The Towed SUV, the On-Hook Endorsement, and the Dispatcher's Promise
Blue Ridge Towing & Recovery has a business auto policy with Symbol 1 (any auto), a $1,000,000 combined single limit, and a garagekeepers legal liability endorsement with a $150,000 limit marked on-hook only. The company also has a $2,000,000 commercial umbrella. In September, driver Luis hooks a customer's 2021 SUV to the wheel-lift and begins a 12-mile tow. At a railroad crossing, the hydraulic lift fails and the SUV falls onto the tracks, where it is struck by a train and destroyed. The customer's SUV is valued at $68,000. The customer also claims $5,000 for a laptop and tools inside the SUV. Blue Ridge's dispatcher had told the customer that the company carries full coverage for anything that happens to your car. The BAP has no cargo or property-transport coverage.
1. Does the business auto policy's liability coverage pay for the destroyed SUV?
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No. The business auto form excludes property damage to property being transported by the insured or in the insured's care, custody, or control. The SUV was hooked to the wheel-lift and was being towed when it fell, so it was property being transported. The BAP's $1,000,000 CSL applies to liability for bodily injury or damage to other property, not to the customer's towed vehicle. The BAP therefore does not pay for the SUV itself. This is a common gap for towing operators who assume the auto liability limit covers customer vehicles.
2. Does the garagekeepers endorsement respond, and what about the laptop and tools?
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Garagekeepers legal liability responds because the endorsement is on-hook only and the loss occurred while the SUV was hooked to the tow truck. The $150,000 limit is enough for the $68,000 vehicle. The $5,000 claim for the laptop and tools depends on the garagekeepers form. Many forms cover personal effects in the customer's auto, but some exclude them or apply a sublimit. The adjuster should check the endorsement's definition of customer's auto and any personal-effects coverage. A deductible may also apply. If the loss had occurred in the storage yard after the SUV was unhooked, the on-hook-only endorsement would not respond.
3. Does the umbrella respond, and does the dispatcher's statement create coverage?
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The umbrella sits above scheduled underlying coverage. If the garagekeepers limit is $150,000 and the SUV loss is $68,000, the loss does not reach the umbrella. The dispatcher's statement that Blue Ridge carries full coverage does not change the policy. Oral statements generally cannot expand coverage, and a court would look to the written contract. If the garagekeepers endorsement were off-hook only, the loss would not be covered at all, and the umbrella would not fill that gap unless it expressly covered garagekeepers and its self-insured retention was met. The agency should correct the dispatcher's script and confirm the on-hook versus off-hook wording with the insured.