Exclusions In Commercial Auto Policies

Here are a few articles for insurance lawyers handling commercial policy cases.

Commercial auto policies often contain business use exclusions that exclude coverage when a scheduled auto is used “in the business” of a lessee.  A policy containing such a provision is effectively know as a “bobtail” or “non-trucking use” policy.  The business use exclusion is often contained within an endorsement and is intended to exclude coverage from the auto owner’s commercial auto policy when a party with whom the truck owner has entered into an exclusive lease hauling agreement has agreed to provide coverage for that auto.  Consequently, when the auto is being operated on behalf of the lessee, the lessee’s liability insurance should be on the risk.  Inclusion of the business use exclusion results in the owner’s insurer owing no duties if an accident occurs while the auto is being operated in furtherance of the lessee’s business.

Under the business use analysis, the driver is almost always an independent contractor and the relevant determination usually is whether he or she is “in the business” of the lessee while “bobtailing” or “deadheading.”  “Bobtailing” means without trailer, while “deadheading” means operation of the vehicle with an empty trailer.  Though similar, a course and scope of employment analysis is not used to determine whether the driver was an employee.  Nonetheless, course and scope analyses such as the “coming and going” and “special mission” doctrines are sometimes used to inform a court’s decision.  Analyzing coverage in almost any factual scenario pertaining to this exclusion is a sliding scale on which the balance can be tipped by a specific, minute fact.

More on this topic in future blogs.