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Motor Truck Cargo: Is There Coverage Loading or Unloading Property?

Employees dropped and damaged a couch when moving it between buildings. The carrier says that the couch is not covered under the motor truck cargo policy once it has left the truck.
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motor truck cargo: is there coverage loading or unloading property?

A commercial insured has a motor truck cargo policy. Some employees were moving a couch from one building to another when the couch slipped, fell and was damaged. The cargo policy carrier says that the goods are not covered once they leave the truck and denied the claim.

The form says:

1. Property In Vehicles --

b. Coverage Limitation --

1) "We" only cover property of others while in due course of "transit" on or in a "vehicle".

2) "We" only cover loading and unloading if the property of others is loaded from or unloaded onto a sidewalk, street, loading dock, or similar area that is adjacent to a "vehicle".

Q: Per this line, I think coverage for "loading and unloading" property between two buildings would be included. I would not be able to offer bailees coverage for this type of exposure, as they are not storing it or processing.

Is unloading and loading the couch included in the cargo policy? Or is coverage provided under a voluntary property damage endorsement? 

Response 1: First, more detail is needed. Why were employees moving a couch from one building to another? Who owns the couch at the time of the damage?

It is clear that the cargo policy does not cover this exposure: “Due course of 'transit' includes loading and unloading, but only if the property of others is loaded from or unloaded onto a sidewalk, street, loading dock, or similar area that is adjacent to a 'vehicle.'"

Your description and comments do seem to imply that they were acting as a bailor at the time. However, a voluntary property damage endorsement attached to a commercial general liability policy would very rarely overcome the auto exclusion under the CGL policy:

g. Aircraft, auto or watercraft

"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".

I do not understand why you would not be able to offer bailees coverage. Bailees coverage is a non-filed form where coverage can be tailored to match the exposure. 

Response 2: Motor truck cargo policy forms are non-standard and the loading and unloading coverage in these forms varies. In this one, there is limited coverage for unloading. If the loading and unloading exposure had been discussed with the insurer, you may have been able to negotiate broader coverage.

Response 3: ISO's business auto policy and CGL dovetail for the movement of property.

ISO's CGL excludes the movement of property by hand. ISO's BAP states by exception that liability coverage is extended to carrying property by hand or a device attached to the vehicle. 

Turn the claim in under the BAP policy. However, depending on the state, it'll only pay actual cash value. 

Response 4: It depends on the voluntary property damage endorsement and, even if you could find one in the marketplace to cover this exposure, it likely comes with a sizeable deductible and a relatively low sublimit of coverage. 

In general, this type of exposure is often considered a business risk. There may be specialty products for moving businesses, but more often noninsurance techniques must be used, such as hiring and training qualified personnel, using the appropriate means and methods, and other risk mitigation measures.

Response 5: This is a business auto claim because it's a loading and unloading issue. That said, the care, custody or control exclusion would apply—so there's no coverage. It's definitely not a cargo claim.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

This article is intended for general informational purposes only, and any opinions expressed are solely those of the author(s). The article is provided “as is" with no warranties or representations of any kind, and any liability is disclaimed that is in any way connected to reliance on or use of the information contained therein. The article is not intended to constitute and should not be considered legal or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.

Thursday, October 6, 2022
Commercial Lines
Virtual University