The Landscaper's Employee and the Personal Car
Dale owns a landscaping business. His commercial auto policy covers two dump trucks and includes hired and non-owned auto liability with a $1,000,000 limit. His CGL policy has a $1,000,000 occurrence limit and the standard auto exclusion. Employee Luis uses his personal car to pick up mulch from a supplier while on the clock. Luis is reimbursed mileage but is not required to use his car daily. Luis's personal auto policy has 100/300/50 liability and a standard business-use exclusion for vehicles furnished for regular use. At an intersection, Luis runs a red light and injures another driver, who sues Luis and Dale for $250,000. The claimant's attorney argues Dale's commercial auto and CGL both apply.
1. Which liability policy is primary for Luis and for Dale? Explain hired/non-owned and other-insurance reasoning.
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Luis's personal auto policy likely responds first for Luis. Occasional business errands generally do not trigger the 'vehicle furnished for regular use' exclusion, because Luis is not required to use the car daily and the employer does not furnish it. His 100/300/50 limits exceed the $250,000 claim.
Dale's commercial auto hired/non-owned coverage is designed for business use of employee-owned autos. Its 'other insurance' clause usually makes it excess over the employee's personal auto. For Dale's vicarious liability, the commercial auto policy can respond, but the order depends on the policy's other-insurance wording. The practical approach is to tender to Luis's PAP as primary for Luis and to Dale's commercial auto for Dale, with the commercial auto excess where required.
2. Does Dale's CGL respond to the vicarious liability claim? Why?
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No. The CGL policy contains the standard auto exclusion, which excludes bodily injury arising out of the ownership, maintenance, or use of an auto. The claim against Dale is based on Luis's auto accident, so the CGL auto exclusion applies. The commercial auto policy, not the CGL, is the correct coverage source.
3. If Luis had been driving a company dump truck, how would the analysis change?
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The commercial auto policy would be primary because the vehicle is owned and insured by Dale. Luis's personal auto policy would likely not apply, or would apply only excess, because the dump truck is a vehicle furnished for regular use by the employer. The CGL auto exclusion would still bar coverage for the auto liability claim. Dale's exposure would be handled under the commercial auto policy, with the same need to cooperate and tender the claim promptly.