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October 20, 2016  

 
 Q&A of the Week
Semitrailer and Coverage under the Auto Dealers Coverage Form

An insured under the auto dealers coverage form was using one of his trucks to pull a customer's semitrailer from one lot to another when the trailer came loose and struck a car in an intersection. The liability insurance is written with coverage keyed to symbol 21, any auto, but the question we have centers around subparagraph C in Section I, Covered Autos Coverages. This subparagraph states that liability insurance applies to trailers with a load capacity of 2,000 pounds or less.
An adjuster told us that this subparagraph limits liability coverage to small trailers and there is no coverage for this semitrailer accident. What is your opinion?


ANSWER: With liability coverage keyed to symbol 21, the insured is protected against claims for bodily injury or property damage (or both) involving any auto. By definition in the policy, an auto includes trailers and semitrailers. Consequently, the extension of coverage in subparagraph C to small trailers is not relevant in this particular situation. Symbol 21 grants automatic liability coverage for the semitrailer. Subparagraph C can cause some confusion when it comes to coverage but the following information may help. In certain situations where the covered auto designation symbol does not include a trailer, the automatic trailer coverage in the subparagraph can serve as a helpful tool for the insured. For example, designation symbol 23 is for owned private passenger autos only. If the insured chooses symbol 23 for liability coverage and then bought a trailer or used a borrowed trailer for some reason, the covered auto symbol could be seen as not including that trailer since a trailer is clearly not a private passenger auto. As another example, if the insured chooses symbol 29 for liability coverage (nonowned autos) and then buys a trailer for use in connection with his business, the covered auto designation symbol can be a problem. In both examples, subparagraph C would provide automatic liability coverage for the insured as long as the trailer has a load capacity of 2,000 pounds or less.
In sum, the auto dealers coverage form will provide liability coverage for the exposure of using a trailer with a load capacity of 2,000 pounds or less regardless of the designation symbol that the insured chooses for his covered autos. However, symbol 21, any auto, will provide the liability coverage for a trailer regardless of the load capacity.
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 What's New This Week in FC&S
Farm Liability Endorsements

Standard liability endorsements prescribed for use with the current simplified language farm program of Insurance Services Office are listed in these pages along with a brief description of the coverages provided by each. Read More
 
 Litigation Watch
Settling Without Consent of Insurer

The condominium unit owner filed an action against the owners of an adjacent unit, the condo association, and the condo's insurer after flooding in the adjacent unit saturated the common wall and caused mold growth. After the unit owners reached a settlement, the insurer filed a motion for summary judgment. This case is Novak v. State Farm Insurance Companies, 2009 WL 5174078.

Novak owned unit 310 in the Great Oaks Condominiums complex and was a member of the condo association. The Fords owned unit 308, adjacent to the Novak unit. In 2000, the Fords abandoned their unit and the heat was turned off. As a result of freezing, a water pipe broke and the water saturated the common wall with the Novak unit. Mold developed. 
Read More
 
 Fraud of the Week
Social Security Benefits Fraud – New Jersey
AMOUNT: $82,854


A man originally from Monmouth County, New Jersey has admitted to collecting social security benefits that were meant to be paid to his wife for more than four years after she died. Read More
 
   
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FC&S Team
Kelly Maheu, J.D.
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  Diane W. Richardson, CPCU
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