Many businesses use company-owned vehicles to transport property. Accidents may occur while property is being loaded or unloaded from the auto. If the accident causes bodily injury or property damage to a third party, that person may file a claim or suit against the business. Fortunately, many claims that arise out loading or unloading are covered by a commercial auto policy. Here's an example.
Harry owns Happy HVAC Supplies, a company that sells heating and air conditioning equipment. Harry's company owns several trucks that it uses to deliver equipment to customers. The trucks are insured for liability under a business auto policy that lists Happy HVAC Supplies as the named insured.
One day, Harry asks Bill, a Happy HVAC employee, to deliver an air conditioner to a customer named Fred. Bill loads the air conditioner onto a company truck and drives to Fred's business location. Bill is in the process of unloading the unit when he accidentally drops it. The air conditioner bounces onto Fred's foot. Fred suffers a fractured ankle. Fred files a bodily injury claim against Happy HVAC Supplies, seeking $25,000 in compensation.
Auto Liability Coverage
Claims that arise out of the loading or unloading of property onto or from an auto are generally covered under commercial auto liability insurance if the following three conditions are satisfied:
- The auto involved in the accident is a covered auto.
- The plaintiff has sustained bodily injury or property damage as a result of the accident.
- The person or company named in the claim or suit qualifies as an insured under the policy.
In the above example, the truck is a covered auto under Harry's auto liability insurance. Fred, the plaintiff, seeks damages for bodily injury he sustained in the accident. Harry's firm is an insured under the auto policy. Fred's bodily injury claim against Happy HVAC Supplies should be covered by the company's auto liability insurance.
Commercial auto liability coverage contains various exclusions that may apply to loading and unloading accidents.
1. Employee Injuries
The policy excludes bodily injury claims filed by any of the insured's employees. In the Happy HVAC scenario outlined above, suppose that Bill strains his back when he drops the air conditioner. Harry has failed to purchase workers compensation insurance so Bill sues Happy HVAC for bodily injury. The claim won't be covered by Happy HVAC's auto policy due to the employee injury exclusion.
2. Damage to Property Being Loaded or Unloaded
Property that you (or another insured) are loading or unloading onto or from an auto is deemed to be property in your "care, custody or control." Damage to such property is excluded under auto liability insurance. In the Happy HVAC example, suppose that the air conditioner bounces off Fred's foot and then slams into the concrete driveway. The air conditioner is badly damaged. Fred files a property damage claim against Happy HVAC, demanding reimbursement of the $3500 he paid for the air conditioner.
The air conditioner was in Bill's custody when it was damaged in the accident. The "care, custody or control" exclusion will apply, and Happy HVAC's auto insurer will not pay for the damage to the machine.
Commercial auto liability insurance may cover third-party property damage that occurs during the loading or unloading process if the property is not subject to the "care, custody or control" exclusion. For example, suppose that Bill is unloading the air conditioner when he accidentally drops it onto the hood of a sports car parked nearby. The car belongs to one of Fred's customers. If the car owner files a property damage claim against Happy HVAC, the claim should be covered by the company's auto policy.
3. Movement by a Mechanical Device
Property is often loaded or unloaded from a vehicle with the aid of a mechanical device such as a forklift. The auto policy excludes bodily injury or property damage caused by the movement of property with a mechanical device unless the device is attached to the auto. (This exclusion does not apply to a hand truck.) Suppose that Bill is using a forklift to unload the air conditioner when he accidentally dumps it onto Fred's foot. If Fred files a bodily injury claim against Happy HVAC, the claim will not be covered by the firm's auto policy.
Now suppose that Bill is unloading the air conditioner using a crane attached to the truck. Bill accidentally drops the air conditioner onto Fred's foot, causing an injury. If Bill seeks compensation for his injury from Happy HVAC, the claim should be covered.
General Liability Policy
Claims that arise from the loading or unloading of property onto or from an auto, aircraft, or watercraft are excluded under a general liability policy. The policy also excludes the loading or unloading of property by the use of a hand truck or by a mechanical device attached to an auto, aircraft, or watercraft. These exclusions ensure that the loading and unloading coverage provided by the auto policy isn't duplicated in the liability policy.