Ask Regina: What Business Use Is Excluded in the PAP?

Q. Recently, an IIAT member contacted me about the following scenario. One of their insured’s
was parked and his vehicle was hit by a van owned by a plumbing company. The plumbing company’s adjuster denied the claim because the van was insured on a personal auto policreginay.

The adjuster quoted exclusion A.6. in his denial:  He wrote, “We do not provide Liability Coverage for any person ‘While employed or otherwise engaged in the business or occupation of: a. selling; b. repairing; c. servicing; d. storing; or e. parking.’”

Is this a correct interpretation?

A. No, the adjuster is incorrect and in quoting exclusion A.6. He forgot to read the entire exclusion which says:

“While employed or otherwise engaged in the business of: a. selling; b. repairing; c. servicing; d. storing, or e. parking; vehicles designed for use mainly on public highways. This includes road testing and delivery. Exclusion A.6. does not apply to the ownership, maintenance or use of your covered auto by: 1. you; 2. any family member; or 3. any partner, agent or employee of you or any family member.”

Exclusion A.6. is for garage business use and coverage should be found in a garage policy. If the adjuster had continued reading the exclusion it applies to vehicles, the insured is in the business (garage) of selling, repairing, servicing, storing or parking and it’s doubtful this would apply to a plumbing business.

Another business exclusion in the PAP excludes:maintaining or using any vehicle while that

“Maintaining or using any vehicle while that insured is employed or otherwise engaged in any business (other than farming or ranching) not described in Exclusion A.6. This exclusion (A.7.) does not apply to the maintenance or use of a: a. private passenger auto; b. pickup or van; or c. trailer used with a vehicle described in a. or b. above.”

The primary purpose of this business exclusion is to exclude coverage for business use of a non-owned vehicle larger than a pickup or van. This exclusion is removed by attaching endorsement PP 03 06 Extended Non-Owned Coverage for Named Individual and also would not apply to this loss.

Don’t get stumped. Ask Regina. 
Call her (Mon. – Fri., 7:30 a.m. – 4 p.m.) at 800.880.7428 or e-mail . Her contact information is only a click away from the button in the top right corner on every page of InfoCentral!

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