Commercial Casualty II

Transcription

1 Commercial Casualty II Course Introduction p1 Welcome Insurance and risk professionals today need learning choices from many sources. As time and economic pressures bear down on everyone, The National Alliance continues to push forward with excellent online programs, carefully designed to fulfill your professional development needs. In the pages that follow, be sure to read and understand the requirements for completing your course. If you have any questions, you may contact us via the link on the bottom navigation bar. I hope you enjoy your journey into online learning. Thank you for choosing a National Alliance online course! William T. Hold, Ph.D., CIC, CPCU, CLU President Course Introduction p2 1

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5 Certified Insurance Service Representatives (CISR) Most students who select this course have already made the decision to achieve the Certified Insurance Service Representatives (CISR) Designation - the best recognized credential for insurance service representatives and other insurance professionals in the industry today. The National Alliance for Insurance Education & Research gave recognition to the first CISR designee in Today, over 28,000 insurance professionals proudly wear the CISR pin. You can learn more about it by using the link provided below maybe it s right for you! Course Introduction Page 4 Course Home Page Use the home symbol on the bottom left navigation bar to access this page during your course. Links to instructions and other helpful information are provided on this page. Help Desk Hours: 8:30 am to 5:00 pm Central Time Phone Contact: Copyright. The Society of Certified Insurance Service Representatives, Incorporated. All rights reserved. This material includes copyrighted material of ISO Properties, Inc. with its permission. This course or any part thereof may not be reproduced, copied, republished, uploaded, posted, transmitted, or distributed in any form or by any means or stored in any information retrieval system without the express written consent of the National Alliance for Insurance Education and Research and the Society of CISR. All trademarks and services marks are proprietary to The Society of CISR, or its affiliates or licensees. 5

6 Course Introduction p5 REQUIRED READING FOR FLORIDA RESIDENTS ONLY: An entity that is required to be licensed or registered with the Florida Office of Insurance Regulation but is operating without the proper authorization is identified as an unauthorized insurer. All persons have the responsibility of conducting reasonable research to ensure they are not writing policies or placing business with an unauthorized insurer. Any person who, directly or indirectly, aid or represent an unauthorized insurer can lose their licenses or face other disciplinary sanctions. Please see section , Florida Statutes, to read the laws. Lack of careful screening can result in significant financial loss to Florida consumers due to unpaid claims and/or theft of premiums. Under Florida law, a person can be charged with a third-degree felony and also held liable for any unpaid claims and refund of premiums when representing an unauthorized insurer. It is the person s responsibility to give fair and accurate information regarding the companies they represent. Curriculum Intro p1 (2IC) Welcome! CISR Liability Thank you for selecting the Certified Insurance Service Representatives (CISR) Commercial Casualty II course. This course will provide an overview of Business Auto, Workers Compensation and Excess Liability/Commercial Umbrella. More than ever, insurance professionals need to increase their technical knowledge of commercial casualty coverage. This course will provide a solid foundation and is ideal if your career involves any of the following: describing coverages to a client placing coverage with an insurance company reviewing policies handling claims analyzing the broad range of products being offered by insurance companies exchanging information between producers, company underwriters, adjusters pursuing sales leads or cross selling Curriculum Intro p2 (2IC) Course Study and Exam Preparation Have you ever thought about how you learn? The study aids listed below will help you determine your progress and test your understanding of concepts and examples presented in the course. 6

7 Learning Objectives: Learning Objectives are designed for managing your own learning. The learning objectives for the course are listed at the beginning of each topic. The learning objectives are indicated throughout the course pages as well. At the end of the course, you will have the opportunity to read the learning objectives again, and see how confident you feel about each one. Self Quizzes Self quizzes are another learning management tool. You are required to pass each self-quiz with a score of 70 or above before moving forward in the course, and you can launch a self-quiz as many times as needed. To print the score page of your self- quiz, click on Assessment Results, then right click on the page. The Assessment Results page makes an excellent study aid. Glossary Glossary terms and definitions are critical to insurance professionals, and a key study aid for your online course. To define a term, click on the Glossary link above. Definitions of newly introduced terms will also be included on the course pages. Knowledge Checks Knowledge Checks are application level questions. By attempting to apply the concepts of the course, you will better prepare yourself for the final exam. Make sure you attempt each knowledge check in the course. Course Mentor And don't forget to the Course Mentor with your questions about the curriculum. Our faculty members are distinguished producers and risk managers who currently work in the insurance industry. The mentors are happy to explain and clarify the concepts in the course. They will return your on or before the next business day. Be sure to use the Frequently Asked Questions (FAQ) Page to review guides for commonly asked questions. ISO Forms v. Company or State Specific Forms Insurance companies often use policy forms other than the ISO Commercial Casualty Exposure forms. These policies may incorporate language similar to the ISO Forms in their contract and endorsement language. You must also be aware that state specific forms often contain different provisions than the ISO Standard Forms. Be sure to look for differences between the ISO Forms which we study in this course, and the company 7

8 specific or state specific forms that you use in your job. Forms used in this course are located by clicking on the Forms Library link. We also present a link to the forms used at the beginning of each lesson. Curriculum Intro p4 (2IC) This course consists of three lessons: 1. Business Auto Coverage 2. Workers Compensation & Employers Liability Insurance Policy 3. Commercial Umbrella / Excess Liability Exposures Each lesson is further broken down into topics. In each topic, you will have content to read, graphical material to view, and self-quizzes to test your comprehension of important points. You may link to the final exam after completing all of self quizzes in the course with a score of 70 or above. 8

9 Lesson 1 Business Auto Policy Lesson 1 BAP Intro p1 (2IC) The Business Auto Policy (BAP) provides coverage for most business exposures. It is designed to provide protection for a variety of business risks that are eligible to be written on this type of policy, including auto service and auto repair shops. The BAP is not designed for auto and trailer dealers and similarly related dealerships as these should be written on a Garage Policy. It is also not designed for businesses that regularly transport materials, commodities and goods for themselves as well as for others. Those business risks are best written on a Motor Carrier Policy. The Garage and Motor Carrier Coverage Forms will not be discussed in this course. The structure chart displays the makeup of the Business Auto Policy. This course will focus on the Business Auto Coverage Form and some commonly used endorsements. Common Policy Declarations These five parts make up the Business auto Policy Common Policy Business Auto Business Auto Conditions Declarations Coverage Form Endorsements Lesson 1 BAP Intro p2 (2IC) Lesson 1 - Business Auto Coverage Form The Business Auto Coverage Form (BAC) is a combination of several coverages. It includes a liability section, which provides protection from claims for bodily injury and property damage for which an insured is legally responsible. It also includes a physical damage section, which provides coverage for damage to or loss of an insured's covered auto. This presentation will focus on these two coverages. Medical Payments and/or Personal Injury Protection and coverage for Uninsured and/or Underinsured Motorist bodily injury and/or property damage losses can be added by endorsement. These coverages vary from state to state and will not be addressed in this presentation. You should obtain and keep for reference a copy of the forms for these coverages that apply in your state. Exposures Covered by the Business Auto Coverage Form Liability Coverage Physical Damage Coverage Owned Comprehensive Non-Owned Specified Causes of Loss Hired or Borrowed Collision Towing (Private Passenger Autos Only) Lesson 1 BAP Intro p3 (2IC) This lesson will consist of the following topics: 1. Business Auto Exposures 2. Definitions 9

10 3. Symbols 4. Newly Acquired Autos and Liability Coverage Extensions 5. Who is an Insured 6. Insuring Agreement 7. Liability Exclusions 8. Physical Damage Coverage and Exclusions 9. Conditions Lesson 1 BAP Intro p4 (2IC) Lesson 1 Learning Objectives: 1. Identify the liability and physical damage exposures covered by the Business Auto Coverage (BAC) Form. 2. Explain specific Business Auto Coverage Form definitions. 3. Identify a covered "auto" when presented with the appropriate symbol. 4. Determine whether a newly acquired auto is covered in specific situations. 5. Identify what types of vehicles are granted coverage through the Liability Extension. 6. Determine who is and who is not an insured under the BAC Form. 7. Identify and explain the most commonly used endorsements to modify who is an insured. 8. Recognize the paragraphs of the Insuring Agreement in the BAC Form. 9. Explain the two Coverage Extensions in the BAC Form. 10. Apply the Liability Coverage Exclusions of the BAC Form to specific situations. 11. Explain the application of the BAC Form's Physical Damage Coverage. 12. Apply the Physical Damage Coverage exclusions of the BAC to specific situations. 13. Recognize Conditions provisions under the BAC Form. Lesson 1 BAP Intro p5 (2IC) Forms that you need to print for this lesson: CA Business Auto Policy CA DS 03 Business Auto Policy Declarations Forms you have printed and will need for this lesson None 10

11 Lesson 1 Topic A Business Auto Exposures p1 (2IC) Lesson 1 Topic A Business Auto Exposures Learning Objective: Identify the liability and physical damage exposures covered by the Business Auto Coverage (BAC) Form. Refer to page 2 of the Business Auto Coverage Form. In this topic, we will discuss two primary exposures covered by the BAC Form. They are: 1. Liability for the ownership, maintenance or use of covered autos. 2. Physical damage for loss of or damage to a covered auto. Lesson 1 Topic A Business Auto Exposures p2 (2IC) Learning Objective: Identify the liability and physical damage exposures covered by the Business Auto Coverage (BAC) Form. Liability Coverage Legal liability results when "bodily injury" to others or "property damage" to the property of others arises out of the ownership, operation, maintenance or use of an auto. Business auto exposures can arise from an insured's maintenance or use of several types of autos. Autos the Named Insured owns. Autos the Named Insured does not own, but are used in, or on behalf of, the Named Insured's business. Autos the Named Insured hires or borrows. The last two auto types are specifically defined in the BAC Form and will be discussed later. Physical Damage Coverage A business owner can suffer loss if one of the business's vehicles is damaged or destroyed. Some of the more common claims include collision, windshield breakage, theft, fire, and vandalism. The BAP can be written to include coverage for many of the perils that can damage a vehicle. Potentially covered physical damage losses can happen to both owned autos and to hired or borrowed autos. We will study how the BAP covers, or does not cover, these exposures. 11

12 Lesson 1 Topic B BAC Form Definitions p1 (2IC) Lesson 1 Topic B Definitions Learning Objective: Explain specific Business Auto Coverage Form definitions. Refer to page 10 of the Business Auto Coverage Form. Throughout the BAC Form, specially defined words or terms are set apart by quotation marks. Before beginning a discussion of the BAC Form conditions, provisions, and coverages, please read the following from the Business Auto Coverage Form: Click here to read Business Auto Coverage Form Section V. Definitions. The definitions begin on page 10 of the Business Auto Coverage Form. You should refer to this section of the Coverage Form when the meaning of a defined word is unclear. There are sixteen terms defined in this policy section. Please focus on understanding the following defined words or terms: Accident Auto Employee Insured Contract Mobile Equipment Property Damage Trailer Below is a copy of the definitions section of the Business Auto Coverage Form. SECTION V. DEFINITIONS A. "Accident" includes continuous or repeated exposure to the same conditions resulting in "bodily injury" or "property damage". B. "Auto" means: 1. A land motor vehicle, "trailer" or semitrailer designed for travel on public roads; or 12

13 2. Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, "auto" does not include "mobile equipment". C. "Bodily injury" means bodily injury, sickness or disease sustained by a person including death resulting from any of these. D. "Covered pollution cost or expense" means any cost or expense arising out of: 1. Any request, demand, order or statutory or regulatory requirement that any "insured" or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants" or 2. Any claim or "suit" by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to or assessing the effects of "pollutants". "Covered pollution cost or expense" does not include any cost or expense arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants": a. That are, or that are contained in any property that is: (1) Being transported or towed by, handled, or handled for movement into, onto or from the covered "auto"; (2) Otherwise in the course of transit by or on behalf of the "insured"; (3) Being stored, disposed of, treated or processed in or upon the covered "auto"; b. Before the "pollutants" or any property in which the "pollutants" are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto"; or c. After the "pollutants" or any property in which the "pollutants" are contained are moved from the covered "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured". Paragraph a. above does not 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, if: (1) The "pollutants" escape, seep, migrate, or are discharged, dispersed or released directly from an "auto" part designed by its manufacturer to hold, store, receive or dispose of such "pollutants"; and (2) The "bodily injury", "property damage" or "covered pollution cost or expense" does not arise out of the operation of any equipment listed in Paragraph 6.b. or 6.c. of the definition of "mobile equipment". Paragraphs b. and c. above do not apply to "accidents" that occur away from premises owned by or rented to an "insured" with respect to "pollutants" not in or upon a covered "auto" if: (1) The "pollutants" or any property in which the "pollutants" are contained are upset, overturned or damaged as a result of the maintenance or use of a covered "auto"; and (2) The discharge, dispersal, seepage, migration, release or escape of the "pollutants" is caused directly by such upset, overturn or damage. E. "Diminution in value" means the actual or perceived loss in market value or resale value which results from a direct and accidental "loss". F. "Employee" includes a "leased worker". "Employee" does not include a "temporary worker". G. "Insured" means any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage. Except with respect to the Limit of Insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or "suit" is brought. H. "Insured contract" means: 1. A lease of premises; 2. A sidetrack agreement; 3. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad; 13

14 4. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality; 5. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another to pay for "bodily injury" or "property damage" to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement; 6. That part of any contract or agreement entered into, as part of your business, pertaining to the rental or lease, by you or any of your "employees", of any "auto". However, such contract or agreement shall not be considered an "insured contract" to the extent that it obligates you or any of your "employees" to pay for "property damage" to any "auto" rented or leased by you or any of your "employees". An "insured contract" does not include that part of any contract or agreement: a. That indemnifies a railroad for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, roadbeds, tunnel, underpass or crossing; or b. That pertains to the loan, lease or rental of an "auto" to you or any of your "employees", if the "auto" is loaned, leased or rented with a driver; or c. That holds a person or organization engaged in the business of transporting property by "auto" for hire harmless for your use of a covered "auto" over a route or territory that person or organization is authorized to serve by public authority. I. "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker". J. "Loss" means direct and accidental loss or damage. K. "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment: 1. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads; 2. Vehicles maintained for use solely on or next to premises you own or rent; 3. Vehicles that travel on crawler treads; 4. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted: a. Power cranes, shovels, loaders, diggers or drills; or b. Road construction or resurfacing equipment such as graders, scrapers or rollers. 5. Vehicles not described in Paragraph 1., 2., 3., or 4. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types: a. Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or b. Cherry pickers and similar devices used to raise or lower workers. 6. Vehicles not described in Paragraph 1., 2., 3. Or 4. above maintained primarily for purposes other than the transportation of persons or cargo. However, selfpropelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos": a. Equipment designed primarily for: (1) Snow removal; (2) Road maintenance, but not construction or resurfacing; or (3) Street cleaning; b. Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and c. Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well servicing equipment. However, "mobile equipment" does not include land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law 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". L. "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. M. "Property damage" means damage to or loss of use of tangible property. 14

15 N. "Suit" means a civil proceeding in which: 1. Damages because of "bodily injury" or "property damage"; or 2. A "covered pollution cost or expense", to which this insurance applies, are alleged. "Suit" includes: a. An arbitration proceeding in which such damages or "covered pollution costs or expenses" are claimed and to which the "insured" must submit or does submit with our consent; or b. Any other alternative dispute resolution proceeding in which such damages or "covered pollution costs or expenses" are claimed and to which the insured submits with our consent. O. "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions. P. "Trailer" includes semitrailer. Lesson 1 Topic B BAC Form Definitions p2 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Refer to page 10 of the Business Auto Coverage Form. We will not discuss all of the definitions in this topic. Some will be discussed at the point of their application to the BAP. An example is pollution which will be discussed in Topic G Liability Coverage Exclusions. However, several defined words or terms are used in more than one section of the Policy, and we will discuss those now. Lesson 1 Topic B BAC Form Definitions p3 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Accident As used in the BAC Form, an "accident" does not have to be sudden. A continuous or repeated exposure to the same conditions that result in "bodily injury" or "property damage" is considered an "accident". Example: A truck, exceeding the weight limit restriction for a bridge, crosses the bridge daily. Over a period of time, the bridge is weakened and suffers structural damage. This is considered an "accident". 15

16 Lesson 1 Topic B BAC Form Definitions p4 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Auto An "auto" is a land motor vehicle, "trailer", or semi-trailer designed for travel on public roads. "Auto" also includes any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. "Auto" is not "mobile equipment". "Mobile equipment" has the same definition in this Policy as is found in the Commercial General Liability (CGL) Policy. Lesson 1 Topic B BAC Form Definitions p5 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Employee The BAC Form does not actually define employee. The definition only tells us that an employee does include a leased worker (one leased by a labor-leasing firm), but does not include a temporary worker (a substitute for a permanent employee furnished to the named insured). Lesson 1 Topic B BAC Form Definitions p6 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Insured Contracts The first five types of "insured contracts" in this Policy are the same found in the CGL Policy. Those deal with lease of premises, sidetrack agreement, easement or license agreement, an obligation as required by ordinance to indemnify a municipality, and assumed tort liability arising from the insured's business. There is no elevator maintenance liability in the BAC Form definition of "insured contract". The BAC Form includes one additional type of "insured contract" that addresses the exposure of auto rental or lease agreements. These agreements are considered "insured contracts", if the rental or lease is entered 16

17 into as part of the named insured's business and the agreements are made by the named insured of any of its employees. The rental/lease "insured contract" does not cover property damage to the auto rented or leased by the named insured or one of the employees. We will discuss "property damage" to a rented or leased auto in Topic H Physical Damage Coverage and Exclusions. Lesson 1 Topic B BAC Form Definitions p7 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Refer to pages of the Business Coverage Form. Mobile Equipment The definition of "mobile equipment" in the BAC Form is the same definition as the "mobile equipment" definition in the CGL Coverage Form, found in the Commercial Casualty I Course. There are six types of land vehicles that are considered "mobile equipment". Any machinery or equipment attached to any of these vehicles is also considered "mobile equipment". The six categories have been summarized on the next page. Please refer to the definition K. of mobile equipment found on page of the BAC Form as you study this material. Take note of the descriptive phrases that will be key to understanding "mobile equipment". "designed for use off public roads" "used primarily to service premises you own or rent" "moves on crawler treads" "self propelled or not self propelled" "provides mobility to permanently mounted specific equipment" "not otherwise described... maintained for purposes other than transport of persons or cargo" Lesson 1 Topic B BAC Form Definitions p8 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued 17

18 Refer to K. "mobile equipment" on page of the BAC Form. We will look at each individually, but first consider all six categories of "mobile equipment" identified by the BAC Form. 1. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads. 2. Vehicles maintained for use solely on or next to premises you own or rent. (The key words are "maintained for use solely on premises you own or rent".) 3. Vehicles that travel on crawler treads. 4. Vehicles, whether self-propelled or not, maintained to provide mobility to permanently mounted specific equipment. (This wording includes trailers.) 5. Other vehicles that are not self-propelled and are maintained primarily to provide mobility to specific permanently attached equipment. 6. Vehicles not otherwise described maintained primarily for purposes other than the transportation of persons or cargo. Lesson 1 Topic B BAC Form Definitions p9 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued BAC Form definition of Mobile Equipment lists six types of land vehicles which meet the definition of "mobile equipment": 1. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads Example: Think of the forklifts you see in a large lumberyard or the bulldozers you see on a construction site. If these are occasionally on a public road, they still may be considered mobile equipment. 2. Vehicles maintained for use solely on or next to premises you own or rent Example: A golf cart is used by apartment managers to drive around a large apartment complex. The key words are maintained for use solely on premises you own or rent. 18

19 Lesson 1 Topic B BAC Form Definitions p10 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued We continue our discussion of the six types of land vehicles which meet the BAC Form definition of "mobile equipment": 3. Vehicles that travel on crawler treads Example: Construction equipment and other commonly seen types of contractor's equipment 4. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted specified equipment Examples Vehicles with attached power cranes, shovels, loaders, diggers or drills OR road construction or resurfacing equipment Lesson 1 Topic B BAC Form Definitions p11 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued There are two final types of land vehicles which meet the definition of "mobile equipment" under the BAC Form: 5. Other vehicles that are not self-propelled and are maintained primarily to provide mobility to specific types of permanently attached equipment: air compressors pumps and generators spraying, welding, building cleaning, geophysical explorations, lighting and well servicing equipment The key words here are not self-propelled, primarily provide mobility to the specified types of equipment. Generally, these vehicles will be a trailer-type of vehicle with the specified equipment attached. 19

20 6. Vehicles not otherwise described maintained primarily for purposes other than the transportation of persons or cargo. Paragraph 6. of the definition of mobile equipment includes vehicles not described in 1. through 4. which are maintained primarily for purposes other than transporting people or cargo. Lesson 1 Topic B BAC Form Definitions p12 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Refer to paragraph 6. on page 12 of the BAC Form. "Autos" Not "Mobile Equipment" The Coverage Form then goes on to define specific self-propelled vehicles as "autos" and not "mobile equipment". The Coverage Form language says: However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "autos". There are three categories of vehicles that are considered "autos" and not "mobile equipment". We will list them all here, then look at all three individually. a. Equipment designed primarily for snow removal, road maintenance, (but not construction or resurfacing) or street cleaning; b. Cherry pickers and similar devices mounted on an automobile or truck chassis and used to raise or lower workers; and c. Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment. Lesson 1 Topic B BAC Form Definitions p13 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Refer to paragraph 6. on page 12 of the BAC Form. 20

21 Self-Propelled: Self-Propelled vehicles designed for: Snow Removal Road Maintenance (not road building or repaving) Street cleaning Examples: snowplow, paint striping, street sweeper Mounted Devices: Devices Mounted on an auto or truck chassis and used to raise and lower workers Example: cherry pickers Self-Propelled with permanently attached equipment: Self-propelled vehicles with the following types of permanently attached equipment: Air Compressors Pumps and generators Spraying, welding, building, cleaning, geophysical explorations, lighting and well servicing equipment Example: well drilling truck Tip: Caution: Even though the BAC Coverage Form defines item b. and c. above as "autos", the Coverage Form excludes coverage to these while the attached equipment is being operated. We will discuss this later under Exclusions. Lesson 1 Topic B BAC Form Definitions p14 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued Refer to the last paragraph of k. "mobile equipment" on page 12 of the BAC Form. 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. 21

22 Please refer to Lesson 1 Topic B BAC Form Definitions p15 (2IC) to complete the Knowledge Check at this time. Lesson 1 Topic B BAC Form Definitions p16 (2IC) Learning Objective: Explain specific Business Auto Coverage Form definitions. BAC Form Definitions continued "Property damage" means damage to or loss of use of tangible property. "Trailer" simply states trailer includes semi-trailer Please refer to the end of Lesson 1 Topic B to complete Self Quiz 1. 22

23 Lesson 1 Topic C Symbols Lesson 1 Topic C Symbols p1 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Refer to page 1 of the Business Auto Coverage Form In this topic, we provide an overview of the use of symbols in the Business Auto Policy (BAP). Additional symbols are also suggested which may customize coverage. On the BAP Declarations, the coverage applicable to autos is determined by the use of numerical symbols. This is the part of the BAP that tells us which autos are covered by the Policy. The symbols are entered next to a coverage in the Declarations to show what coverage applies. When a symbol is entered in the Covered Auto column next to the desired coverage, then those autos designated by that symbol have that coverage. More than one symbol may be used to designate coverage. Tip: A symbol must be on the Declarations to trigger coverage. If there is no symbol next to a coverage item, no auto has that coverage. Lesson 1 Topic C Symbols p2 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. The key to symbols and to analyzing coverage is to remember that the symbol belongs only to the Named Insured, not necessarily to the driver of the vehicle. Click on the image to print a study aid which summarizes the symbols. We will go through each one listed in the next few pages. The symbols are also fully described on page 1 of the BAC Form. Summary of Covered Auto Symbols Symbol Description Applicable Coverages 1 Any Auto Liability Only 2 Owned Autos Only Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists 3 Owned Private Passenger Autos Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists, Towing 4 Owned Autos Other Than Private Passenger Autos Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists 5 Owned Autos Subject to a no- Personal Injury Protection for autos required to have No-fault benefits in 23

24 fault law 6 Owned Autos Subject to a compulsory Uninsured Motorists law 7 Specifically Described Autos Only 8 Hired Autos Only meaning autos the Named Insured leases, hires, rents or borrows excluding those from employees, partners of a partnership, members of a limited liability company, or members of their households 9 Non-owned Autos Only autoes the Named Insured does not own, lease, hire rent or borrow. Includes autos of employees, partners, members, and their respective households 19 Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only the state where they are licensed or principally garaged. Uninsured Motorists Coverage when the law in the state where the autos are licensed or principally garaged are required to have and cannot reject Uninsured Motorists Coverage. Liability, Physical Damage, medical Payments, Personal Injury Protection, Uninsured Motorists Liability, Physical Damage Liability Only Liability only on those autos that are land vehicles and that would qualify under the definition of mobile equipment under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged. Lesson 1 Topic C Symbols p3 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbol 1 Refer to page 1 of the Business Auto Coverage Form Symbol 1 can be used to provide Liability Coverage: Triggers Liability Coverage for any auto. Provides the broadest Liability Coverage possible. May be used when there are no owned autos and an umbrella calls for underlying auto coverage. Symbol Description Applicable Coverages 1 Any Auto Liability Only 24

25 Lesson 1 Topic C Symbols p4 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbols 2 4 Refer to page 1 of the Business Auto Coverage Form Symbols 2-4 are used for owned autos: All three symbols trigger coverage for autos owned by the named insured at the inception of the Policy as well as automatic coverage for autos (of the same type) acquired during the policy period. All three symbols can provide Physical Damage Coverage (towing and labor on Symbol 3). Symbol Description Applicable Coverages 2 Owned Autos Only Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists 3 Owned Private Passenger Autos Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists, Towing 4 Owned Autos Other Than Private Passenger Autos Liability, Physical Damage, Medical Payments, Personal Injury Protection, Uninsured Motorists Lesson 1 Topic C Symbols p5 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbols 5 & 6 Refer to page 1 of the Business Auto Coverage Form Symbol 5 is used for owned autos: that are required to have no-fault benefits according to state law where the autos are licensed or principally garaged. Symbol 5 includes newly acquired autos if no-fault benefits are required. Symbol 6 is also used for owned autos: that are required to have Uninsured Motorist Coverage according to state law where the autos are licensed or garaged. 25

26 Symbol 6 includes newly acquired autos if the state does not permit rejection of mandatory coverage. Symbol Description Applicable Coverages 5 Owned Autos Subject to a no-fault law Personal Injury Protection for autos required to have No-fault benefits in the state where they are licensed or principally garaged. 6 Owned Autos Subject to a No-fault Law Personal Injury Protection for autos required to have No-fault benefits in the state where they are licensed or principally garaged. Lesson 1 Topic C Symbols p6 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbol 7 Refer to page 1 of the Business Auto Coverage Form Symbol 7 is used for specifically described autos: Triggers coverage for autos scheduled in the Declarations. Liability for trailers the named insured does not own while attached to a scheduled auto. Symbol Description Applicable Coverages 7 Specifically Described Liability, Physical Damage, medical Payments, Personal Injury Autos Only Protection, Uninsured Motorists Lesson 1 Topic C Symbols p7 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbol 8 Refer to page 1 of the Business Auto Coverage Form Symbol 8 is used for hired autos: Triggers coverage for autos the named insured leases, hires, rents, or borrows Does not include autos the named insured leases, hires, rents, or borrows from any of the named insured's employees, partners (of partnership named insured) or members (of LLC named insured) or members of their households 26

27 Symbol Description Applicable Coverages 8 Hired Autos Only meaning autos the Named Insured leases, hires, rents or borrows excluding those from employees, partners of a partnership, members of a limited liability company, or members of their households Liability, Physical Damage Lesson 1 Topic C Symbols p8 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbol 9 Refer to page 1 of the Business Auto Coverage Form Symbol 9 is for non-owned autos: Triggers coverage for autos the named insured does not own, lease, hire, rent, or borrow and are used in connection with the name insured's business. Autos owned by the named insured's employees, partners (of partnership named insured), members (of LLC named insured) or members of their household while used in the named insured's business or named insured's personal affairs. Symbol Description Applicable Coverages 9 Non-owned Autos Only autoes the Named Insured does not own, lease, hire rent or borrow. Includes autos of employees, partners, members, and their respective households Liability Only Lesson 1 Topic C Symbols p9 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Symbol 19 Refer to page 2 of the Business Auto Coverage Form. Symbol 19 is used for mobile equipment subject to motor vehicle insurance law: Triggers Liability Coverage. 27

28 Symbol Description Applicable Coverages 19 Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only Liability only on those autos that are land vehicles and that would qualify under the definition of mobile equipment under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged. Lesson 1 Topic C Symbols p10 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Additional Symbols There is a way you can customize coverage for a client by using additional symbols. You attach the endorsement CA Covered Auto Designation Symbol to describe the vehicles you wish to cover. Example: Your insured may want to have collision coverage only on those vehicles that are fairly new. You could use Symbol 10 and define it as follows: Only those "autos" you own with a model year of 2010 and newer. This includes those "autos" you acquire ownership of after the policy begins. Lesson 1 Topic C Symbols p11 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Example Take a look at sample entries on a Business Auto Declaration Page showing coverage symbols. Refer to the image on Lesson 1 Topic C Symbols p11 (2IC) at this time. Refer to Lesson 1 Topic C Symbols p12 (2IC) to complete the Knowledge Check at this time. 28

29 Lesson 1 Topic C Symbols p13 (2IC) Learning Objective: Identify a covered "auto" when presented with the appropriate symbol. Automatic Coverage Symbols vs. Scheduled Coverage Symbols When you use Symbols 2-6, the Policy states, "This includes those "autos" you acquire ownership of after the policy begins". This means that the named insured has automatic coverage for the type of auto shown next to the coverage without having to notify the insurer. Since Symbol 1 is "Any Auto", it automatically triggers liability coverage for any newly acquired autos. When a named insured has Symbol 7 next to a coverage, only those vehicles specifically scheduled in Item 3 of the BAP Declarations have that coverage. In our next topic, we will study the very limited coverage a named insured has for newly acquired autos when Symbol 7 is used. Please refer to the end of Lesson 1 Topic C to complete Self Quiz 2 at this time. 29

30 Lesson 1 Topic D - Newly Acquired Autos and Liability Coverage Extensions Lesson 1 Topic D Newly Acquired Autos & Cvg. Extensions p1 (2IC) Learning Objective: Determine whether a newly acquired auto is covered in specific situations. Refer to page 2 of your Business Auto Coverage Form, section titled Owned Autos You Acquire After The Policy Begins. In this topic, you will learn about newly acquired autos and liability coverage extensions. Before proceeding further click here and read paragraph C. and paragraph D. of the BAC Form. The coverage for newly acquired "autos" is tied to the symbol used for each coverage. Whether or not the named insured has a specific coverage for a newly acquired "auto" will depend on which symbol is shown in the Declarations. We study this concept in three parts: Automatic Coverage Symbols 1-6 or 19 Specified Autos-Symbol 7-Limited Coverage Liability Coverage Extensions SECTION I - COVERED AUTOS B. Owned Autos You Acquire After The Policy Begins 1. If Symbols 1, 2, 3, 4, 5, 6 or 19 are entered next to a coverage in Item Two of the Declarations, then you have coverage for "autos" that you acquire of the type described for the remainder of the policy period. 2. But, if Symbol 7 is entered next to a coverage in Item Two of the Declarations, an "auto" you acquire will be a covered "auto" for that coverage only if: a. We already cover all "autos" that you own for that coverage or it replaces an "auto" you previously owned that had that coverage; and b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage. C. Certain Trailers, Mobile Equipment And Temporary Substitute Autos If Liability Coverage is provided by this Coverage Form, the following types of vehicles are also covered "autos" for Liability Coverage: 1. "Trailers" with a load capacity of 2,000 pounds or less designed primarily for travel on public roads. 2. "Mobile equipment" while being carried or towed by a covered "auto". 3. Any "auto" you do not own while used with the permission of its owner as a temporary substitute for a covered "auto" you own that is out of service because of its: a. Breakdown; b. Repair; 30

31 c. Servicing; d. "Loss"; or e. Destruction. Lesson 1 Topic D Newly Acquired Autos & Cvg. Extensions p2 (2IC) Learning Objective: Determine whether a newly acquired auto is covered in specific situations. Automatic Coverage: Symbols 1-6 or 19 Refer to page 2 of your Business Auto Coverage Form, section titled Owned Autos You Acquire After The Policy Begins. If any of these symbols are used to trigger a coverage in Item 2 of the Declarations, then the named insured has that coverage for newly acquired "autos" of the type described by the symbol for the remainder of the policy period. Example 1 Assume that a named insured has a BAP in which Symbol 2 (Owned Autos Only) is used to trigger liability, comprehensive, and collision coverage. If this named insured acquires an additional auto, that auto has liability, comprehensive, and collision coverage under the Policy for the remainder of the policy period. The insured does not have to report the newly acquired auto. Premium will be picked up on audit. Example 2 Assume that a different named insured has a BAP in which Symbol 3 (Owned Private Passenger "Autos" only) is used to trigger liability, comprehensive, and collision coverage. If the named insured acquires a panel truck, there is no automatic coverage because the panel truck does not qualify as a private passenger auto. It is a good practice for the named insured to inform the agent immediately of any change in auto ownership to avoid any gaps that could exist. Lesson 1 Topic D Newly Acquired Autos & Cvg. Extensions p3 (2IC) Learning Objective: Determine whether a newly acquired auto is covered in specific situations. Specified Autos Symbol 7 - Limited Coverage 31

32 Refer to page 2 of your Business Auto Coverage Form, section titled Owned Autos You Acquire After The Policy Begins. When Item 2 of the Declarations shows Symbol 7 next to a coverage, the BAC Form states that a newly acquired auto will have that coverage only if both of the following conditions are met: 1. All "autos" the named insured owns must be insured by the insurance company for that coverage; or it replaces an "auto" the named insured previously owned that has coverage and 2. This named insured must tell the insurance company within 30 days after acquiring the "auto" that the named insured wants that coverage. If both conditions are met and the newly acquired auto is an additional unit, it will automatically have the coverage that all owned autos have. If the unit is a replacement vehicle, it will automatically have only the coverage the replaced vehicle had. Lesson 1 Topic D Newly Acquired Autos & Cvg. Extensions p4 (2IC) Learning Objective: Determine whether a newly acquired auto is covered in specific situations. Specifically Described Autos Symbol 7 - Limited Coverage continued Example 1 A named insured owns nine autos insured on a BAP with Symbol 7 triggering coverage. All nine autos have Liability, eight have Comprehensive, one has Specified Causes of Loss, and six have Collision. If the named insured acquires a 10th auto, that additional unit only has automatic liability coverage, because that is the only coverage all nine autos have and only for a maximum of 30 days. Example 2 A named insured owns two autos, both of which are insured on a BAP with Symbol 7 triggering coverage. Vehicle 1 has only liability coverage, and Vehicle 2 has liability and collision coverages. If the named insured acquires a replacement auto for Vehicle 1, the new auto only has liability coverage and only for a maximum of 30 days. (The named insured must tell the insurer that Liability Coverage is wanted within 30 days after acquisition.) Physical Damage Coverage does not apply until the named insured notifies the insurance company that Physical Damage Coverage is wanted. 32