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Food Truck Not an Auto Under CGL Policy

The California Court of Appeal, Second Appellate District, held that the “mobile equipment exception” to the automobile exclusion in a commercial general liability (CGL) policy applied and obligated the insurer to defend and indemnify its insured in connection with a lawsuit filed by the lessee of its food trucks after she was burned from hot oil in the food truck’s fryer.  The court reasoned that the core functional identity of the food truck emerges when it operates as a mobile kitchen at specified locations. 

In American States Ins. Co. v. Travelers Prop. Cas. Co. of Amer., decided Jan. 27, Royal Catering Co. was insured under a commercial auto policy issued by American States and a CGL policy issued by Travelers.  Royal owned a fleet of food trucks that it leased to operators who prepared and sold food.  The underlying plaintiff was injured when the food truck she leased was involved in an accident and hot oil from the fryer burned her. 

American States sought a declaration that the Travelers CGL policy applied to the loss.  That policy contained an exclusion that precluded coverage for bodily injury arising out of the use of an auto.  However, the exclusion contained an exception for mobile equipment, defined as “vehicles … maintained primarily for purposes other than the transportation of persons or cargo.” 

In holding that the food truck was mobile equipment and not an auto, the court stated that the food truck’s primary purpose was for something other than transportation of a person or cargo.  The court also held that the CGL policy designated certain vehicles with permanently attached equipment as autos and could have included food trucks in that definition if it intended to exclude them from coverage.

Additionally, the court held the completed operations exclusion in the commercial auto policy precluded coverage thereunder.  Specifically, the court reasoned that the completed operations exclusion precludes coverage for bodily injury arising out of the insured’s work after that work has been completed.  As the lawsuit against Royal sought damages for bodily injury sustained after the food truck was leased, the court held the exclusion applied because Royal’s work was furnishing the food truck and it was deemed completed when the plaintiff leased and operated the truck. 

Click here for the opinion.

The opinion in American States Ins. Co. v. Travelers Prop. Cas. Co. of Amer., (2014) 2014 Cal.App. LEXIS 74, 14 C.D.O.S. 940, is not final.  It may be withdrawn from publication, modified on rehearing, or review may be granted by the California Supreme Court.  These events would render the opinion unavailable for use as legal authority in California state courts.

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Jordan S. Altura