Q

We have a question concerning the definition of “mobile equipment” as it appears on the commercial general liability (CGL) form, specifically paragraph (f) of the definition. That part of the definition states that mobile equipment is any vehicle not described previously in the definition that is maintained primarily for purposes other than the transportation of persons or cargo.

This description seems to fit a vehicle such as a mobile cafeteria or a lunch wagon, wherein an insured drives around to offices and construction sites and sells food and drinks to the workers right from the insured's vehicle. We find it hard to believe such an exposure is adequately covered by the CGL form as mobile equipment. How does an insurer handle this type of risk?

Ohio Subscriber

A

It is true that a lunch wagon would fit the mobile equipment definition on the CGL form; it is also true that such a vehicle has been recognized for the exposures it presents. The rules in the commercial lines manual (CLM), division one – automobile, allow an insurer to classify and rate vehicles such as lunch wagons and blood mobiles and others that are “maintained primarily for purposes other than the transportation of persons or cargo” as autos. Endorsement CA 20 15 10 01 – mobile equipment – provides for liability, med pay, uninsured motorists, and physical damage coverages for scheduled vehicles and declares that “the vehicles described in the schedule will be considered covered autos and not mobile equipment”.

It is logical to consider lunch wagons as autos considering that the most serious exposure to a loss arises when the lunch wagon is on the move, being driven from one location to another. However, any insured in such a business should not be content with just a business auto coverage form, especially since the CLM rules require a coverage form that covers autos equipped as a rolling store to exclude product liability through endorsement CA 23 04 10 01.

This endorsement states that the insurance does not apply to “bodily injury or property damage resulting from the handling, use, or condition of any item the insured makes, sells, or distributes if the injury or damage occurs after the insured has given up possession of the item”. In other words, if the insured sells a ham sandwich from his lunch wagon to a construction worker and the worker later gets sick from that sandwich, the business auto policy, due to CA 23 04, will not provide any products liability coverage for any claim arising out of that incident. The insured needs products liability coverage to handle such a products exposure and to, thus, supplement the coverage provided by the auto policy for the insured's driving exposures.