Commercial Automobile Policy (CAP)

Flashcards covering key terminology, policy forms, coverage sections, symbol designations, conditions, and regulations of the Commercial Automobile Policy (CAP).

Commercial Automobile Policy (CAP)

An insurance policy providing coverage for a business's auto loss exposures, including liability and physical damage, which can be issued as a stand-alone policy or as a coverage part within a Commercial Package Policy (CPP).

Owned Auto

A motor vehicle that the business owns.

Hired Auto

A motor vehicle that is leased or rented by the business.

Nonowned Auto

A motor vehicle that the business might borrow, rather than own, lease, or rent.

Covered Auto

A land motor vehicle, trailer, or semitrailer designed for travel on public roads, specifically excluding mobile equipment.

Section I – Covered Autos

The section of a commercial auto policy that establishes and defines numerical symbols used to specify which categories of autos are protected under each coverage.

Section II – Covered Autos Liability Coverage

The policy section providing coverage for bodily injury (including death), property damage to others, and pollution clean-up expenses arising from the operation, maintenance, or business use of a covered auto.

Section III – Physical Damage Coverage

The policy section covering property loss exposures resulting in physical damage to the insured's covered autos, including collision, comprehensive, specified causes of loss, and towing and labor.

Specified Causes of Loss Coverage

A limited form of comprehensive physical damage coverage that pays for loss to a covered auto caused by specific named perils: fire, lightning, theft, explosion, flood, earthquake, windstorm, hail, and vandalism.

Section IV – Policy Conditions

The section of a commercial auto policy detailing general provisions that apply to the entire contract, including duties after an accident, legal action terms, and subrogation.

Section V – Definitions

The section of a commercial auto policy containing definitions that clarify key terms used throughout the policy contract.

Business Auto Policy (BAP)

The most widely used commercial auto coverage form for general businesses, which excludes auto businesses (such as dealers and repair shops) and motor carriers for hire.

Symbol 1

The BAP coverage symbol designating "Any Auto" for coverage.

Symbol 2

The BAP coverage symbol designating "Owned Autos Only."

Symbol 3

The BAP coverage symbol designating "Owned Private Passenger Autos Only."

Symbol 4

The BAP coverage symbol designating "Owned Autos other than Private Passenger Autos Only."

Symbol 5

The BAP coverage symbol designating "Owned Autos Subject to No-Fault Laws."

Symbol 6

The BAP coverage symbol designating "Owned Autos Subject to Compulsory Uninsured Motorists Laws."

Symbol 7

The BAP coverage symbol designating "Specifically Described Autos" listed in the declarations.

Symbol 8

The BAP coverage symbol designating "Hired Autos Only."

Symbol 9

The BAP coverage symbol designating "Non-Owned Vehicles Only."

BAP Supplementary Payments

Payments provided under Section II in addition to liability limits, including claim defense expenses, up to $2,000$ for bail bonds, bond attachment costs, insured's loss of earnings up to $250$ per day, taxed court costs (excluding attorney fees/expenses), and post-judgment interest.

Out-of-State Coverage Extension

A BAP provision stating that when a covered auto is operated away from its licensing state, liability limits automatically increase to meet the jurisdiction's legal minimums, and required compulsory coverages (such as no-fault) are provided.

BAP Other Insurance Condition

A policy condition specifying that coverage under the BAP is primary for owned covered autos and excess for nonowned covered autos.

Premium Audit

A condition under which the initial premium is an estimate paid in advance, allowing the insurer to audit the insured's books and records after policy expiration to adjust the premium based on actual exposure.

BAP Coverage Territory

The territory within which covered losses must occur, defined as the United States, its territories and possessions (e.g., Guam, American Virgin Islands), Puerto Rico, and Canada; Mexico is explicitly excluded.

Auto Dealers / Garage Coverage Form

A commercial coverage form designed for businesses that sell, service, repair, park, or store autos, covering risks arising out of garage operations that cannot be insured under a standard BAP alone.

Symbol 30

A Garage Coverage form symbol providing coverage for any customer's land motor vehicle, trailer, or semitrailer left with the insured for service, repair, storage, or safekeeping.

Garage Operations

The ownership, maintenance, or use of locations for garage business (including repair shops, maintenance shops, and auto storage facilities), adjoining access roads, covered autos, and all operations necessary or incidental to the garage business.

Section III – Garagekeepers Coverage

Bailee coverage within the Garage Coverage form that pays for damages to customers' autos or auto equipment while left in the insured's care, custody, or control for attending, servicing, repairing, parking, or storing.

Customer's Auto

A land motor vehicle, trailer, or semitrailer lawfully in the insured's possession for service, repair, storage, or safekeeping, including vehicles left by employees and household members who pay for services.

Trucker

A person or organization in the business of transporting goods, materials, or commodities for others.

Common Carrier

A carrier that offers its transport services to the general public and is held legally liable for the cargo it carries, including loss caused by an act of God.

Contract Carrier

A commercial transportation provider that hauls property exclusively for organizations or individuals who have entered into a specific contract with them.

Private Carrier

A commercial entity that transports its own property using its own trucks rather than transporting property of others for hire.

Trailer Interchange Coverage

Section III of the Truckers Coverage form, which pays for property damage to non-owned trailers or associated equipment while in the insured's possession under a trailer interchange agreement.

Motor Carrier Coverage Form

A commercial auto coverage form designed for organizations transporting goods they have manufactured or goods produced by other parties, offering broader coverage than the Truckers Coverage form.

Motor Carrier Act of 1980

Federal legislation that deregulated the trucking industry, broadly defined motor carriers, and mandated minimum public liability insurance requirements ranging from $750,000$ to $5\text{ million}$.

MCS-90 Endorsement

A mandatory federal policy endorsement attached to a motor carrier's insurance policy to certify compliance with the financial responsibility requirements of the Motor Carrier Act of 1980.