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July 21, 2016  

 
 Q&A of the Week
Collision with Ground is not Improper Service

A Texas subscriber recently asked the following question:

Our insured is a franchised auto dealer. We write the dealer's physical damage coverage. Our insured's shop employee placed an owned (held for sale) vehicle on a lift. He did not properly position the vehicle and it fell off the back of the lift. The car hit the shop floor doing major damage to the rear end. The insurer has taken the position that coverage does not apply because of "improper service." The policy provides both comprehensive and collision coverage.
My position is that this is not a vehicle service issue, but a collision of the vehicle with the shop floor. To me improper service involves those items that are part of ongoing service to properly maintain a vehicle, e.g., changing fluids, spark plugs, etc.
Insurer is denying coverage based on policy language excluding "improper service."


ANSWER: Here, the insured would prevail. The word "collision" has been broadly interpreted for the insured throughout the recent past and has been deemed to include many dictionary definitions, such as the act of one object suddenly coming violently into contact with another in motion or standing and the meeting and mutual striking of two moving bodies or of a moving body and a stationary one. There have also been several cases that have included a collision with the ground as a collision. (see What is Collision.)
The improper service exclusion is meant to exclude when the car is improperly serviced, such as when something is installed incorrectly and some harm results. For example, if the mechanic hooked up a hose incorrectly and the vehicle overheated, the exclusion would apply and coverage would not be provided. Since here the damage was sustained as the result of a collision, regardless of whose fault that collision was, the damage should be covered.

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 What's New This Week in FC&S
Drones

Drones have been the latest new technology to catch the headlines. Read More
 
 Litigation Watch
Dispute Over Duty to Defend Additional Insured

The insurer for a roofing company filed a declaratory judgment action for a determination that it owed no duty to defend or indemnify the developer of condominium units as an additional insured in an underlying action. This case is Westfield Insurance Company v. West Van Buren, 2016 IL.App (1st) 140862-U.

West Van Buren (developer) constructed a condominium development in Chicago. The developer subcontracted the installation of the roof to Total Roofing && Construction Services. The subcontract provided that Total Roofing would insure and indemnify West Van Buren against liability for Total Roofing's work. Westfield Insurance wrote a general liability policy for Total Roofing with the policy listing West Van Buren as an additional insured.
 Read More
 
 Fraud of the Week
Automobile Fraud – Georgia
AMOUNT: $40,000


Three of four suspects in an insurance fraud scheme have been arrested for damaging cars multiple times in order to file insurance claims. Read More
 
   
 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here.
 
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FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@alm.com, to set one up! They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer.
 
 Contact Us
As always, your comments and questions are welcome.

Contact us at:
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FC&S Team
Kelly Maheu, J.D.
Publisher
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
Consulting Editor
David D. Thamann, J.D., CPCU, ARM
Managing Editor, FC&S Bulletins
  Emily Brunner
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Susan L. Massmann, CPCU
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  Tosha Brinkman
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Barry Zalma, Esq., CFE
Contributing Editor
  Donna Cozatchy
Creative Director

 
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