AD Banker Ch.10 - Commercial Auto

Business Auto Coverage Form (BAP)

The Business Auto Coverage Form is used to cover the autos owned by or used by a business, including owned, leased, hired, rented, or borrowed private passenger autos, trucks, trailers, and semitrailers. It also provides liability coverage for trailers being towed by a covered vehicle, but does not provide automatic coverage for physical damage to trailers. Nonowned vehicles may be covered if they are used in the course of the insured's business (e.g. the personal auto of an employee used on the insured's behalf).

Note: Vehicles that are sold, stored, or repaired for others are insured on the garage coverage form.

The following 10 symbols designate what type of coverage is provided by the policy.

Symbol 1: Any Auto

Symbol 2: Owned Autos Only

Symbol 3: Owned Private Passenger Autos Only

Symbol 4: Owned Autos Other Than Private Passenger Autos Only

Symbol 5: Owned Autos Subject to No Fault

Symbol 6: Owned Autos Subject to a Compulsory Uninsured Motorist Law

Symbol 7: Specifically Described Autos - Autos itemized in the declarations

Symbol 8: Hired Autos Only - Only those autos the insured leases, hires, rents or borrows, except any auto the insured leases, hires, rents, or borrows from an employee.

Symbol 9: Nonowned Autos Only - Only those autos the insured does not own, lease, hire, or borrow, which are used in connection with the insured's business. This includes autos owned by an employee of the insured, or a member of the employee's household.

Symbol 19: Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law - triggers protection for autos that are land vehicles that would qualify under the definition of "mobile equipment" and are required to be licensed and registered to be operated on public roadways. This symbol is necessary since mobile equipment is excluded from the definition of "auto" under the Business Auto Policy.

Symbol 1

Any Auto

Symbol 2

Owned Autos Only

Symbol 3

Owned Private Passenger Autos Only

Symbol 4

Owned Autos Other Than Private Passenger Autos Only

Symbol 5

Owned Autos Subject to No Fault

Symbol 6

Owned Autos Subject to a Compulsory Uninsured Motorist Law

Symbol 7

Specifically Described Autos - Autos itemized in the declarations

Symbol 8

Hired Autos Only - Only those autos the insured leases, hires, rents or borrows, except any auto the insured leases, hires, rents, or borrows from an employee.

Symbol 9

Nonowned Autos Only - Only those autos the insured does not own, lease, hire, or borrow, which are used in connection with the insured's business. This includes autos owned by an employee of the insured, or a member of the employee's household.

Symbol 19

Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law - triggers protection for autos that are land vehicles that would qualify under the definition of "mobile equipment" and are required to be licensed and registered to be operated on public roadways. This symbol is necessary since mobile equipment is excluded from the definition of "auto" under the Business Auto Policy.

Section II - Liability Coverage

This section provides coverage for bodily injury or property damage caused by an accident for which the insured is legally responsible.

Who is an Insured

The following are considered insureds under the policy:

The named insured for any covered vehicle

Anyone else using an owned, borrowed, or hired vehicle with the named insured's permission

Anyone liable for the conduct of an insured

Supplementary Payments

In addition to liability for Bodily Injury (BI) and Property Damage (PD), the insurer will pay the following, without reducing the limit of liability:

The cost of bail bonds (up to $2,000)

Courts costs (not including attorney fees)

Loss of work (up to $250/day)

Other reasonable expenses incurred by the insured at the insurer's request

Out-of-State Coverage Extensions

The insurer will increase the limit of insurance for liability coverage to meet the compulsory limit of another jurisdiction where the covered auto is being used.

Business Auto Coverage Form (BAP)

Exclusions

Expected or intended injury

Contractual Liability (except insured contracts)

Workers' Compensation

Care, Custody, or Control

Handling of Property (before the property is moved or removed from the covered auto)

Operations

Completed Operations

Pollution

War

Racing

Workers' Compensation

Any liability that would be covered under a Workers' Compensation policy

Care, Custody, or Control

Damage to property owned or transported by the insured, or in the insured's care, custody, or control

Handling of Property (before the property is moved or removed from the covered auto)

Operations

BI or PD arising out of the operation of mobile equipment

Completed Operations

BI or PD arising out of the insured's work, after that work has been completed or abandoned

Pollution

BI or PD arising out of the discharge, dispersal, seepage, migration, release or escape of pollutants

Section III - Physical Damage Coverage

There are three types of Physical Damage coverage available:

Collision

Comprehensive

Specified Causes of Loss

Perils for the Specified Causes of Loss coverage include: fire, lightning, explosion, theft, wind, hail, earthquake, flood, mischief or vandalism, and derailment of a conveying vehicle.

Towing

The insurer will pay for towing and labor incurred each time a covered private passenger type auto is disabled. Labor must be performed at the place of disablement.

Glass Breakage - Hitting a Bird or Animal - Falling Objects or Missiles

If the insured carries Comprehensive coverage, the insurer will pay for:

Glass breakage

Loss caused by hitting a bird or animal

Loss caused by falling objects or missiles

Coverage Extension

The insurer will pay up to $20 per day, and up to a maximum of $600, for temporary transportation expenses. Transportation expenses begin 48 hours after the theft of the vehicle.

Garage Coverage Form

Neither the Business Auto policy nor the CGL policies provide the particular coverage necessary for an automobile business such as a dealership or repair facility. General liability policies specifically exclude automobile coverage, and the Business Auto form excludes nonowned autos unless they are involved in the business of the insured.

The Garage Coverage Form is designed to provide automobile liability and physical damage coverage, as well as General Liability Protection for businesses that are engaged in the sale, service, or storage of automobiles. Eligible businesses include automobile sales agencies, repair shops, service stations, storage garages, and public parking places.

Section I - Covered Auto Coverage

The garage coverage form provides a schedule of covered auto designation symbols in a similar fashion to the business auto coverage form. The 10 types of vehicles insured by the business auto coverage form are renamed symbols 21-29, and the garage coverage form also includes two new symbols for vehicles that are unique to the auto business.

Symbol 30 - Autos left with the insured for service, repair, storage, or safekeeping

Symbol 31 - Dealers autos physical damage coverages

Symbol 30

Autos left with the insured for service, repair, storage, or safekeeping

Symbol 31

Dealers autos physical damage coverages

Liability Insurance

Liability insurance for a covered auto covers BI and PD arising out of an accident resulting from the ownership, maintenance, or use of covered autos.

Physical Damage

This coverage pays for physical damage to covered autos. As with the Physical Damage section of the BAP, the insured may select the following coverages:

Comprehensive Coverage

Specified Causes of Loss

Collision Coverage

Perils for Specified Causes of Loss

include fire, lightning, explosion, theft, mischief, windstorm, hail, earthquake, flood, vandalism, or the sinking, burning, collision or derailment of any conveyance transporting the covered auto.

Garagekeepers Coverage

Garagekeepers coverage pays for physical damage to a customer's car that is in the care of the insured. As with the Physical Damage section of the BAP, the insured may select the following coverages:

Comprehensive Coverage

Specified Causes of Loss

Collision Coverage

Perils for Specified Causes of Loss

include fire, lightning, explosion, theft, mischief, or vandalism.

Garagekeepers Coverage

The insured may elect one of the following:

Legal Liability Basis

Direct Excess Basis

Direct Primary Basis

Section II of the Garage Coverage form

provides bodily injury and property damage liability coverage for losses resulting from garage operations.

This coverage broadly resembles the premises and operations coverage of the Commercial General Liability policy. It covers bodily injury, physical damage, advertising injury, and personal injury.

Section III - Acts and Omissions

This coverage pays for damages resulting from an insured's act, error or omission arising out of the conduct of the insured's operations, in the coverage territory during the policy period.

Truckers Coverage Form

This form is patterned after the Business Auto Coverage Form, and is designed for those firms or persons that are in the business of transporting goods for hire. Differences between the Truckers' form and the BAP are outlined below.

Section I - Covered Autos

This Section is similar to Section I of the Business Auto Coverage Form, but also provides symbols for trailers in the insured's possession with a written agreement (Symbol 47), and a symbol for the insured's trailers while in the possession of anyone else under a written agreement (Symbol 48).

Section III - Trailer Interchange Coverage

This is physical damage coverage for those trailers that the insured does not own but has in his/her possession along with a written Trailer Interchange Agreement in which the insured assumes liability for loss to the trailer. Loss of use of such trailers is not covered.

Motor Carrier Coverage Form

While a trucker is defined as someone engaged in the business of transporting property for hire, a motor carrier is engaged in transporting property or passengers. The motor carrier form is a variation of traditional trucker's coverage developed to reflect the risks associated with transporting passengers in addition to cargo.

The Motor Carrier Act of 1980

This federal legislation authorizes the Department of Transportation (DOT) to enforce the financial requirements for motor carriers. The DOT has ruled that a motor carrier must either carry an insurance policy of certain minimum limits, or post a surety bond representing certain financial stability criteria when transporting passengers or cargo. The most common approach is the purchase of insurance.

Note: Common carriers owe a higher degree of care to their passengers than other operators of motor vehicles do.

Selected Commercial Auto Endorsements

Auto Medical Payments Coverage

This endorsement allows the insured to purchase Medical Payments Coverage since the commercial auto forms do not automatically include this coverage.

Coverage is written with a limit per person, per accident, and pays up to the limit for necessary medical and funeral expenses resulting from bodily injury incurred within 3 years of an accident.

Selected Commercial Auto Endorsements

Uninsured Motorists Coverage

This endorsement allows the insured to purchase Uninsured Motorists Coverage since the commercial auto forms do not automatically include this coverage.

The coverage provides payment for bodily injury to the insured and vehicle occupants when struck by an uninsured driver who is legally responsible for the accident.

Selected Commercial Auto Endorsements

Individual Named Insured

This endorsement is used to add family coverage to the Business Auto Coverage Form.

The endorsement is commonly used where a sole proprietor or partner desires to let his/her family members drive their business autos.

When purchased, the endorsement would apply to all family members who are residents.

Mobile Equipment

This is an endorsement that allows mobile equipment such as bulldozers, forklifts, and road construction equipment to be considered as covered autos.

This type of equipment would not normally be covered, except for liability arising while being carried or towed by a covered auto.

Drive Other Car - Broadened Coverage for Named Individuals

This endorsement protects named individuals who do not own the car being used for the business. Employers who want complete assurance they're covered with regard to all employees should add this coverage to their commercial or business auto policy. It is especially intended for employees who do not have a vehicle registered in their own names.

This endorsement provides coverage for bodily injury, property damage and medical payments.

There is no additional charge for covering the named individual's spouse.

The Endorsement for Motor Carrier Policies of Insurance for Public Liability (Form MCS-90)

This endorsement provides evidence of financial responsibility, on behalf of the motor carrier, to the Interstate Commerce Commission (ICC). The endorsement must be included in any policy, and the policy must meet the DOT financial responsibility requirements.