Coverage Question: How are items covered by insurance that are damaged while being loaded and unload

This is an interesting situation that we’ve had arise a couple of times with some of our restoration contractor clients. The company will be unloading customers’ goods and they damage the property or other nearby items (i.e. a wall or other vehicle). Unfortunately, as simple as the situation and claim sounds, the insurance coverage can be a bit convoluted.

Here’s the various ways this type of scenario is typically covered:

Situation 1: Cutomer’s property is damaged while being unloaded. Coverage for this scenario is not found on a general liability policy or business auto policy. Actually, the coverage for this scenario is found through a specialty policy called bailee’s coverage. This type of policy provides coverage for property in your “care, custody or control.” This type of coverage is common for businesses that have customer’s property in their control on a regular basis like moving, delivery or repair companies.

Situation 2: Adjacent property like a wall or vehicle is damaged while unloading customer’s property. Though general liability typically covers property damage, in this scenario the business auto policy will pick up the claim (in most cases). As long as the property is being unloaded by hand or a hand dolly, this is considered “normal use” of the vehicle and the claim will be covered by the business auto policy and excluded on the general liability policy. However, if the property is being unloaded by something else like a forklift, the claim will actually be covered by the general liability policy because this is no longer “normal use” of the vehicle.

As you can see properly covering a claim as simple as unloading or moving customers' property can actually be difficult to insure properly. This is why we recommend that you partner with an agency that specializes in your operations and understands the risks associated with them.