lesson after a loss occurs.  We're trying to prevent that scenario for you by pointing out a potential dangerous gap in your insurance protection.  Specifically, we're talking about your Commercial General Liability Insurance Policy (CGL) and your Commercial Auto Policy (CAP).

How to Deal With Loading & Unloading
Your employees are loading your truck. A box is carelessly tossed at the truck. It strikes a passerby and injures them. Is this covered by your CGL or your CAP? What if the truck you hit is my truck and driver? Does your CGL pay the claim or should my CAP respond and cover the damages to my truck? Where does the CAP end and the CGL take over? Once a delivery item is set on the ground, off the truck, or at its destination?

Numerous questions like these have caused many lawsuits. They have also led to many rewrites of the CGL and the CAP.

Let's see how the policies handle this problem. The CGL doesn't cover injury or damage from the transportation of property by truck. When loading or unloading a truck, the CGL gives coverage if you load with a forklift or other mechanical device. However, when an insured trucker is loading by hand or with a hand truck, coverage is under a CAP. That being the case, the CAP is meshed with the CGL coverage.

The CAP excludes loading or unloading by mechanical device unless the device is attached to the vehicle. Combined with the CGL, this makes a device attached to the truck a problem for the CAP. But a device not attached to the truck is a CGL problem. Further, the CAP covers the entire transport process of property.

So one delivery or pickup could result in a CAP covered claim and a CGL covered claim. Without both a CAP and a CGL, you can't properly cover loading and unloading.

Tip. It's a good idea to have both your CGL and your CAP with the same insurance company. If there is a question of loading or unloading, there is no question about which insurance company covers it. There is only one.

If you need us

We want to make sure you have the protection you need before the loss occurs.  If you're concerned about your insurance, our licensed advisors are here to help!

Cyber & Data Liability Insurance eBook

Category: Business Insurance (3), Commercial Auto Insurance (3), General Liability Insurance (3)

Comments