Mobile equipment vs. auto

Bulldozers, farm machinery and forklifts! Oh my! Where will protection come from? Is it your business auto policy or your commercial general liability policy?

In most cases, it will be fairly easy to make this determination, but sometimes it gets complicated. Of course, it won’t be a critical distinction if the same insurance company writes both policies. In that case, each policy has the same definition of mobile equipment and autos, so any land vehicle will fall on one side or the other; and the common insurer will have no option but to pay the claim. However, the limits of these policies may be different, so that could be something to consider.

In addition, the premium you pay will be decided by which policy the vehicle is assigned. Mobile equipment is included in the overall premium of the CGL policy. Autos are rated on a per-vehicle basis. Naturally, you will want to place as many vehicles as possible on the CGL side in order to limit your premium expense.

If the BAP and the CGL policies are written by different insurance companies, there is potential for conflict if a claim occurs. You don’t want to wait until this happens before making the mobile equipment vs. auto determination. Whether for rating purposes or for coverage purposes, it is a good idea to attempt to settle the matter up front.

Most insurance companies have adopted policy language that stipulate a vehicle to be an auto when it is subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged. If not subject to a compulsory or financial responsibility law, then you need to dig deeper into the policy definitions. Our agency will assist you with this task. Give us a call, and let’s first try to get both your BAP and CGL policy with the same insurer. Then we can make sure you pay the appropriate premium.