Coverage for Attached Equipment Not in Operation Excluded

A clause excluding coverage for damage arising out of the operation of attached equipment did not apply where the equipment was in use but not being directly controlled at the time of the accident.

Dadey v. Insurance Corp. of British Columbia, [2014] B.C.J. No. 2118, August 15, 2014, British Columbia Supreme Court, R.W. Jenkins J.

The insured owned a mobile crane service. It was hired to use the crane to move large rolls of conveyor belt a distance of approximately thirty feet to another area where the rolls were to be held by the crane and unrolled by other equipment. The insured was lifting a roll with the crane and backing the truck into position along a slope when the roll, which was still attached to the crane, fell off the deck of the truck, pulling the truck and crane over onto one side. The falling crane struck a nearby vehicle causing damage.

The insured claimed indemnity from the motor vehicle insurer for the costs incurred to fix the crushed vehicle. The insurer denied coverage based on a term in the policy excluding coverage for “damage arising, directly or indirectly, out of the operation of attached equipment at a site where the attached equipment is being operated…”

The issue before the court was whether the damage to the nearby vehicle was caused by the operation of the crane as opposed to the operation of the truck. First, the court concluded the words “directly or indirectly” modified the words “damages arising” rather than the words “out of the operation of”. Accordingly, the policy did not exclude coverage for damages arising out of the indirect operation of the attached equipment as argued by the insurer. The court then went on to consider whether the crane was operating at the time of the accident. The court held that the grammatical and ordinary sense of the word limited operation to the time when the crane was actually being directly controlled. As the crane was locked and not being directly controlled at the time of the accident, it was not being operated for the purposes of the exclusion clause. The court concluded, although the crane may have been in “use” at the time of the accident, it was not in “operation” and so the exclusion clause did not apply. The insured was entitled to indemnification for the damage to the nearby vehicle.

This case was originally summarized by Djuna M. Field of Harper Grey LLP.

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