Agribusiness and Farm Insurance Specialist (AFIS ) Part 3. Farm Auto. The Agribusiness Auto Exposure

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1 Agribusiness and Farm Insurance Specialist (AFIS ) Part 3 Farm Auto The Agribusiness Auto Exposure Who is an insured? What is a covered auto? When is mobile equipment considered auto Where is it covered? The Family Auto policy is designed for Private Passenger Autos. No coverage for non owned or hired trucks that do not meet the definition. Our focus is the BAP which can accommodate both personal and commercial vehicles 2 1

2 Auto Exposures Owned / Leased / Rented / Borrowed Third party liability Injury Damage to property Injury to driver and passenger Medical bills Injury caused by uninsured or underinsured drivers Damage to or theft of and loss of use of vehicle 3 Auto Exposures Employees Use of company vehicle Use of personal vehicle on company business Use of rental vehicle Rented by company Rented by employee Loading or unloading property 4 2

3 Business Auto Policy Eligibility All Agribusinesses except: Garage risks o Body shop o Repair o Parking o Dealer Motor carrier o Hauls for others Sole proprietor eligible but has personal auto option (not necessarily a good option) 5 Business Auto Policy Eligibility All businesses except: Garage risks o Body shop o Repair o Parking o Dealer Motor carrier o Hauls for others Sole proprietor eligible but has personal auto option (not necessarily a good option) 6 3

4 Types of Agribusiness Activities Farming Harvesting Servicing Transportation of Equipment Materials and supplies Products People 7 Family Individual Other Partnership Corporation LLC Living on Farm Fixed Location Many Locations Types of Legal Entities 8 4

5 Liability Auto vs. Farm/General Liability Auto or mobile equipment Loading and unloading Having others provide transportation of o Products o Equipment o People o Materials and supplies Personal Auto vs. Business Auto Our focus is on the Business Auto Policy. 9 Coverage Structure The Business Auto Policy } 1. Common Policy Declarations 2. Common Policy Conditions 3. Business Auto Declarations 4. Business Auto Coverage 5. Endorsements 10 5

6 Important Concepts Covered Persons Covered Types of Vehicles Vehicle Usage Locations of garaging 11 Eligible Types of Vehicles Any land vehicle designed for use on public roads Motorcycle Private passenger vehicle Truck Tractor/trailer units Motorized equipment Typically off road Subject to financial responsibility or other insurance laws 12 6

7 Classifying Vehicles Most insurance companies use the ISO Commercial Lines Manual Industry standard Establishes rating factors to charge proper premium Type and size of vehicle Vehicle Use Value of vehicle 13 Property Coverage Auto Physical Damage Auto or Mobile Equipment Power Unit or Attached Equipment Cause of Loss Payment of Damages 14 7

8 The Insured Family Farm Owned Individually Auto PPA s or Pick ups? 15 Coverage for the Family Farm Personal Auto Coverage Form Protect autos listed Protect family members Extends medical coverage o PIP Extends selected coverage o UM IUM 16 8

9 Personal Auto Coverage Forms PP0001 Only units less than 10,000 GVW No Hauling One location operation Units used personally Business transportation of family member 17 An Auto Accident Happens If It Was Your Insured, What Would They Expect? Coverage!!! Factors to Ensure Coverage Liability o The insured o Covered autos o Limits Other coverage o Physical damage o UM/MP 18 9

10 Personal Auto vs. Business Auto Insured Other Than Individual Larger Units (10,000 plus) Hauls Other Than Owned, small equipment, limited supplies Hauls for Others Coverage BACF only or both? 19 Important Terms and Concepts Agribusiness can have many different types of vehicles used for different purposes The policy can be designed to cover owned, rented, hired, leased or borrowed vehicles BAP is designed to cover a wide spectrum of exposures and customer needs Third party liability Injury to vehicle occupants Physical damage to covered autos 20 10

11 BAP Coverages Liability Coverage Pays defense and damages if the insured is sued because of a car accident Medical Payments Pays medical bills and funeral expenses for occupants of the insured vehicle or in limited cases when outside the vehicle Added by endorsement 21 BAP Coverages Uninsured / Underinsured Motorists Physical Damage Pays damages for injury to the insured or physical damage to the insured vehicle if the other party is at fault (or partially at fault) and does not have liability insurance or has low limits of liability coverage Added by endorsement Pays for damage to an insured vehicle Comprehensive coverage / Specific Causes of Loss Collision coverage 22 11

12 Who is The Insured? The Insured Is Properly Addressed by Name and Legal Type Item One of the Dec And Selection of Symbols to Define What Will be Covered Autos and What Coverages Will Apply to These Covered Autos Item Two of the Dec If These Two Steps Are Not Taken, Then the Policy Will Not Respond 23 NAMED INSURED Item One You in Policy Is any entity listed as named insured on the Named Insured line on Dec Any and all Type o Corporation (Inc.) Best Business only o Limited Liability Company (LLC) Same as corporation o Partnership A legal entity (do not name the individual partners) o Individual Proprietor; DBA 24 12

13 Item One If a named insured is an individual, the policy must consider activities of the person as well as the business This applies any time an individual is a named insured No need to name the owners of the business, corporation, LLC, partnership for their liability arising out of the ownership of the legal entities on the named insured line You give them no more coverage than they already have Of course, if the named insured is an individual, you have to name them The DBA Trade name is not a legal entity The individual and all of the individual s activities must be considered 25 Insured Persons Named Insured(s) Employees of the Named Insured(s) Permissive Drivers 26 13

14 Uncovered Parties Owner of hired or borrowed vehicle Employee driving personal vehicle A garage employee driving an insured vehicle A non employee loading or unloading an insured vehicle A partner (named insured is partnership) driving personally owned vehicle 27 Item Two What is a Covered Auto? Schedule of Coverage and Covered Autos Package Liability and Property To Effect Coverage a Number Must be Listed by Each Coverage Desired Estimate Total Premium 28 14

15 Purpose of Symbols Indicates which autos are covered autos To show which autos are provided what coverages First is the request on the application to the underwriter Policy is issued with symbols verify as requested on the application A critical step in establishing the proper coverage 29 Symbol 1 Any auto Used for liability coverage only Covered Autos Always request this symbol as it provides the broadest coverage Underwriter might not always provide Next best use Symbols 2, 8 and 9 (you can ask for more than one or different ones in each coverage area) 30 15

16 Symbol 2 Covered Autos Any owned auto Used for liability, medical payments, uninsured / underinsured motorists and physical damage Symbol 3 Any owned private passenger auto Not a common symbol to use Symbol 4 Any owned auto other than private passenger Not a common symbol to use 31 Other Covered Autos Symbols Symbol 5 Compulsory No fault Applies only to No Fault States Symbol 6 Compulsory Uninsured Motorists 32 16

17 Covered Autos Symbol 7 Any specified auto Used for liability, medical payments, uninsured / underinsured motorists and physical damage This is a more restrictive symbol (more in a minute) Symbol 8 Any auto the named insured hires, rents or borrows. Must use to protect the insured if symbol 1 not available. 33 Covered Autos Symbol 9 Autos the named insured does not own, lease, hire, rent or borrow. Must be used in connection with named insured s business. Includes employee owned vehicles while being used in named insured s business or personal affairs. Des not cover the employee. Must use to protect the insured if symbol 1 not available

18 Covered Autos Symbol 19 Used for liability coverage Covers any vehicle for liability when subject to motor vehicle insurance or financial responsibility laws Example is a skip loader, back hoe, fork lift No need if using Symbol 1 for liability Always add if using Symbols other than 1 35 Newly Acquired Autos Symbols 1, 2, 3, 4, 5, 6 Automatic Coverage for the policy period Recommend adding as soon as insured advises Must be added at renewal Any auto Symbol 7 Very Limited Coverage ONLY IF: Replaces a vehicle with that coverage OR All Owned Are Covered AND Notified Within 30 Days 36 18

19 Newly Acquired Units Coverage for autos that are acquired after inception of policy that insurance company has not been notified about This provision allows the auto to be considered a covered auto Either units added to fleet (increased number of units) or unit replacing an insured auto (trade in) Newly acquired units o When using symbols that have triggering of any or owned, all autos that meet these descriptions will be covered for those coverages automatically without notice to company until policy expiration subject to audit 37 Newly Acquired Units o But if (7) is used to trigger coverage, to be a covered auto, the auto must be specified in Item Three, because it is newly added, it is not specified yet. To have coverage for those autos newly acquired, the insured must meet these conditions Additional units (Units added to fleet Increased numbers) To have coverage, all autos owned by you must be insured by the company and for all coverages desired Replacement units Same coverages that the replaced unit had If conditions above are met for coverages, then must notify insurer within 30 days of acquiring the new autos or coverage expires This is a limitation for Symbol 7 only 38 19

20 Coverage Extensions Certain trailers, mobile equipment and temporary substitute autos o Liability coverage only Service trailer Covered without being listed on policy if using (7) No premium charged if using (1), (2), (4) for liability Mobile equipment being carried or towed is treated like any other cargo Damage done by ME falling off or coming loose to public is auto loss No coverage for damaged equipment Mini hired car If (1) or (8) not used, then limited protection for temporary substitute An auto not owned replaces an insured covered auto that is owned while the covered auto is out of service 39 Premium Considerations Coverage Extensions Trailer less than 2,000 lb. load capacity will have no liability premium charge Hired auto used to replace insured auto that is out of service will not be subject to liability hired auto premium if you have for physical damage coverage, then there will be a premium charge These premiums only apply to liability 40 20

21 An example for symbol 10 Make Up Your Own Symbol Use CA9954 Covered Auto Designation Symbol If proprietorship: We want to provide no coverage for PPA not used in business o Any auto except PPA not used in insured s business that is covered on insured s personal auto policy o Any auto except PPA 41 Symbols You only want to meet federal insurance requirements o Any auto 10,000 lb. GVW or larger Special o Any auto except the one driven by the drunk brother in law my wife wants me to hire Most clients with fleets do not want physical damage coverage on all owned autos but do not want the limitation of Symbol 7 o Any owned auto 20 or newer including newly acquired 42 21

22 Symbols - Review To provide protection for Liability for all exposures must use Symbol 1 Any auto Best for insured How about the company? o Know the insured o Have adequate rate and audit to get premium part of risk excluded Individual (DBA s) Try 4 or 10 Possible problem with 1 o For company Personal autos o For insured Premium audit 43 All owned 2 Coverage - Review Liability Must own at time of accident No coverage for non owned Physical Damage Use if insured wants all owned autos covered If not, try 10 2, 8 and 9 do not equal 1 for liability All owned PPA s 3 Use for Medical Payments and possibly Uninsured Motorists All insureds have exposure from non owned Must use 8 and 9 for liability if not 1 Physical Damage 8 for comprehensive and collision add to any other used 44 22

23 Coverage Review Specified 7 Must be found in policy at time of loss or no coverage unless it is: Newly acquired Must meet these conditions to have coverage o All autos insured for coverage or o Replacements Had coverage o 30 day notice required to continue Considerations At time of loss to have coverage triggered by Symbol 7 auto must be specified in policy or must meet above conditions 45 Item Three Schedule of Covered Autos You Own If Symbol 7 then must be described here to have coverage Other than listing Rating Radius Use Size Coverage 46 23

24 Hired Car and Nonowned Coverage Only included in Symbol ( 1, 8 or 9 ) CA9954 with any auto coverage will have premium for coverage when only 1 is used No need to add 8 and 9 Premium considerations Primary Operated by insured Hired Used by insured Contingency Operated by others for insured Owner of non owned auto used by insured has insurance and has properly protected the insured Having someone else do hauling for insured Also need hired car to provide physical damage for autos of others 47 Insuring Agreement Liability (Coverage) Paragraph One Direct Damages Policy will pay what insured legally must pay for BI and PD where insurance applies, and if a covered auto caused accident (named insured and symbols must be done correctly or no coverage) Paragraph Two Coverage for pollution cost or expense Paragraph Three Duty to defend. Very important, we now have an attorney on retainer

25 Insuring Agreement Liability (Coverage) Defined terms Section V Insured The you on the Dec plus anyone who qualifies as who is an insured Policy applies separately to each qualifying Suits Any means of settlement of dispute Bodily injury Includes sickness or disease and even death Accident Same as occurrence 49 Insuring Agreement Liability (Coverage) Property Damage Pays to others where insured is liable: Direct Fix what was damaged Loss of use Payment because property cannot be used Autos Only requirement is to be designed for travel on road No number of wheels required But not mobile equipment Trailer All types 50 25

26 Added to GL/FL definition 2004 However, "mobile equipment" does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos"

27 Mobile Equipment or Auto? 53 Auto vs. Mobile Equipment Key Consideration Auto Any land vehicle subject to financial responsibility laws or required to be licensed Mobile equipment Listed items except for above 54 27

28 Underwriting Review mobile equipment If licensed or should be then must be addressed for Auto Liability and could be for Physical Damage in the Auto Form Concern if not licensed but should have been States differ on what must be licensed or subject to financial responsibility requirements Concern if General Liability Form is not the 12/04 or 12/07 edition 55 What do you think? 56 28

29 This should be no problem 57 This could be! What covered auto symbol could help? 58 29

30 Pollution Pollution Damage Coverage Bodily injury and property damage Pollution damage coverage found in the first insuring agreement when not excluded Direct damage and loss of use Clean up of pollutants Coverage in a second insuring agreement to assure clean up will be paid if loss meets definition of covered pollution cost or expense 59 Pollution Three areas property causing pollution damage can come from Property that is cargo In insured s CCC Property being carried does damage Property used for service of vehicle Fluids that make covered auto go Escapes from designed containers and does damage Property that is someone else s property Third party s property that an insured causes to escape does damage 60 30

31 Covered Pollution Cost excerpt We will also pay all sums an "insured" legally must pay as a "covered pollution cost or expense" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of covered "autos". However, we will only pay for the "covered pollution cost or expense" if there is either "bodily injury" or "property damage" to which this insurance applies that is caused by the same "accident 61 Pollution Covered Pollution Cost and Expense Defined Term Exclusion 11 Pollution o Same for both defined items and exclusions o Buy back CA9948. A critical endorsement for the Agribusiness account. If loss is caused by something the insured is carrying (cargo) No coverage o Except for Fluids for servicing of auto or Someone s property not in insured s CCC 62 31

32 Covered fluids apply to fuels, lubricants, fluids, exhaust gases or other similar "pollutants" that are needed for or result from the normal electrical, hydraulic or mechanical functioning of the covered "auto" or its parts, 63 Pollution Coverage Auto Form Pollution Coverage Add Endorsement CA9948 to extend to cargo. Always included in coverages and quoted premium by some insurer Added if requested for a premium charge by some carries Some states mandate coverage for units domiciled and tagged in that state New York, Vermont, Virginia Amendatory Endorsement New Jersey, Massachusetts, Kentucky, Kansas To state financial limits 64 32

33 Accident spills more than fuel Lets think about a solution and discuss. 65 Some cargo deserves to be salvaged! 66 33

34 Some is just plain fishy! 67 Truck carrying french fries through Grapevine crashes, catches fire (L.A.Times 12/2013) A truck carrying about 40,000 pounds of French fries went off the freeway and caught fire on the Grapevine early Sunday morning. Two lanes of traffic were blocked for most of the morning. CHP officials said the truck had to be unloaded before it could be turned upright and towed. The CA endorsement would surely help here. In related news further to the north

35 Do you want fries with that? Sticky situation: A truck carrying thousands of bottles of ketchup has crashed in Reno, Nevada, covering the freeway with the Heinz sauce 69 Cleanup covered? Clear away: State transportation crews used snowplows to help clear the highway connecting Reno to Lake Tahoe 70 35

36 Pollution Coverage You need to see what is required for pollution coverage in your state You need to ask every insurer you do business with how they approach pollution coverage You must offer the coverage Even if the cost is higher Offer both Quote It is available, it is a question of cost That should be the insured s option Not yours. Reviewed further in AFIS 5 71 MCS90 Endorsement to Policy to Meet MCSA80 Requirements Required for both exempt and non exempt for hire motor insurers operating in interstate commerce and certain intrastate insurers of hazardous materials 91X FILING WITH FMCSA PLEDGES COMPLIANCE WITH MCA80 Insurer agrees to pay to protect the public even if no coverage in policy (even when insured is using an auto that is not a covered auto under the policy) Reimbursement by insured for any payment beyond coverage 72 36

37 MCS90 Issues Suretyship vs. Coverage No coverage Applicability to the driver No just MC and no other MC Applicability to punitive damages No Duty to defend None in MCS90 Claims for Reimbursement insurer discretion Cancellation 36 days Stacking Not with new court rulings 73 MCS 90 Excerpt However, all terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company. The insured agrees to reimburse the company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement

38 State Oversight Unified Carrier Registration (UCR) States cannot put additional requirements in place on a federal registered motor carrier No longer have to send any FR to state if motor carrier has met the requirements of a federal registered motor carrier with few exceptions 75 Auto Forms Who Is An Insured Provision The policy will pay all sums an insured legally must pay Insured defined term Means any person or organization qualifying as an insured in the who is an insured provision... So, anyone qualifying will be an insured 76 38

39 Auto Forms Who Is An Insured Provision The following are insureds You The entity on the dec sheet (Item One) for any covered auto (defined by use of symbol) Anyone Else Employee, driver, officer (No matter who they are, they are insured) While using with your (the entity on dec sheet) permission if covered auto (again symbol) Owned, hired, or borrowed by the insured 77 Auto Forms Who Is An Insured Provision TWO CONCERNS Who is using the covered auto o Driver selection important to underwriting What permission do they have Employee can take home at night and park in driver s yard Now that employee got it home, can they take it to the store, bar, or let others use it? Need to have insured s state rules in writing as to what the scope of permission the user of the covered auto has 78 39

40 Auto Forms Who Is An Insured Provision The you and permissive user are an insured for a covered auto you own, hire or borrow Except The owners of non owned covered autos will not be an insured. The insured (you and permissive user) will be protected but not the owner of the non owned covered auto Any owner of non owned covered auto Employee for employee s personally owned auto Partner, partnership and members of LLC s for autos owned individually 79 Auto Forms Who Is An Insured Provision The except takes away coverage for certain others Persons in the garage business even when they have permission from the you to test drive the vehicle o Where do they get coverage? Someone loading and unloading a covered auto Other than employee of insured or permissive user This is needed because of the loading and unloading definition Coverage under GL of business loading and unloading the covered autos 80 40

41 Auto Forms Who Is An Insured Provision The Business Auto Coverage Form includes wording in part c. of the who is an insured provision c. Anyone liable for the conduct of an insured described above but only to the extend of that liability Who does this provision extend coverage to? Insurance Services Office, Inc., Additional Insured Considerations Your insured wants to or is required to add others as insureds on their auto policy and send proof of this because of doing business with them No need to add endorsement They already are an insured because of the vicarious liability wording No additional coverage is provided by endorsements Just send a certificate showing these customers as additional insureds because of provision c. in the Who Is An Insured Provision But, if they must see their name o CA2048 Designated Insured 82 41

42 Additional Insured Considerations BLANKET ADDITIONAL INSURED ALREADY IN POLICIES Vicarious Liability Anyone liable for the conduct of an insured in an auto policy will also be an insured under that policy and will be protected by the policy covering the auto causing the accident Protection for insureds who use non owned autos will be provided by the Vicarious Liability Provision of the Auto policy covering non owned autos being used on their behalf (still they need non owned auto coverage to protect them in excess of others provided protection if other does not respond and have to be made to) o How about non owned auto coverage for customers? o Which one of the customers policies covers them in excess of the insured? 83 Additional Insured Considerations Want to be on the Named Insured line of Item One as insured because of their ownership of the legal entity Why would the owner be named in a suit? Because they were being held vicariously liable for the activities of the business they own which is an insured Therefore they already have all the coverage they need for owning the legal entity You give them no additional coverage by adding them to Item One of the Dec You do complicate the covered auto issue if you do add them 84 42

43 Additional Insured Considerations But if they own the auto personally and titled in business name or they lease or rent the auto and want or are required to provide coverage endorsements to protect them from possibly being held legally liable because of their ownership of the non owned covered auto can add: CA9947 Employee as Lessor CA2001 Lessor Additional Insured and Loss Payee CA9916 Hired Auto Specified as Covered Autos You Own CA9937 Employees as Insureds (Excess) 85 The You on the Dec Who Is An Insured Review Only While Operating a Covered Auto Covered auto? Symbols done correctly The You and Permissive User While Using a Covered Auto No matter on insured business or personal use Covered autos always covered and insured and permissive user will be protected How far does permission go? 86 43

44 Who Is An Insured Review But Not Owner of Hired, Borrowed, Rented or leased Auto Insured will be protected for non owned auto if a covered auto owner of the non owned auto Will not be protected even if covered auto, even if listed on policy But Not Employee for Employee Owned Autos Insured will be protected for non owned only if a covered auto Employee (Owner) of auto will not be protected Even if a covered auto, even if listed on policy Anyone Else Held Vicariously Liable for the Insured 87 Coverage Extensions Supplementary payments Payment in addition to limits of policy. Note! Defense costs for insured are outside the limits! All expenses we incur (includes legal fees) Up to $2,000 for bail bonds Bonds to release attachments Insured s expense ($250 a day earnings) Costs taxed against the insured Interest on judgment 88 44

45 Coverage Extensions Out of state coverage extensions Increase the limit to meet the other states requirements if carrying minimum o Not Motor Carrier Acts Minimum amounts and types of coverages 89 Exclusions No Coverage No coverage for expected or intended injury Knowledge of insured No coverage for liability assumed contractual Except if assumed under an insured contract, therefore, coverage for insured contract 90 45

46 Definition of Insured Contract from Section V Definitions Four incidental contracts 5. Other contracts Broad Form 6. Rental contract hold harmless agreement signed when renting auto Definition does not include the following Contracts involving railroad construction, insured must have Railroad Protective Coverage Contracts involved in trucking 91 Tell The Insured To Buy A Workers Compensation Policy (3) Workers Compensation and other laws No coverage under BA for employees work related injuries Work Comp Policy Needed (4) Employee Indemnification and Employers Liability Coverage under Section B Workers Compensation Policy No coverage under BA for suits from employees work related injuries Work Comp policy Needed Buy Back CA2325 Coverage for Injury to Leased Workers 92 46

47 Tell The Insured To Buy A Workers Compensation Policy (5) Fellow Employee The employee s (insured) Workers Compensation pays for injury to employee (work related injuries) where injury is auto related If employees want to sue each other for job related injuries, the employees own (personal auto) policies will provide them coverage Work Comp Policy Protects the Insured (Employer) Endorsements CA2055 and CA2056 will modify this exclusion 93 Care, Custody or Control No coverage for damage to property that is being carried or in possession of insured Damage to either their own or property of others will not be protected by BA Cargo Policy Covering owned or non owned property needed Symbol 8 for Physical Damage Covering non owned auto in possession of insured 94 47

48 Definition of Coverages between CGL and BA INSURED MUST ALSO HAVE A CGL THESE EXCLUSIONS DEFINE WHERE ONE POLICY COVERAGE STARTS AND THE OTHER POLICY STOPS Exclusion 7 Handling of Property Defines coverage for damage to public (not damage to the cargo) Protection for BI and PD done during the loading and unloading of cargo from a covered auto Conforms with GL coverage Damage done during the complete loading and unloading operation only Excluded before and after the move so during the movement not excluded, therefore, BI and PD done covered under Auto Form during movement of property to and from a covered auto from first handling of property to be moved until property is at final place of unloading 95 Definition of Coverages between CGL and BA Exclusion 8 Limitations of Above No coverage for damage done during the movement of property by mechanical device Exclusion does not apply if device is attached to a covered auto (BI and PD done covered by BA) Exclusion does not apply if movement is by hand truck (BI and PD done covered by BA) Exclusion applies only if the movement is by a device not attached to a covered auto (crane, forklift, front end loaders) Coverage for this BI and PD found under the CGL policy of the owner of the device being used 96 48

49 Definition of Coverages between CGL and BA Exclusion 9 BI and PD Done During Operations of the Equipment of a Defined Auto with the Following Equipment Type Items defined as auto in 6 b and c while equipment is being operated (only items 6 b and c) CGL coverage operation BA coverage road exposure Exclusion 10 Completed Operations Conforms with CGL coverage Movement complete No more coverage under BA Coverage now CGL The BA Form has no completed operations coverage 97 Pollution Exclusion 11 Pollution (Previously discussed) No coverage if pollution BI and PD is caused by insured s cargo There is coverage if pollution BI and PD is caused from fluids for service of a covered auto or from others property Buy back pollution damage caused by Cargo (CA9948) 98 49

50 Other Exclusions Exclusion 12 War No coverage if insured contracted for war Exclusion 13 Racing No coverage for a covered auto if used in racing activities First found in 12/93 Form Same as in Garage Form 99 How Much Will Be Paid? C. Limits Each accident has full limits (no aggregate) but multi insured or multi covered vehicle does not increase limit (no stacking)

51 Section III Physical Damage Coverage Property Coverage Protects auto and its equipment by cause of loss selected 101 Physical Damage The company will pay the damage to a covered auto or equipment Cab, chassis and equipment if damage is done by a selected cause of loss Cause of loss Comprehensive coverage All risks Except (c) Specified cause of loss Named causes of loss that must be what happens to the covered auto or its equipment Collision coverage Added to above causes of loss for complete coverage under comprehensive or the seventh cause of loss under specified

52 Physical Damage Other Towing coverage applies only to PPA A collision with bird/animal/falling item can be claimed under comprehensive if insured wants Less deductible If theft of PP auto, payment after 48 hours $20 a day/$600 max payable No recovery for diminution in value of the auto Repair to same condition but because of accident not worth as much The worth less because of the accident is not recoverable by insured 103 Cause of loss exclusions Physical Damage Following loss not covered o Nuclear Damaged by nuclear explosion o War Damaged during war No coverage for a covered auto for wear and tear o Comprehensive and collision coverage are as close to all risk as can be provided in property coverage in any form. Only cause of loss exclusions are war, nuclear or wear and tear Activities exclusions o Used in professional or organized racing

53 Physical Damage Exclusions Types of property exclusions Tapes CD s Records or other devices Radar detectors Electronic devices not for sound reproduction Electronic accessories not covered if not permanently installed or for operation of auto Buy Back CA9960 Telephone, fax, scanners Everything not part of the radio Property not excluded Permanently installed electrical equipment used for operation of auto is covered New wording on 03/10 Coverage Form 105 Physical Damage Limits of Insurance What amount of dollars will be available to pay damages? Evaluation at time of loss is ACV What one just like it is worth o Cost new shown in dec is not a consideration for recovery o Cost new is premium base only Payment for damaged property will be what covered auto and its equipment is worth at time of loss Same condition and type Cost of repairing or replace o With like kind and quality

54 Physical Damage Limits of Insurance Considerations I want a certain amount of coverage Bank, lease company or insured ask Can we provide coverage where premium base is on limit of insurance? Percent of value of unit and a limit is listed on dec, premium charged is based on o Stated Amount (CA9928) Seller Beware! o This coverage only caps recovery Does not guarantee recovery Does not benefit insured at time of loss, therefore, the request from bank or finance company are not met o Rented or lease agreements May require a certain amount of coverage but there is no means to meet these requirements in standard Auto Form 107 Physical Damage Limits of Insurance GAP coverage has been available in specialty markets or with leasing company, now Endorsement CA2071 Auto Loan/Lease Gap Coverage No guarantee of recovery amount from Auto Physical Damage Deductible Comp deductible not applied to fire or lightning

55 Physical Damage Review Auto and Equipment Covered Cause of Loss Comp and Collision Almost Equals All Risk Cost New Base of Premium Base of Settlement ACV Worth at Time of Loss 109 Duties and Conditions Company has the choice of how to pay for damage Cannot waive subrogation rights after a loss Concealment of material fact can void coverage

56 General Conditions Concealment, Misrepresentation or Fraud Declaim coverage Coverage can be void by insured if there is Material Misrepresentation or Concealment. Other Insurance Provision When auto is involved in an accident How will policy apply? If the auto is an owned auto, the coverage is primary If the auto is a non owned auto, the coverage is excess Trailers track the power units the trailer is attached to Hired Auto Physical Damage, coverage is primary Premium Audit Get dollars for protection Type (rating information from Item Three) Numbers of exposure units 111 Covered Territory USA Puerto Rico Canada Worldwide 30 days* Suit brought in US, PR, or Canada Covered during transit *PPV hired without a driver

57 *Tip! Limited World Wide Coverage Recommend Foreign hired auto coverage. Responds to foreign locus. BAP requires lawsuit to be brought back here. Not likely to happen! 113 Additional Coverages: Medical Payments UM / UIM Added by Endorsement but very common coverage 57

58 Medical Payments Coverage Pays reasonable expenses for medical and funeral services Incurred within 3 years Caused by accident to an insured 115 Uninsured Motorists/Underinsured Motorists Differences Between Personal Auto and Business Auto Always Provide Maximum (Limits) in Personal Auto Coverage Business Auto Could Be Different

59 Uninsured Motorists/Underinsured Motorists How to meet employer s obligation to employee in business For work related injury, loss of income Buy a work comp policy 117 Uninsured Motorists/Underinsured Motorists Does employee have any other legal recourse to employer beyond work comp? What does UM pay? UM A pool of dollars for users of covered auto to pay for their damages by others Meet legal obligation/provide a benefit

60 Uninsured Motorists/Underinsured Motorists More people in auto, more exposure Have insured acknowledge what is being provided 119 Endorsements Some endorsements may me useful to expand or clarify "who is an insured

61 Issue Additional Insured A business partner of the insured wants to be added as Additional Insured to your insured s auto policy Solution Provide the Designated Insured endorsement 121 Issue Leased Auto Insured leases vehicles and the lessor wants the insured to provide primary coverage and to be named on the insured s BAP Solution Use the Lessor Additional Insured and Loss Payee endorsement to provide coverage

62 Issue Employees Lease To Your Insured Your insured s employees use their vehicle on your insured s business and the insured company has agreed to provide auto insurance for the vehicles and has arranged a lease back contract with the employee. Solution Add the Employee as Lessor endorsement. This endorsement provides coverage for the vehicle(s) on a primary basis and covers the employee for all coverages provided on the vehicle, i.e., liability, medical payments, uninsured motorists, physical damage, etc. 123 Issue Hired Autos Insured hires vehicle and renting party requires that the insured provide primary insurance and name them on the insured s auto policy. Solution Add Hired Autos Specified As Covered Autos You Own

63 Issue Employees Rent Cars Your insured has employees that rent vehicles for business use. Solution Add Employee Hired Auto to cover the Physical Damage and clarify Liability coverage For Liability coverage, Symbol 1 will cover the hired auto or Symbol More Than One Employee In Vehicle Issue The insured has vehicles that may be occupied by two or more employees. Solution Add the Fellow Employee endorsement to provide coverage for an employee causing injury to fellow employee

64 Issue No Personal Auto Insurance Your insured is a sole proprietorship and the owner(s) of the firm are provided a vehicle insured under the BAP and do not have any personal auto insurance. Solution Add Individual Named Insured Provide coverage similar to personal auto insurance Name the individual and legal spouse Can extend all coverage areas: Liability, Medical Payments, Uninsured Motorists, Physical Damage 127 Issue No Personal Auto Insurance Your insured is a Partnership, LLP, LLC or Corporation and some of the key employees of the firm are provided a vehicle insured under the BAP and do not have any personal auto insurance. Solution Add Drive Other Car coverage Covers the named person when driving a rented, hired or borrowed vehicle Name the employee, legal spouse and resident children Can extend all coverage areas: Liability, Medical Payments, Uninsured Motorists, Physical Damage

65 Employee Needs Liability Coverage Issue Your insured wants to provide coverage for an employee when operating a vehicle not owned, hired or borrowed by the insured. Solution Add the Employee as Insured endorsement This endorsement is only providing Liability coverage 129 Issue Personal Use Vehicles Your insured has personal use vehicles on the BAP that are covered for physical damage. Solution Add the Rental Reimbursement endorsement to provide coverage for a rental car for the insured to use if their covered auto is not usable due to a covered loss under physical damage

66 Comments on Regulation The following is an overview of DOT regulations. The Motor Carrier Reform Act of 1980 changed the rules to apply to what is being hauled on Interstate Highways and eliminated the distinction between Carriers for Hire. The Agribusiness account may be subject to these requirements if hauling hazardous material. 131 What Type Of Business Does The Federal Government Consider A Motor Carrier? Anyone using a vehicle for commercial purposes in interstate that has a GVW of 10,001 pounds or larger Does this include private? Yes What is interstate? o When items being transported cross state lines Either the unit is providing transportation or the unit is used to provide local movement of an interstate shipment o If the definition is met, must have a DOT# and meet responsibilities under UCR o Could have to meet financial responsibility requirements

67 The Federal Government Requires A Motor Carrier To Register DOT Registration (DOT Number) 700,000 Plus This is for overseeing motor carrier safety and operation compliance It affects all interstate motor carriers To obtain a DOT number at present, no financial responsibility requirements have to be filed Some might have to meet the MCS90 requirements If DOT#, then required to be part of the Unified Carrier Registration (UCR) Subject to safety rules and information in Safer Pay a fee based on the number of interstate trucks operated Fees are from $76 (0 2 units) to $73,346 (100+ units) 133 Regulations Only DOT number is required to be displayed on truck The basis of the Uniform Registration System is the DOT number No difference between regulated or exempt for hire carriers No difference between common or contract motor carriers Everyone with a DOT# will pay a fee to operate

68 Drivers and Safety Safety oversight Driver selection o If unit is 26,001 GVW or larger, driver must have a CDL Operating standards/safety monitoring and rating The use of non owned autos as a part of the business of a for hire motor carrier Insureds using their autos for someone else Insureds using someone else s autos as a part of their business o Permanent and exclusive o One load at a time 135 Brief (Very Brief) Overview Both IFTA and IRP requirements occur for trucks over 26,001 GVW or larger that cross state lines, however, the UCR fees are based on units 10,001 GVW or larger that cross state lines for commerce purposes

69 Current Regulation For Financial Responsibility When a motor carrier approaches someone to provide insurance for them, the first and most important service provided to them is to get them legal Meet all the government requirements! Motor carriers must gain FMCSA s permission to haul for others, processed goods in intestate commerce today about 170,000 (MC number) These are interstate motor carriers who haul regulated goods and have met their financial responsibility requirements by having a 91X sent to the federal government and MCS90 attached to policy This financial responsibility requirement affects vehicles 10,000 GVW or larger The promise to protect the public is for all operations with authority to haul even if unit is not known by carrier and promise is continuous 137 SAFERSYS.ORG Access by: MC/DOT/Name o Snapshot Overview of motor carrier Who, what and insurance

70 Compliance, Safety, Accountability (CSA) Safety Measurement System (SMS) Roadside inspection Basic Unsafe driving, fatigued driving, driver fitness, drug and alcohol, vehicle maintenance, cargo loading/securement (including most violations related to hazardous materials) and crash history Peer Group 65%/80% = Alert Interventions Driver controls PEP Electronic equipment