Mundo Inc. v. Liberty Mut. Group

The First Department decision is an excellent demonstration of two insurance concepts: (1) exclusions; and (2) insurance triggers in an insurance policy. The insurer commenced a declaratory judgment action seeking a declaration that the insurer had an obligation to defend and indemnify it for an underlying action for property damage sustained by a trailer that the insurer was hauling. The insurer issued a business automobile policy to the insured that contained a “Care, Custody or Control” exclusion. The exclusion applied to “[p]roperty damageto property owned or transported by the insured or in the insured’s care, custody or control.” The policy was one for liability and only covered damage to vehicles that were neither owned by the insured, nor being transported by the insurer or otherwise under its care.

The First Department affirmed the Supreme Court holding that granted the insurer’s summary judgment motion dismissing the complaint. The First Department noted that the plaintiff owned the trailer and, therefore, the exclusion precluded the insurer’s duty to defend or indenify under the insurance contract. The Court observed that the declarations page indicated that the plaintiff purchased coverage for “liability,” among other things, not “trailer interchange comprehensive coverage,” physical damage comprehensive coverage” or “physical damage collision coverage.”

The Court also noted that it would reach the same conclusion irrespective of the exclusion issue because the damaged trailer was not the trailer listed on the policy’s schedule of covered automobiles. It rejected the insurer’s argument that the difference in vehicle identification numbers must have been a typographical error. Therefore, the trailer was not covered property and an insured event did not occur.

Search Terms:
business automobile policy
trailer
exclusion
trigger for liability insurance.