Mobile Equipment Exclusion and Traffic Accident

The insured's auger was being transported in the insured's pickup truck. The auger gear box came loose (a cotter pin was missing) and fell into traffic causing a multicar accident. The auto insurer paid for the property damage claims and now wants reimbursement from the CGL carrier. The claim is that the damage was caused by a failure of the auger equipment and not from the transportation of that equipment.

Does exclusion (h), mobile equipment, on the CGL form apply in this instance?

Kentucky Subscriber

The auto insurer is making an argument meant to skirt the mobile equipment exclusion in the CGL form. The property damage did not occur because the equipment failed; it occurred because the equipment fell into traffic and caused an accident. If the gear box had become loose and the equipment had not fallen into traffic, there would have been no accident. So, the actual property damage was caused by and arose out of the transportation of mobile equipment and exclusion (h) will prevent any coverage for the PD claim under the CGL form.