PAP Delivery: What is Excluded?
By: Bill Wilson
Depending on the precise wording of the exclusion and the interpretation of the word “delivery,” these policies may exclude far more than the ISO forms. For example: “We do not provide liability coverage for…Any insured while maintaining or using any vehicle while that insured is employed or otherwise engaged in any business of delivery including, but not limited to, the delivery of newspapers or magazines, food or any other products unless such use is incidental to your business of installing, maintaining or repairing furnishings or equipment, or for farming or ranching.”
The insured was a student who was working for a law firm. His duties involved handling the mail room, cleaning the kitchen and conference rooms and delivering papers for the law firm when needed. He worked about 25 hours a week and averaged one or two deliveries a day. He was responsible for an at-fault accident which was denied by the insurer, citing the above exclusion.
We do not believe this would be excluded by the current ISO “public or livery conveyance” exclusion because the insured is not holding his vehicle out to the general public for hire. If the carrier’s delivery exclusion above is read literally, there may not be any coverage. Which raises this question: If you’re an agent whose vehicle is insured under this policy, does it exclude an accident that occurs while you’re “delivering” a policy to an insured?
To read the complete analysis, click here.
CGL and Landscaper Damage
A lawn maintenance company was hired to fertilize a residential client’s lawn. The company damaged the lawn by applying an incorrect fertilizer and it needed to be replaced. The carrier denied the claim based on the determination that the lawn was part of “your work” and excluded. Is this correct?
Our “Ask an Expert” service has received two questions involving this type of loss. Since this is the season when much of this work begins, it’s important to be able to counsel your insureds as to what their CGL policies may or may not cover.
The CGL has several workmanship exclusions to avoid turning the policy into a warranty or performance bond. Most likely, one or more CGL exclusions apply to these types of losses.
For example, if the damage occurs during the application, CGL exclusions j.(5) and/or j.(6) probably apply. All they require is damage to the property of others caused by the insured or a subcontractor. Exclusion j.(6) specifically mentions work that is “incorrectly performed,” which would be the case if the wrong fertilizer was used.
If the damage takes place after the operation is completed, exclusion L. would apply. “Your work” is defined to include “work or operations performed by you or on your behalf.” Spreading the wrong fertilizer was the insured’s work and it resulted in property damage to a third party (their lawn) for which the insured is legally liable.
To read about these and other exclusionary policy provisions, click here.
PAP Coverage for Valet Parking
Normally, the PAP covers permissive users. However, there is an exclusion for anyone “employed or otherwise engaged in the ‘business’ of…parking…vehicles designed for use mainly on public highways.” So, does the PAP provide coverage for valet parking at a restaurant or hotel? Let’s complicate things…how about valet parking for a rental car?
Again, the ISO PAP generally covers permissive drivers. However, this only applies to “your covered auto,” which is primarily a declared or “temporary substitute” auto, not a non-owned auto rented on vacation or on a business trip. The valet’s ISO PAP would also not respond because of the “auto business” exclusion.
This exclusion in the owner’s PAP may or may not apply. For a more complete review of the potential coverage gap presented by valet parking, including a look at an important exclusion for physical, click here.
Bill Wilson (bill.wilson@iiaba.net) is Big “I” director of the Virtual University, an online learning center for agents and brokers.
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