Accidents can occur while you (or an employee) are loading or unloading property from a company vehicle. Such accidents can result in bodily injury or property damage to a third party. If the injured party files a lawsuit against your company, will the suit be covered by your commercial auto policy? This article will answer that question.

Example

Here's an example of an accident caused by loading or unloading.


Suppose that you own a hardware store. The air conditioner in your store broke down yesterday. A replacement unit will not be available until next week. The weather has been hot so you have driven your company truck to A-1 Appliance to rent a portable air conditioner.

You sign a rental contract and an A-1 employee named Steve loads your air conditioner onto a hand truck. The air conditioner has been packed into a large box. Steve follows you to your truck so that you and he can load the box into your vehicle. The truck is insured for liability under a commercial auto policy.

You and Steve each pick up one end of the box and move toward the pickup bed. Suddenly, your hand slips and you drop your end of the box. The box bounces onto Steve's leg, fracturing his ankle. The box then slams onto the concrete, damaging the air conditioner severely.

Steve collects benefits from his employer's worker's compensation insurer. He then sues your firm for bodily injury. His suit demands $25,000 in compensatory damages.

The appliance store demands that you pay it $3500, the value of the damaged air conditioner.

Auto Liability Coverage

Claims that arise out of the loading or unloading of property onto or from an auto are typically covered under commercial auto liability insurance. For a loss to be covered, however, the following conditions must be satisfied.

• The auto involved in the accident must be a covered auto.
• The person or company named in the claim or suit must be an insured.
• The plaintiff must have sustained bodily injury or property damage as a result of the accident.

In the above example, your pickup is a covered auto under your auto liability insurance. Your firm is an insured under your policy. Steve, the plaintiff, seeks damages for bodily injury he sustained in the accident. Steve's claim against your firm should be covered by your auto liability insurance.

A commercial auto policy excludes bodily injury claims filed by any of your employees. If Steve were employed by you, his claim against your firm would not be covered.

Claims that arise from the loading or unloading of property onto or from an auto are excluded under a general liability policy. This exclusion is intended to prevent duplication of the coverage provided by the auto policy.

No Coverage for Property Being Loaded or Unloaded

Note that damage to the property being loaded or unloaded is not covered under an auto policy. Property that you (or another insured) are loading or unloading is considered property in your "care, custody or control." Damage to such property is excluded under auto liability insurance via the care, custody or control exclusion. Because of this exclusion, the property damage claim against your firm by A-1 Appliance is not covered by your auto policy.

Covers Damage to Other Property

Commercial auto liability insurance covers third-party property damage that occurs during the loading or unloading process if the damaged property is other than the property being loaded or unloaded. For example, suppose that you and Steve (in the previous scenario) have just picked up the air conditioner. The box slips out of your hand. Instead of falling on Steve's leg, it crashes onto the hood of a sports car parked nearby. The car belongs to a customer of A-1 Appliance. The vehicle is badly dented. If the car owner files a property damage claim against your company, the claim should be covered by your auto policy.

Mechanical Devices

Property is often loaded or unloaded from a vehicle with the aid of a mechanical device such as a forklift. The auto policy excludes bodily injury or property damage caused by the movement of property with a mechanical device unless the device is attached to the auto. (This exclusion does not apply to a hand truck.) An example of a mechanical device that would likely be covered is a crane attached to a truck.