Does the Business Auto Policy Cover Unregistered Construction Equipment?

Question from an IIABNY member: I am hoping you can clarify the following issue.  We have several insureds who may incidentally drive a piece of equipment (which is not licensed or registered for road use) along a road.  Since this is so incidental, they are willing to take the chance with the NYS law and not have this equipment licensed. 

I have assumed that as long as the insured has symbol 1 on their policy (form CA 00 01 03 06 applies),  it is ok that this equipment is not specifically listed on the policy.

Answer: Here’s my line of thought: 

• Per the ISO BAP (CA 00 01 03 06), Symbol 1 means any “auto”, as the policy defines that term. 
  
• The policy defines “auto” as:

1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or

2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.

However, "auto" does not include "mobile equipment".

• The definition of “mobile equipment” states, “Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered ‘autos’.” (emphasis added) Note that the definition does not say that the vehicle must be registered; it says that the vehicle must be subject to a compulsory liability insurance law, which in this state means that it must be registered with the DMV. When your insured’s vehicles are used on public roads, they automatically become subject to New York’s compulsory financial responsibility law (N.Y. Vehicle and Traffic Law Section 312.) Therefore, the policy considers the vehicles to be “autos” in this situation, and since the dec page shows symbol 1 for Liability Coverage, the policy should afford coverage for the insured’s legal liability for injuries or damages resulting from their use. 

• Lastly, I checked the mandatory endorsement New York Changes in Business Auto, Business Auto Physical Damage, Motor Carrier And Truckers Coverage Forms (CA 01 12 04 09) to see if it changes any of these terms, and it does modify the definition of “mobile equipment.” It tacks on the following changes:

However, the operation of:

a.       (Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well servicing equipment); or

b.       Machinery or equipment that is on, 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

is considered operation of “mobile equipment” and not operation of an “auto.”

So, when a vehicle is being driven and its attached equipment is not in use, it’s an auto. When it’s stationary or slow-moving and its attached earth loader is in use, then it’s mobile equipment.

To sum up, I think your interpretation is correct, but coverage could switch between the auto and GL policies several times in a given workday. If a claim involving one of these vehicles ever occurs, it might be best (from an E&O loss prevention standpoint) to submit claims under both policies and let the carriers determine which one applies.

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Comments

[Mattwi]

Would it not be best to clarify it with the insurance company direct, then should a claim arise, you've got previous to fall back on??

[Tim Dodge]

Matt, There's nothing wrong with doing that, but the policy is binding, whereas an "understanding" between agent and insurance company is not. The person who clarifies the issue with you might not still be in that job when a claim occurs. Purely from an E&O loss control perspective, I still think it's best to notify both carriers. Although New York law has changed to make it more difficult for carriers to deny coverage for late notice, the carriers can still do it if they can show that their ability to handle a claim has been prejudiced. Notifying both carriers should take that issue off the table.

[Chris Joy]

Hi Tim,

I was wondering if you knew of any "crash" P & C licensing courses for individuals seeking their NY state insurance license?

Thanks,
Chris Joy

[Bygningsentreprise]

Very informative article. I hope that you will post more and thank you for sharing.

[Construction Equipment Insurance]

This post is very good. Most of the Construction Equipment Owners have this problem. Recently one of my friend, having the same problem and I suggested him to visit http://www.constructionequipmentinsurance.net/ site for more information about Equipment Insurance policies. Now I am going to suggest him to read this post. Definitely the information provided here, will help him.

Thank you.
Aisha.

[Tim Dodge]

Aisha,
Thank you for the plug. I'm glad you found this helpful.

Tim

[ca car coverage]

Mobile Equipment is covered while being carried or pulled by a covered auto. Mobile equipment is defined the same way in the Business Auto Coverage Form as it is in the Commercial General Liability Coverage Form. The goal is to eliminate gaps in coverage as well as duplicate coverage by defining it the same way in both forms

[pipe lifting equipment]

I think it is best to discuss it with your contractor and insurance company. A construction equipment being transported from one place to another or passing to any hiway and any other public roads should have a special authority and/or clearance.

[Tom Kevlin]

Does the Business Auto Policy Cover Unregistered Construction Equipment?
The problem with relying on auto symbol #1 is that "you have coverage for "auto's" that you acquire of the type described for the remainder of the policy period." Once the policy renews coverage ends. Vehicle needs to be scheduled and a premium charge made.

[Tim Dodge]

Tom,

I agree. There's no substitute for an insurance check at renewal, and that includes a check for changes to the vehicle schedule.

Tim

[Vocational Course Florida]

It really is best to submit claims under both policies. You can never know to which of these 2 your claim is more relevant, and relying only on one may cause financial losses.

[Mining equipment Parts]

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