A collision involving a delivery van has triggered a coverage dispute that now threatens the financial stability of a mid-sized catering company operating in the Edmonton area. The company, which has been in business for 11 years, provides corporate catering services to businesses throughout the region, delivering prepared meals, equipment, and supplies to client locations for meetings, conferences, and special events. The operation relies on a mixed fleet arrangement that includes 3 company-owned delivery vans and regular use of employees' personal vehicles when demand exceeds fleet capacity or when staff travel to client sites for consultations and event coordination.
The company-owned vans were insured under a commercial automobile policy purchased 4 years ago when the business expanded its delivery operations. The policy was placed through a commercial insurance broker and covers the 3 scheduled vehicles for various business uses including delivery of goods. The company also carried a commercial general liability policy for its catering operations, but the owner understood this policy to extend to all vehicle-related exposures arising from business activities.
The collision occurred when a long-time employee was transporting catering supplies and serving equipment to a corporate event in a personal vehicle. The employee had been with the company for 6 years and regularly used their own car for work-related deliveries when the company vans were unavailable or when smaller loads made a personal vehicle more practical. The employee's personal automobile policy was a standard individual policy with no commercial use endorsements. The accident resulted in significant property damage to 2 other vehicles and injuries to 3 people, with total claimed damages approaching $340,000.
When the employee's personal auto insurer investigated the claim, it determined that the vehicle was being used for business purposes at the time of the collision and denied coverage under the business use exclusion. The catering company's commercial auto policy did not respond because the employee's personal vehicle was not a scheduled vehicle under that policy. The question of whether the company carried non-owned automobile coverage, and if so whether it would respond to this loss, became the central issue in the dispute.
Compounding the coverage question, the commercial auto insurer has raised concerns about driver management practices for the 3 company-owned vans. Several employees had been operating those vehicles without having been disclosed to the insurer, and at least 1 driver had a driving record that would likely have affected underwriting decisions had it been reported. The business now faces potential exposure on multiple fronts: the uninsured liability from the collision involving the employee's personal vehicle, questions about whether coverage for the company-owned fleet remains intact, and the broader question of how the business should have structured its vehicle insurance program from the outset.