The Lunch Detour: Auto Liability Meets the Public Adjuster's Scope
A Frederick landscaping LLC owns two pickup trucks. Its commercial auto policy has $1 million liability, $250,000 uninsured motorist, and $50,000 collision with a $1,000 deductible. Its CGL policy has $1 million each occurrence and an auto exclusion. An employee driving a company truck to pick up mulch rear-ends a minivan, injuring the driver and damaging the truck. At the time, the employee had diverted two miles to his home for lunch. The minivan driver demands $250,000 for medical bills and lost wages. The LLC owner asks a public adjuster to handle the whole thing, including the bodily injury demand and the truck repair. The insurer reserves rights on the liability claim and questions whether the employee was in the course of employment. The truck's repair estimate is $18,000.
1. Which coverage responds to the $18,000 truck repair, and what part of this file may the public adjuster handle?
Read the worked answer
The commercial auto policy's collision coverage responds to the LLC's owned pickup, subject to the $1,000 deductible, so the net first-party payment is $17,000 before salvage. The CGL policy does not pay because it excludes auto liability and physical damage to owned autos. The public adjuster may handle the first-party physical damage claim and help document the repair, but Maryland public adjuster authority is limited to property claims. The adjuster should not negotiate the minivan driver's bodily injury claim, give legal advice, or sign a release on the liability claim. The adjuster should tell the owner to tender the bodily injury demand to the auto liability carrier and to consult coverage counsel if the carrier reserves rights.
2. Analyze whether the employee's two-mile lunch detour affects auto liability coverage and the employer's potential vicarious liability.
Read the worked answer
The auto policy covers the owned pickup and its permissive driver, so the liability insurer's coverage does not disappear simply because the employee made a two-mile detour. The employer's vicarious liability under respondeat superior depends on whether the employee was still within the scope of employment. Maryland courts generally treat a minor deviation for a personal errand as within the scope, while a substantial frolic is not. The insurer has a duty to defend if there is any potential for coverage, and that duty is broader than the duty to indemnify. The reservation of rights creates a potential conflict, so the insurer may need independent counsel for the employer. The public adjuster should stay out of the liability analysis and let the auto liability carrier and counsel handle it.
3. What should the adjuster tell the owner about the CGL auto exclusion and the risk of the insurer denying the bodily injury claim?
Read the worked answer
The CGL auto exclusion bars coverage for bodily injury arising out of the use of an auto the business owns or operates, so the CGL insurer is unlikely to defend the minivan driver's claim. The auto liability carrier is the primary responder. If the auto carrier denies because it concludes the employee was on a personal frolic, the employer may face a coverage gap, but the employer still has a duty to defend itself and should not ignore the lawsuit. The adjuster should advise the owner to preserve the auto policy, the employee's statement, the lunch timeline, and any dispatch records; to notify both carriers in writing; and to retain defense counsel if suit is filed. The adjuster should not promise that the auto policy will pay or that the CGL policy will drop down.