Note that the definition of "auto" does specifically exclude "mobile equipment." The significance is that "mobile equipment" does not qualify as a covered auto, and therefore must be insured through some other means. The liability exposure for mobile equipment is for the most part covered under the standard commercial general liability (CGL) form. However, one aspect of the liability exposure that is not covered under the CGL form is mobile equipment while being transported by an auto. This exposure is covered through paragraph C under section I of the BAP, provided the BAP includes liability coverage and the vehicle transporting the mobile equipment is a covered auto. Apart from that extension, the ISO business auto coverage form excludes liability for mobile equipment.

BAP Definition of"Mobile Equipment"

"Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment:

1. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads;
2. Vehicles maintained for use solely on or next to premises you own or rent;
3. Vehicles that travel on crawler treads;
4. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:

a. power cranes, shovels, loaders, diggers or drills; or
b. road construction or resurfacing equipment such as graders, scrapers or rollers;
5. Vehicles not described in 1., 2., 3., or 4. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:

a. air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or
b. cherry pickers and similar devices used to raise or lower workers;
6. Vehicles not described in 1., 2., 3. or 4. above maintained primarily for purposes other than the transportation of persons or cargo. However, self-propelled vehicles with the following types of permanently attached equipment are not mobile equipment but will be considered autos:
a. equipment designed primarily for
(1) snow removal;
(2) road maintenance (but not construction or resurfacing); or
(3) street cleaning;
b.cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and
c.air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment.

However, "mobile equipment" does not include land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".

Analysis: 

The significance of this detailed definition is to clearly delineate between an "auto" and "mobile equipment." The business auto coverage form is meant to apply to autos and not mobile equipment,and this definition goes into great detail to help the insured and the insurer know just what mobile equipment is.Also, the point is made that vehicles that are subject to state financial responsibility laws are not mobile equipment; they are considered to be autos for insurance coverage purposes.

GENERAL LIABILITY COVERAGE FORM

Mobile Equipment Exception to Exclusion

Exclusion G—Aircraft, Auto, or Watercraft

This insurance does not apply to "bodily injury" or "property damage" arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, "auto", or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading".

This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occurrence" which caused the "bodily injury" or "property damage" involved the ownership, maintenance, use or entrustment to others of any aircraft, "auto", or watercraft that is owned or operated by or rented or loaned to any insured.

This exclusion does not apply to: ...
(5)"Bodily injury" or "property damage" arising out of:
(a) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of "mobile equipment" if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged; or
(b) The operation of any machinery or equipment listed in Paragraph f.(2) or f.(3) of the definition of "mobile equipment".

Analysis: 

An exception to the auto exclusion states that bodily injury or property damage arising out of the operation of any of the equipment listed in paragraph f.(2) or f.(3) of the definition of mobile equipment is not subject to the exclusion. In other words, operation of the equipment attached to certain self-propelled vehicles is not excluded here even though operation of the vehicle is excluded. If, for example, a cherry picker attached to a truck were being used to cut down a tree, there would be coverage for injury to a pedestrian struck by the cherry picker as it descends from the top of the tree. However, there would be no CGL coverage if the vehicle to which the cherry picker is attached hit a pedestrian while proceeding to the next job site.

This same exception makes reference to the operation of machinery or equipment attached to vehicles that would qualify as mobile equipment as defined in the CGL form, but for the fact that the vehicles are subject to a compulsory or financial responsibility law or some other motor vehicle insurance law where the vehicles are licensed or principally garaged. Such vehicles are considered as autos and the CGL form strives to emphasize this point. These vehicles are autos and if they are the cause of any bodily injury or property damage, the CGL form will not respond to a claim. However, if machinery or equipment attached to these vehicles cause the injury or damage, the CGL form will apply. This is perhaps a confusing exception, but it is meant to reinforce the separation between auto liability and general liability (mobile equipment) claims, and, in fact, it acts as a complement to the exception paragraph about machinery or equipment attached to vehicles described in f.(2) or f.(3).

Mobile Equipment CGL Exclusion

Exclusion H—Mobile Equipment

This insurance does not apply to "bodily injury" or "property damage" arising out of:

(1) The transportation of "mobile equipment" by an "auto" owned oroperatedby or rented or loaned to any insured; or
(2) The use of "mobile equipment" in, or while in practice for, or while being prepared for, any prearranged racing, speed, demolition, or stunting activity.

Analysis: 

The second clause of the exclusion is so worded to clarify that the CGL forms do provide coverage for liability arising from mobile equipment used just to prepare for such things as a prearranged race, as opposed to coverage being excluded for the actual mobile equipment engaging in or preparing to engage in such an event. To illustrate: if a piece of mobile equipment like a tractor is being prepared for a race at a county fair, the CGL form would not provide coverage if someone is injured by that tractor.On the other hand, if a particular piece of mobile equipment is being used to prepare the tractor for its later use in a race, and someone is injured through the use of that particular equipment, the CGL form would apply to a resulting claim.

Incidentally, clause (1) of exclusion (h) is ordinarily covered by automobile liability insurance (except, of course, for damage to the mobile equipment itself; this is excluded by the care, custody, or control exclusion on the auto policy). Clause (2) is an uncommon and especially hazardous exposure that must usually be insured on a specialty basis.

CGL Definition of "Mobile Equipment"

12."Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment;
a. Bulldozers, farm machinery, forklifts, and other vehicles designed for use principally off public roads;
b. Vehicles maintained for use solely on or next to premises you own or rent;
c. Vehicles that travel on crawler treads;
d. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:
(1) Power cranes, shovels, loaders, diggers, or drills; or
(2) Road construction or resurfacing equipment such as graders, scrapers, or rollers;
e. Vehicles not described in a., b., c., or d. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:
(1) Aircompressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration,lightingand well servicing equipment; or
(2) Cherrypickers and similar devices used to raise or lower workers;
f. Vehicles not described in a., b., c., or d. above maintained primarily for purposes other than the transportation of persons or cargo.

However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos":
(1) Equipment designed primarily for:
(a) Snow removal;
(b) Road maintenance, but not construction or resurfacing; or
(c) Street cleaning;
(2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and
(3)Air compressors, pumps, and generators, including spraying, welding, building cleaning, geophysical exploration,lighting and well servicing equipment.
However, "mobile equipment" does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".

Analysis: 

As with the definition under the auto form, the significance of this detailed definition is to clearly delineate between an auto and mobile equipment. The CGL form is meant to apply to mobile equipment and not to auto exposures and this particular definition goes into great detail in order to help the insured and the insurer know just what mobile equipment is.

Note that this mobile equipment definition is designed to clarify the difference between autos and mobile equipment by also describing what type vehicles are considered as autos. This current mobile equipment definition also complements the definition of "auto", as previously discussed, when it comes to vehicles that are subject to auto financial responsibility laws. Such vehicles are autos and liability questions should be addressed by an auto policy, not the CGL form.

CASE STUDIES

Coverage for Garbage Truck

If the mechanized arm from a garbage truck causes bodily injury or property damage, does this fall under the auto coverage or the general liability coverage?

Answer:

The answer is that the claim would be handled under the BAP.

The BI or PD resulted from the use and ownership of the covered auto. The only exclusions that might apply pertain to the movement of property by a mechanical device or the operation of equipment listed in the mobile equipment definition in the BAP.

The movement of property by mechanical device exclusion is not applicable because the exclusion states that the exclusion does not apply if the device is attached to the covered auto;presumably, this is the case in your scenario.

The operation of equipment listed in the mobile equipment definition refers to things like cherry pickers, air compressorsand pumps. The mechanized arm on a garbage truck does not fit into this category.
So, the BI or PD claim would be handled by the BAP. 

Parade Float Pulled by Tractor

Question:

Our insured, a community school district, sponsors the annual Homecoming Parade. On the way back to the school, the junior class float was in an accident. The float was being pulled by a tractor operated by a student. At a stop sign, the tractor and float rolled back slightly as it began to enter the intersection. A convertible that was also in the parade (driven by a teacher, carrying the cheerleaders) was behind the float and got damaged when the float backed into it. Note that neither the auto nor equipment involved is owned by the insured. Adjuster claims the school's policy would be secondary based on the Other Insurance clause…the tractor owner should pay the damages or let the auto owner's carrier pay under collision. I would argue that the tractor operator is an insured under the school's policy as a volunteer and is responsible for the operation of the tractor on behalf of the school. The school should be primary as there is no other insurance available to the insured (school).

Answer:

We agree that the school's insurance should be primary. Because the tractor is farm machinery designed for use principally off public roads and it is not licensed for use on public roads and therefore not subject to compulsory or financial responsibility law or other vehicle insurance law, it meets the definition of "mobile equipment" under the CGL form and would not be excluded as an "auto."

As you stated, the operator is an insured under the school's policy. The CGL form's definition of "volunteer worker" is broad enough to include the student driving the tractor on behalf of the school in the parade.
As for the other insurance clause, unless the school was listed as an additional insured under the tractor owner's policy or there was some kind of contractual liability arrangement between the school and the tractor owner, there is no other insurance available to the insured.

Lawnmower and 4-Wheeler

An officer/employee of the insured corporation on occasion loans a trailer and riding lawnmower to the corporation for maintenance of corporate grounds. Also, from time to time, the trailer and 4-wheeler are loaned to the insured for use by the insured's surveying crews on a job.

If the trailer, riding lawnmower, or 4-wheeler caused bodily injury or property damage to a third party, how would the corporation's CGL form and BAP respond?

Answer:

The lawnmower is mobile equipment as defined on the CGL form and the BAP, so any injury or damage that results from the use or ownership of the lawnmower will be covered by the CGL form. That also applies to the trailer while being used for the maintenance of the insured's grounds.

As for the 4-wheeler causing an injury or damage, the answer as to which policy applies depends.

If the 4-wheeler is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged, the 4-wheeler is considered an auto under the terms of the current CGL form and the current BAP. In that case, the BAP would apply to a claim, and this would include the trailer while it is attached to the 4-wheeler. Of course, coverage under the BAP is for covered autos and the 4-wheeler and trailer have to have the proper covered auto designation symbol in order to be considered covered autos. Symbol 9,nonowned autos, is the designated symbol for those autos that the named insured does not own, lease, hire, rent or borrow that are used in connection with the named insured's business; this includes autos owned by employees while used in the business of the named insured.

Now, if the 4-wheeler is not subject to such laws, and it is designed for use principally off public roads or fits some other part of the definition of mobile equipment, then the CGL form would apply to a claim against the insured based on the use or ownership of the 4-wheeler.

Self-Propelled Tractor Damages Parked Vehicle

Question:

The insured was in the process of backing a self-propelled tractor (used to aerate lawns) off the trailer that is attached to a vehicle owned by the insured when the tractor lost traction and rolled into the claimant's parked vehicle. Would the claim be covered under the BAP or the CGL form?

Answer:

We are of the opinion that the claim would be under the CGL form since the actual damage was done by the mobile equipment. We thought it would be possible that the loading or unloading phrase in the auto exclusion would apply, but since the tractor was being operated under its own power, as opposed to someone or something lifting or moving it from the trailer, we don't see the auto exclusion in the CGL form being used to deny the claim. The actual damage done was caused by the tractor and it did not arise out of the transportation or use of the trailer, so we see this as a CGL claim.

Golf Carts as Mobile Equipment

Question:

A client of ours owns large apartment complexes in Florida. The insured owns golf carts which are used primarily for maintenance and sales staff, but occasionally for transporting tenants within the grounds. Is thisusecovered by the CGL form? We are interested in med pay coverage and liability coverage just in case a tenant riding in a golf cart gets hurt in a collision, or in case someone gets hit by a golf cart while it is being driven by an employee of the insured.

Answer:

If an employee runs into someone while driving a golf cart, that liability would be covered by the CGL form. A golf cart would fit the definition of mobile equipment, either as a vehicle designed for use principally off public roads, or as in this instance, a vehicle maintained for use solely on or next to premises that the named insured owns. Further, the mobile equipment exclusion on the CGL form does not apply in circumstances such as this.

As for the med pay coverage, that should also apply. Of course, the bodily injury must be caused by an accident on the premises owned by the named insured—or on ways next to the premises—and the coverage will not apply to anyone considered to be an insured under the CGL form. But, if a tenant is hurt while riding in a golf cart driven by the insured's employee, there is no exclusion that would prevent med pay coverage.

Coverage for Boom Crane

Question:

Our client is securing a boom crane truck in PA. I need to know how to cover this properly. My understanding is as follows:

The BAP covers the truck and the permanently attached crane. When the crane is set up and operating, coverage for operations needs to be under General Liability.

The General Liability covers Bodily Injury and Property Damage. Does the General Liability also cover the property in the insured's care, custody and control such as an air conditioning unit? Does the liability policy pick up coverage for crane overload causing damage to the crane itself or do we need separate Inland Marine coverage? If you could advise the best path forward so I make sure all bases are properly covered,it would be appreciated.

Answer:

A boom crane truck is specialized equipment that may or not be eligible for auto coverage, depending on the carrier. Its type or weight may make it ineligible, so it would benefit you to check with the underwriter as to specific needs of coverage since the operations of the crane may also make it ineligible for standard coverage.

Symbol 19 on the ISO BAP can be used to cover autos that are land vehicles qualifying as mobile equipment unless they are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or garaged, so it is important to check with your underwriter or the state to determine if this is the case.

The general liability coverage will protect against claims made by a third party for injury or property damage claims, but it will not cover damage to the crane itself, nor other property of others associated with the crane rental.

Inland marine coverage would be needed to cover the crane itself, or when it isn't permanently anchored at a job site.

When it comes to such heavy and specialized mobile equipment, it may be that rigging insurance or riggers liability coverage is needed, or even boom truck operator insurance. Because this is specialized equipment, with potentially job specific insurance needs, it is best to check with your underwriter for coverage placement needs.

Is a Food Truck an Automobile or CGL Mobile Equipment?

Food trucks are restaurants without a fixed location. Their location is wherever the truck is parked, and some have hundreds of followers who keep track of where the truck is by Facebook, Twitter, and other forms of social media. In addition to the need for automobile liability insurance—a food truck is still a truck that operates on public highways—they need some of the same insurance products that brick and mortar restaurants need. In addition, there will be disputes concerning which insurance policy must respond when someone is injured in an accident with a food truck.

In American States Insurance Company v. Travelers Property Casualty Company of America, 223 Cal.App.4th 495 (2014), a food truck lessor's automobile insurer sued the lessor's commercial general liability (CGL) insurer, and the CGL insurer cross-complained against the automobile insurer. The CGL insurers ought to establish coverage for injuries a lessee sustained when another lessee attempted to avoid a traffic accident.

Royal Catering Company owned a fleet of food trucks.In the course of normal operations, Royal would lease food trucks to operators who would drive the trucks from site to site selling food. Royal leased one of the food trucks to Esmeragdo Gomez, who operated the food truck with the assistance of his wife, Irais Gomez. The food truck had only two seats and two seatbelts. It was not equipped for transport of more than two people, assumedly a driver and a cook. At the end of each day, Mr. Gomez returned the truck to Royal, who washed,maintained, and repaired the truck as necessary.

On the day of the accident, Mr. Gomez was driving the food truck while a passenger was sitting in the truck's passenger seat, and Mrs. Gomez stood in the food preparation section in the rear of the truck. At an intersection, Mr. Gomez swerved to avoid an approaching truck. Hot oil splashed out of the fryer and burned Mrs. Gomez. Despite Mr. Gomez's evasive action, the trucks collided.

The Gomezes and the passenger in their truck brought an action against Royal for the injuries sustained in connection with the accident. The Gomezes asserted causes of action against Royal for products liability (negligence), products liability (design defect), negligent infliction of emotional distress, and property damage.

Royal tendered the Gomez action to American States Insurance Company, which had issued automobile and excess automobile insurance policies to Royal. American States agreed to provide a defense under a reservation of rights. Royal and American States tendered the Gomez action to Travelers Property and Casualty Company of America, which had issued a CGL policy and excess-umbrella general liability policies to Royal. Travelers declined to provide a defense. American States negotiated with the Gomezes to settle their claims against Royal in the Gomez action. Travelers declined to participatein the settlement of the Gomez action. American States paid $500,000 to the Gomezes to settle all possible claims against Royal under American States's Auto Policy. Under the settlement, the Gomezes could pursue their products liability claims against Royal, but only to the extent such claims were covered by Travelers's insurance policies.

Based on the arbitrator's award, a judgment was entered against Royal on Mr. Gomez's loss of consortium claim and Mrs. Gomez's products liability claims in the amount of$2,428,577.34. The Gomezes' remaining causes of action were dismissed.

American States brought an action against Travelers, who cross-complained against American States; both insurance companies sought to establish Royal's coverage under the other company's insurance policies. The decision of the court that followed was necessarily fair since both parties were insurers and there was no basis for anti-insurer prejudice to enter into the decision.

A liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. An insurer's duty to defend is determined by comparing allegations in the complaint with the policy terms. If no potential coverage is found under the terms of the insurance policy, the insurer acts properly in denying a defense.
The California Court of Appeals concluded that under a plain reading of the Travelers CGL policy, the Gomezes' food truck was mobile equipment and not an auto because the primary purpose of the food truck was to serve as a mobile kitchen and not to transport persons or cargo. On a typical day, the first two hours would be spent stationary in the Royal parking lot preparing food in the food truck. The next eight hours the truck would make twelve or thirteen stops to heat up and sell food. The truck was immobile during the stops and was not transporting anything.

Although there was an inclusion of vehicles "maintained primarily for purposes other than the transportation of persons or cargo" in the Travelers CGL policy's definition of "mobile equipment," other language in the definition seemed to support the conclusion that the food truck should be classified as mobile equipment and not an auto.

Similarly, in Harco Nat. Ins. Co. v. Sleegers Engineering, Inc., No. 06-CV-11314, 2014 WL 5421237 (E.D. Mich. Oct. 22, 2014), the court dealt with a products liability suit when a food truck exploded during maintenance. The issue of liability was not resolved in the case, but it pointed out the need for insurance for the vehicle, both as a truck and as a mobile restaurant.

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