COMPARE: MOBILE EQUIPMENT– ISO COMMERCIAL GENERAL LIABILITY TO ISO BUSINESS AUTO LIABILITY

(April 2019)

INTRODUCTION

The liability exposure for mobile equipment is covered under both the Business Auto Policy (BAP) and under the Commercial General Liability (CGL) Coverage Form, but the forms are designed so that the same equipment should not be covered under both at the same time. Because of the confusion this can cause, in this article we will attempt to explain when mobile equipment is covered under which form and why.

THE DEFINITION OF MOBILE EQUIPMENT

The definition of mobile equipment in both forms is exhaustive but not inclusive. This is because of the usage of the term "types." The American Heritage College Dictionary defines it to mean several things that have in common traits or characteristics that distinguish them as a group. It is also an example or model that has the ideal features of a group or class. The equipment in the definition of mobile equipment is not exhaustive but illustrates and gives examples of the "types" of equipment to be treated this way.

Note: This definition is the same in both coverage forms.

Mobile Equipment is any of the following types of land vehicles. Any machinery or equipment that is attached to the vehicle is also considered mobile equipment:

• Equipment or vehicles designed for and mainly used off public roads. The selected wording is chosen intentionally and carefully. If this equipment or vehicle must cross a public road or occasionally travel on a portion of a public road to reach a job site, it is still considered mobile equipment. Therefore, to be mobile equipment, its design must be for the intended purpose of being off the public roads and it must also be mainly used in that way.
• Equipment or vehicles expected to be used solely on or next to premises the insured owns or rents. As in the previous item, when the vehicle must cross a public road, or occasionally travel on a portion of a road, say to obtain gas or repairs, it is still considered to be mobile equipment. However, the word is “next” so the vehicle cannot travel far.

Notice the difference in this wording from the above. The equipment is not required to be designed for off road use. As an example, a pickup truck that is used only on the premises is mobile equipment – not auto.

• Any equipment or vehicle that operates on crawler treads
• Vehicles maintained primarily to give mobility to certain permanently mounted equipment. These vehicles can be self-propelled or not. The equipment that must be permanently mounted is power cranes, shovels, loaders, diggers, or drills, as well as types of road construction or resurfacing equipment that includes graders, scrapers, or rollers.
• Vehicles that are not self-propelled and not described above but that provide mobility to certain permanently mounted equipment. There are two types of permanently mounted equipment described in this definition. The first type is air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting, well servicing equipment, and similar items. The other type is devices that lower or raise workers, such as cherry pickers.
• The last category is very broad and attempts to tie up some loose ends. Vehicles not described in the first five items are mobile equipment if their primary purpose is other than to transport persons or cargo. Examples of this type of equipment are trailers that have been modified by contractors to haul permanently attached machinery and equipment such as hot tar buckets or concrete mixers.

This item is subject to additional limitations. Vehicles that are self-propelled and that have any of the following items permanently attached are auto and not mobile equipment:

• Primarily designed to remove snow, provide road maintenance, or clean streets
• Devices that lower or raise workers, such as cherry pickers
• Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting, well servicing equipment, and similar items

THE DEFINITION OF AUTO

An auto is a land motor vehicle, trailer, or semi-trailer that is designed for travel on public roads. Machinery and equipment that is attached to the auto is also considered auto.

Other land vehicles that would not be considered autos are defined as auto if they are subject to compulsory or financial responsibility laws or motor vehicle laws wherever they are principally garaged or licensed.

Mobile equipment is not auto.

Note: This definition is the same in both coverage forms.

WHEN IS CERTAIN EQUIPMENT CONSIDERED AUTO AND NOT MOBILE EQUIPMENT?

Reviewing the two definitions together clarifies when vehicles that appear to be mobile equipment are actually auto. Vehicles that appear to meet the definition of mobile equipment are considered auto in the following situations:

1. If the vehicle is self-propelled and has one or more of the following types of permanently attached equipment:

• Equipment designed to be used primarily for snow removal, road maintenance (excluding construction or resurfacing), or street cleaning equipment (such as street and parking lot sweepers)
• Devices used to lower or raise workers such as cherry pickers when mounted on an automobile or truck chassis.

Note: Vehicles with these devices are auto when the vehicle is on an automobile or truck chassis but are mobile equipment when the vehicle is a trailer or other non-self-propelled equipment.

• Air compressors, pumps, generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well servicing equipment

2. If the vehicle would be considered mobile equipment except that it is subject to a state compulsory or financial responsibility motor vehicle law where it is garaged. This means that even though the piece of equipment meets all other definitions of mobile equipment it is defined as an auto due to the individual state licensing rules. This means that what is considered mobile equipment in one state is considered auto in another.

WHAT POLICY WORDING IS USED TO KEEP COVERAGE ON JUST ONE POLICY

1. CG 00 01–Commercial General Liability Coverage Form contains two exclusions to prevent duplication.

• Exclusion g. Aircraft, Auto or Watercraft excludes coverage for auto except for three mobile equipment exceptions. All exceptions relate to damage caused by the equipment mounted on the vehicle but grant no coverage for the damage caused by the actual vehicle itself. The damage caused by the vehicle continues to be covered as auto.
• Exclusion h. Mobile Equipment excludes coverage for damage that is caused by an insured owned, operated, rented or loaned auto while it is transporting mobile equipment.

2. CA 00 01–Business Auto Coverage Form provides coverage in two parts of Section I–Covered Autos.

• In Paragraph A. Description of Covered Auto Designation Symbols, Symbol 19 provides coverage for all mobile equipment types that are subject to compulsory or financial responsibility law.
• Paragraph C. Certain Trailers, Mobile Equipment and Temporary Substitute Autos coverage applies to any mobile equipment that is being carried or towed by a covered auto.

There are no exclusions on the auto policy because only liability for autos within the Description of Auto Designation Symbols is provided.

Related Articles:

CA 00 01–Business Auto Coverage Form Analysis

CG 00 01 and CG 00 02–Commercial General Liability Coverage Forms Analysis

CONCLUSION

The current editions of both coverage forms are designed and arranged to make the wording and coverage provided consistent and compatible. This approach provides coverage under one of the coverage forms under circumstances that the other coverage form excludes and vice-versa. As a result, the insured should not be concerned with gaps in coverage. However, it is extremely important to understand how revisions and updates that occur with each new edition of each of these coverage forms impact the coverage. This works well when all insurance companies are using the most current edition of ISO forms. However, companies often delay adopting edition updates. It is therefore important to compare the CGL and BAP coverage form edition dates to determine if the dates are current and, if not, review the definitions and exclusions described above for possible gaps that may occur because of the differences in edition dates.