| Q&A of the Week |
Collision Coverage under a BAP
A Georgia subscriber recently asked the following question:
The insured has a standard commercial auto policy with the trucker's endorsement, CA 23 20. The insured has symbol 7 for collision and liability. There is no garagekeepers endorsement showing on the policy. There is no coverage for repair plates. There is no drive other car endorsement.
The insured was backing a vehicle off his trailer and struck another vehicle. The vehicle that our insured was backing is a 2015 Acura being delivered to the Acura dealership. There is a property damage claim from the vehicle that our insured struck for $1,570.42. There is no claim for the vehicle he was driving at this point, but there may be one in the future.
Liability for the Acura that our insured was driving appears to be excluded under the care, custody, or control exclusion. However, we are wondering if the handling of property exclusion suggests there might be coverage. The question is, are you "handling" a vehicle when you are driving it under the same definition of "handling" that applies to moving a couch or some other typical loading/unloading claim?
Please advise on coverage for both the vehicle our insured was driving and the vehicle that was struck by our insured.
ANSWER: The care, custody, or control exclusion applies so we do not see that the handling of property exclusion is relevant. As for the vehicle that was struck, the insured has coverage for property damage caused by an accident and resulting from the use of a covered auto. This was an accident and if the Acura was a covered auto and there are no relevant exclusions, the insured has liability coverage for the property damage he caused.
As for the Acura damage, the physical damage coverage applies to loss to a covered auto. If the Acura is a covered auto, and the insured has comp and collision coverage, the damage to the Acura would be covered. There is no exclusion that would apply in this instance. |
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| Litigation Watch |
Damage to Property Exclusions
This case concerns a dispute over insurance coverage for construction defects. The case is Western Heritage Ins. Co. v. Cannon, No. 13-CV-0204-TOR2014, WL 3697806 (July 24, 2014, E.D. Wash.).
The Cannons own a home built by Cook Custom Homes. Cook used a subcontractor, Hattenberg Excavating, to excavate the lot and add several hundred yards of fill soil to extend the building pad. The Cannons began to move into the residence while construction was still in progress, and they noticed cracks throughout the foundation, basement slab, ceilings, and driveway. An inspection attributed the cracks to defects in the settlement and soil subsidence.
The Cannons sued Cook. Cook agreed to a confession of judgment and assigned its rights against its insurer, Western Heritage, to the Cannons. Western Heritage filed for a declaratory judgment that it owed no duty to pay any amount to the Cannons. The insurer contended that six exclusions apply to preclude the Cannons from recovering under the policies issued to Cook.
Western Heritage argued that the subsidence exclusion bars its obligations. The Cannons countered that the exclusion does not apply because it contains the undefined term "operations" and this requires construal in favor of coverage. The Cannons contended that they reasonably understood "operations" to mean ongoing operations, and the exclusion would apply if Cook dug a hole near the house during construction and the digging caused a wall of the house to collapse during construction. The Cannons argued that because the damages occurred after the operation of bringing in the defective fill had been completed, the exclusion is not applicable. The district court did not find this argument persuasive.
The U.S. District Court for the Eastern District of Washington noted that the subsidence exclusion states that it applies to subsidence resulting from operations. Such language in its plain and unadorned common use indicates that it excludes damage incurred as a result of subsidence for a variety of reasons, including from the operations of the insured. There is no indication that the policy intended to exclude subsidence caused only by the ongoing operations of the insured. The subsidence exclusion applied. |
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