A recent discussion highlights the limitations of Commercial General Liability (CGL) insurance when it comes to auto-related incidents. Many businesses assume their CGL policy will cover accidents involving vehicles, but this is often not the case.
CGL policies typically exclude coverage for any accidents involving vehicles owned or operated by an insured party. This means if a business member uses their own vehicle for work-related tasks and causes an accident, the CGL policy might not provide protection. For example, if a church member uses their minivan to transport elderly parishioners and gets into an accident, the church could be held liable. However, if the driver is considered an insured under the church’s policy, coverage may not apply because the vehicle is owned by an insured.
The situation becomes even more complicated when additional insureds are involved. A recent case involved a landlord who added a tenant and its employees as additional insureds on their CGL policy. When a tenant’s employee accidentally injured a customer in the parking lot, both the tenant and the landlord faced lawsuits. The tenant had no coverage under its own CGL policy because the employee was considered an insured. The landlord’s claim was also denied for the same reason, as the employee was included in their policy as well.
This scenario illustrates the importance of having proper auto coverage, regardless of whether a business owns vehicles. Relying solely on a CGL policy can create gaps in coverage, especially when additional insureds are added. Businesses should consider obtaining a separate auto policy to ensure they are adequately protected against potential claims.
Experts emphasize that businesses need to be aware of these coverage limitations. Adding other entities as additional insureds can increase risk and dilute coverage. It’s crucial for businesses to review their insurance policies carefully to avoid unexpected liabilities.