INSURANCE - MID-CONTINENT CASUALTY CO. V. ADVANTAGE MEDICAL ELECTRONICS

Mid-Continent Cas. Co. v. Advantage Medical Electronics, LLC, [Ms. 1140908, Nov. 6, 2015] __ So.3d __ (Ala. 2015). This opinion construes four exclusions in a commercial general liability policy favorably to coverage and affirms a judgment holding that the insurer had a duty to defend. Advantage contracted to load a CT scanner in South Carolina and transport it to Texas. In South Carolina, Advantage contracted with a tow truck operator to load the principal component of the CT scanner on to the tow truck and from there into Advantage’s box truck. While the component was being winched from the tow truck into the box truck, it fell and was destroyed. Mid-Continent raised four exclusions: (1) The “auto” exclusion. Because the tow truck was being used to load the component, the terms of the exclusion did not apply. The court states: “The purpose of the auto exclusion in the CGL policy is to proscribe coverage for liability that should more properly fall under an automobile-liability policy.” (2) The “care, custody, or control” exclusion. Because the component was at least partly under the control of the tow-truck driver, this exclusion did not apply. “The general intent of this exclusion is to avoid coverage under a CGL policy that should be covered separately under property insurance.” (3) The “your work” exclusion. Because there was evidence that the component fell because of a defective bolt attaching a dolly to the gantry, there was evidence that the fall did not occur due to negligence by Advantage. “The purpose of the ‘your work’ exclusion is to prevent coverage for the insured’s own faulty workmanship, a normal risk associated with operating a business. ... The exclusion is intended to prevent liability insurance from becoming a performance bond for the insured’s work.” (4) The “contractual-liability” exclusion. The alleged basis of Advantage’s liability was negligence, not a contractual assumption of liability. “[T]he contractual-liability exclusion relieves an insurer from defending claims against its insured involving indemnity contract liability.” These statements of the purposes of these exclusions could be helpful to refute an insurer’s invocation of such exclusions in other situations involving CGL policies.