We run across many companies that believe a trailer is covered along with their other contractors’ equipment.
Most insurance policies intended to cover contractors’ tools and equipment have specific exclusions for trailers or anything that is licensed for road use. The reason for this exclusion is that the most appropriate form of insurance for a trailer is found on the business auto policy that also covers the towing vehicle(s).
In spite of this exclusion, we still find instances where an insurance company adds a trailer to an equipment policy. In the event of loss, the policyholder runs the risk of having their claim denied – even though the trailer is described as an insured piece of equipment and a premium is charged. Why? Describing an object and payment of a premium does not change the language contained within the policy. The exclusion still exists.
There are two areas of concern when it comes to insurance for a trailer; physical damage and liability.
Above, we have talked about risks of physical damage or loss to the trailer itself. This includes things like collision, theft, and falling objects, and is often thought to be the biggest, if not the only, concern. Protection against physical damage exposures is addressed by the comprehensive and collision coverage on a business auto policy in the same way they would apply to motorized vehicles.
The larger danger is with liability risks. For example, imagine a trailer breaking loose from the towing car or truck and running into something causing damage, or into somebody causing serious injury. A business auto policy automatically extends liability coverage from the towing vehicle to a trailer when the trailer’s load capacity is less than 2,000 pounds. If the trailer's load capacity exceeds 2,000 pounds liability coverage is provided in exchange for a small premium charge.
Don’t rely on a contractor’s equipment policy to cover a trailer! There is NO liability protection available under a contractors’ equipment policy form and there is a good chance the policy excludes trailers for physical damage.
Image Courtesy of Haulmark Trailers