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CGL Policies Don’t Cover Auto Accidents…Or Do They?

Author: Bill Wilson
Answer?“I have a question with regard to the current ISO Business Auto Policy (BAP) that has been posed by my client and I do not know exactly how to respond. I have a client who provides alcohol and drug testing services for a fee to the railroads, transportation industry, and private firms. Some of the collectors are employees and some are independent contractors.
“They are working on a contract with a railroad that is requesting that my insured's BAP cover claims as a result of the use of an auto by the collectors who are independent contractors also. These would be non-owned autos that are owned and operated by the independent contractor. They are required to carry their own insurance. However, if they were on site for a collection and ran into someone and caused BI or PD, such that my Named Insured was sued, would the coverage for Non-Owned Auto protect my named insured against a claim brought against them due to the collector's negligence while performing services on behalf of my Named Insured?
“I know this would be the case if it is an employee, but I am not sure that the same would apply for an independent contractor. The Non-Owned Auto symbol does say that it is “For Autos you do not own hire lease or borrow that are used in connection with your business. Since it includes description of employees and others, I would think that there could be coverage for ANY Non-Owned Auto as long as the auto was being used in connection with their business. Can you tell me if that would be correct or does it only apply to the listing of employees specified in the Symbol definition.”
Answer?Yes, you are correct. The named insured is covered under Symbol 9 for independent contractors and others besides just employees. The form just gives the most common exposure. And, of course, the operator of the nonowned auto is not an insured under the BAP unless added by endorsement.
In fact, it’s quite possible if, unlike an employee, an independent contractor is not an insured under the organization’s CGL policy, the CGL policy could respond to such claims. This is the ISO CGL “auto” exclusion stem:
Aircraft, Auto Or Watercraft
"Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading".
Note that this CGL exclusion requires that both of two conditions be met in order for the exclusion to be triggered:
1.       The auto must be owned, maintained, used, or entrusted to others by an insured, AND
2.       Owned or operated by or rented or loaned to an insured.
If the independent contractor’s auto is not “owned or operated by” a CGL insured or “rented or loaned to” a CGL insured, then the CGL policy should respond. But even if that's the case, from a belt and suspenders approach, all commercial insureds should have both CGL and BAP coverage, the latter for the H/NO exposure if they do not own autos.
Last Updated: July 30, 2015
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