Unloading Confusion: When Is Property ‘Finally Delivered’?

The Commercial General Liability (CGL) form and the Business Auto policy (BAP) contain complementary language when it comes to a claim for injury or damage arising out of loading or unloading property from a motor vehicle. This complementary language is found in exclusions: The CGL form does not apply to claims arising out of the handling of property while it is being moved from an auto to the place where it is finally delivered; the BAP does not apply to claims resulting from the handling of property after it is moved from the covered auto to the place where it is finally delivered. So if one form excludes coverage, the other usually provides coverage. However, a dispute over which form applies to a claim often starts when it is not clear when the property is “finally delivered.”

For example, the insured delivers a refrigerator to a customer's home. The insured brings the refrigerator into the kitchen and pushes it into place against the wall a bit too hard, poking a hole in the wall. Was the refrigerator finally delivered once the insured brought it into the home? Or into the kitchen? Or placed it against the wall? As another example, the insured delivers and installs a washer/dryer but does not properly install an O-ring, causing water damage. Is the faulty installation part of the final delivery or was the washer/dryer finally delivered once it was in place in the laundry room? Just what is the precise cutoff point after which unloading/final delivery ceases?

Read More FC&S Blog Posts at the Coverage Cafe!

There are at least two distinct doctrines that address the confusion about when unloading has ceased: the complete-operation doctrine and the coming-to-rest doctrine. According to some courts, under the complete-operations doctrine, unloading embraces all the operations required in any specific situation to affect a completed delivery of the goods. The coming-to-rest doctrine holds that unloading ends when the goods have been removed from the vehicle and have first come to rest.

The majority of jurisdictions have adopted the complete-operations doctrine, holding that a proper commercial delivery is part of unloading. And this makes sense since delivery and set up are today common practices by stores selling appliances. Moreover, a reasonable interpretation of the language in the CGL form and the BAP actually supports this doctrine.

If the emphasis is put on the entire clause in the CGL form pertaining to unloading, a reasonable interpretation would be that unloading applies only while the insured is actually removing the property from the auto. A look at the BAP language results in the same reasonable conclusion.

In any case, the facts of each unique situation are going to matter—and quite frankly, courts today are more readily focusing on the desire to find coverage, no matter which doctrine is followed. But if the insured is going to have coverage regardless of whether it is under the CGL form or the BAP, why is there a problem?

The problem, of course, arises if the insured has different carriers for General Liability and Business Auto coverage, with the result that the insurers argue with each other over which one should cover the claim while the insured and the claimant impatiently wait for a resolution. The solution: The insured could avoid the problem by having the same insurer for both the CGL form and the BAP. Or insurers could fix the situation by clearly defining when unloading ceases.