An agent insures a tree removal service on ISO general liability form CG 00 01 04 13. The insured rents a power crane mounted on the back of a truck to lift a downed tree. When the tree is being lifted, the boom on the crane breaks, causing the tree to fall on a structure.
The insured files a claim. But the adjuster excludes coverage based on the CGL policy’s definition of "mobile equipment," clause f:
“Mobile equipment” does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered “autos”.
Q: Definition 12. d, however, clearly describes this equipment as mobile equipment. Considering the equipment was being operated as a power crane at the time of the loss and not as an auto, should the Mobile Equipment exclusion apply?
Response 1: Loss caused by movement of the licensed vehicle is auto. Loss caused by operation of the crane while the licensed vehicle is stationary is CGL.
Response 2: Here is the Mobile Equipment exclusion:
However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos":
(1) Equipment designed primarily for:
(a) Snow removal;
(b) Road maintenance, but not construction or resurfacing; or
(c) Street cleaning;
(2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and
(3) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment
A crane mounted to the back of a truck does not constitute any of the equipment detailed the exclusion and is therefore not excluded. The truck wasn't being used at the time; it was stationary. The crane was being used, so it should be covered.
Response 3: It's painfully obvious that this adjuster does not understand the CGL. If they read the definition of "auto" and "mobile equipment" together, they would see only the over-the-road exposure is excluded. The CGL is very clear that the operation of equipment attached to an "auto" is covered by the policy. You need to elevate this to a claims supervisor.
Response 4: The adjuster is wrong. The definition of "mobile equipment" is one part of the coverage equation; the other is the exclusion itself:
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".
This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occurrence" which caused the "bodily injury" or "property damage" involved the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft that is owned or operated by or rented or loaned to any insured.
This exclusion does not apply to:
(1) A watercraft while ashore on premises you own or rent;
(2) A watercraft you do not own that is:
(a) Less than 26 feet long; and
(b) Not being used to carry persons or property for a charge;
(3) Parking an "auto" on, or on the ways next to, premises you own or rent, provided the "auto" is not owned by or rented or loaned to you or the insured;
(4) Liability assumed under any "insured contract" for the ownership, maintenance or use of aircraft or watercraft; or
(5) "Bodily injury" or "property damage" arising out of:
(a) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of "mobile equipment" if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged; or
(b) The operation of any of the machinery or equipment listed in Paragraph f.(2) or f.(3) of the definition of "mobile equipment".
In other words, the crane vehicle is an "auto" when being driven on the road, but "mobile equipment" when being operated.
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