Business-Owned Front-End Loader Damages Personal Vehicle

An insured runs a business in which he uses a front-end loader. One day, he moves the loader from his business-owned truck and puts blocks under the tires to prevent it from moving. But somehow, the loader moves and crashes into his personally owned truck, which is insured on a personal auto policy.

Q: The insured only has other than collision coverage on the truck, and the personal auto carrier claims the damage isn’t covered because it’s collision. And since it was his personally owned truck that was damaged by his business equipment, I don’t think he is covered under his business auto policy, either. Am I correct?

Response 1: “Collision” is defined as impact with another vehicle or object, so this is a collision. However, since this is a personally owned vehicle and the insured has a business, the business could be a separate legal entity. If that is the case, the commercial general liability for the loader should pay for the damage to the vehicle.

But if the business entity is an individual—for example, John Smith—there is no liability, because you can't be liable to yourself. If the business, Smith Excavating, Inc., damaged John Smith's pickup, the GL could pay the damage.

Response 2: This is a collision loss. There’s no coverage under the PAP, and the BAP excludes property damage to personal property owned by an insured. If the business entity is an individual, there’s no coverage there, either.

Response 3: The BAP or CGL policy may provide liability coverage for damage to the personally owned truck, but it depends on whether the damaged truck is owned by the same person who damaged it, or by a separate and distinct corporation.

Response 4: If the insured's business is a sole proprietorship there is no coverage because you cannot be liable to yourself. On the other hand, if the insured's business is a corporation or LLC that owns the front-end loader, there is a good case for coverage under the CGL policy.

This question was originally submitted by an agent through the VU’s 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.