An insured is leaving her house in an employer-owned company car and backs into her fence. She files a claim with the business auto policy carrier, but the carrier denies it.
An insured is leaving her house in an employer-owned company car and backs into her fence. She files a claim with the business auto policy carrier, but the carrier denies it, citing the following language:
B. Exclusions
This insurance does not apply to any of the following:
6. Care, Custody Or Control
"Property damage" to or "covered pollution cost or expense" involving property owned or transported by the "insured" or in the "insured's" care, custody or control. But this exclusion does not apply to liability assumed under a sidetrack agreement.
Combined with:
1. Who Is An Insured
The following are "insureds":
b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except:
(1) The owner or anyone else from whom you hire or borrow a covered "auto".
This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own.
(2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household.
Q: Is this denial correct?
A: No—as far as I can tell, this denial is improper. It is safe to assume that the employee's house is not owned by or in the care, custody or control of the insured. Even though the driver is an insured, the exclusion applies only if the damage is to the insured’s property.
Consider the following hypothetical scenario. A homeowner is the president and only stockholder of a closely held corporation, ABC, Inc.
ABC, Inc. has a BAP that covers 10 vehicles, one of which is driven by the president. While leaving her house, she smashes into her garage, which is attached to the house she and her husband own in their personal names. Does the exclusion apply?
No—it still does not apply. Here’s why: ABC, Inc. owns the vehicle; the individual owns the house. These are two separate persons under the law.
The exclusion applies only when the insured—in your scenario, the driver’s employer—owns the affected property. Since the company doesn’t own the employee’s house or have care, custody or control of the house, the BAP owes for the claim.
Courts have declared a difference between “an" or “any" and “the." Policy language is king—the words in a policy have specific meaning and apply in specific ways. Don't allow adjusters to make them equal.
Chris Boggs is executive director of the Big “I” Virtual University (VU).
This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.
