So, here’s the thing about our latest featured case. A driver, while entering a logging site, struck a metal gate that swung out across the entranceway. The driver later died of his injuries and the business was sued by the deceased’s family.

The business was insured under a General Liability policy. The insurer denied the claim and the driver’s family filed a suit. After losing at the initial level, the family appealed. The focus of litigation was that the said policy was modified by an auto liability exclusion which barred coverage.

Click below to see how the courts answered the critical question – was the exclusion applicable?

Both a trial level and an appeals court scrutinized the language that the General Liability Insurer used in its auto liability exclusion. Both courts held the same opinion. They agreed that the policy clearly prevented coverage for loss related to ownership, maintenance, use (including loading/unloading) and even entrustment of autos, watercraft or aircraft.

From our point of view, we do agree with one aspect of the courts’ opinion. We also believe that the wording of the auto liability exclusion is complete and clear. However, we also wish to share that we disagree with the result of the litigation. It may be helpful to get a refresher on what is meant to be covered under a CGL.

Click here for more information. It is from the Commercial Liability Insurance Section of PF&M found in Advantage Plus.

The coverage provided by Commercial General Liability Policies is intended to be broad. It addresses so many risks that accompany running a business. The chances of losses and their severity tend to both increase with the size and the complexity of a given operation.

In light of the above, policy exclusions are both embedded in the base policy form and attached by endorsement, according to an insurance company’s objectives. A common reason for an exclusion under one type of policy is due to coverage for the excluded source of loss provided by another type of policy. This rationale is definitely at work in the above loss.

Click here to see information on causes of loss that are typically excluded under a CGL. It is from Gordis on P&C Insurance found in Advantage Plus.

We all can understand the importance of an insurance company making an effort to scrutinize claims. A coverage obligation is not blind. Losses occur that, often, aren’t eligible for protection for a variety of reasons. An exclusion that bars coverage is a legitimate reason to deny payment, even if a lawsuit is necessary to justify a denial.

On the other hand, denials should be avoided in the event of eligible losses. That is why it’s critical to carefully examine loss circumstances. In this case, the litigants and the two levels of courts focused on the injury involving an automobile. Was that focus proper?

The vehicle appeared to trigger everyone’s attention on the policy’s broad auto liability exclusion. However, that may have been an instance of wearing blinders. Having a vehicle involved in a loss is not always the same as having a vehicle being the cause of the loss. Yes, the party who, sadly, suffered fatal injury, was operating a vehicle when the loss occurred. But the policy’s exclusion does not apply to the loss. It was caused by a gate that swung out over their entrance and a collision resulted. This was not auto liability; rather it was premises liability. A condition on the premises created the loss and a commercial general liability policy should respond to it.

Click here to see a brief article discussing the importance of trust in addressing losses under an insurance policy. It is from Emarketing for Agents found in Advantage Plus.