Commercial Auto Coverage

Transcription

1 10 Commercial Auto Coverage LEARNING OBJECTIVES Upon the completion of this chapter, you will be able to: 1. Identify the role of the Commercial Auto Coverage Part 2. Recognize the usage of the Business Auto Coverage Form 3. Identify the usage of the Garage Coverage Form 4. Differentiate between the Truckers Coverage Form and the Motor Carrier Coverage Form 5. List Selected Commercial Auto Endorsements 6. Understand the Commercial Carrier Regulations OVERVIEW Commercial auto insurance can be written as a monoline policy, or as a part of the Commercial Package Policy. More than one coverage form may be used on a policy when issued as part of the Commercial Package Policy: 1. One or more Commercial Auto Declaration Forms. 2. One or more of the following Commercial Auto Coverage Forms: a. Business Auto Coverage Form b. Garage Coverage Form c. Truckers Coverage Form d. Motor Carrier Coverage Form e. Business Auto Physical Damage Coverage Form 3. Endorsements may be added to any of the coverage forms Business Auto Coverage Form 1. The Business Auto Coverage Form: a. Is used to cover owned, leased, hired, rented, or borrowed private passenger autos, trucks, trailers, and semitrailers that are owned or used by the insured. b. Provides liability coverage for trailers being towed by a covered vehicle. c. Does not provide automatic coverage for physical damage to trailers. 2. Covers non-owned vehicles, including autos owned by employees while being used in the business. 3. The only types of mobile equipment that may be insured are those required to be registered to drive on public roads. 4. Vehicles that are sold, stored, or repaired for others may NOT be insured on the business auto coverage form, as these vehicles are insured on the garage coverage form. A.D.Banker&Company 149

2 CHAPTER TEN Retention Question 1 The Business Auto Coverage Form covers all of the following, except: a. Owned private passenger autos b. Mobile equipment registered to drive on public roads c. Automatic coverage for physical damage to trailers d. Automobiles owned by employees used for business purposes 10.2 Section I Covered Autos Symbol 1 Symbol 2 Symbol 3 Symbol 4 Symbol 5 Symbol 6 Symbol 7 Symbol 8 Symbol 9 Symbol 19 Any Auto, if it is used in the insured business, regardless of ownership. Owned Autos Only, whether or not specifically listed on the policy. Owned Private Passenger Autos Only; a business may wish to provide insurance differently for its cars than for its dump trucks or vehicles used for delivery. Owned Autos Other Than Private Passenger Autos Only. Owned Autos Subject to No Fault Laws. Owned Autos Subject to a Compulsory Uninsured Motorist Law. Specifically described vehicles listed on the declarations page. Hired Autos Only, which are those the insured leases, hires, rents or borrows, except any auto the insured leases, hires, rents, or borrows from an employee. These vehicles may not be owned by the insured. Non-owned Autos Only, which are those the insured does not own, lease, hire, rent or borrow, and are used in connection with the insured s business. This includes autos owned by an employee of the insured or a member of the employee s household. Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law, which triggers protection for autos that are otherwise described as mobile equipment but are required to be licensed and registered to be operated on public roadways. This symbol is necessary since mobile equipment is excluded from the definition of auto under the business auto policy. Retention Question 2 Which of the following is not a Symbol under Section I Covered Autos? a. Any auto b. Specifically described on Declarations c. Owned Autos Subject to No Fault d. Dealers auto liability coverage 10.3 Section II Liability Coverage 1. Coverage Coverage is provided for bodily injury or property damage caused by an accident for which the insured is legally responsible. The accident must occur within the policy territory, during the policy period, and result from the ownership, maintenance, or use of a covered auto. 150 A.D.Banker&Company

3 COMMERCIAL AUTO COVERAGE a. Who is an Insured 1) The named insured for any covered vehicle. 2) Anyone else using a covered vehicle with permission of the named insured. 3) Anyone liable for the conduct of an insured, but only to the extent of that liability. b. Coverage Extensions 1) Supplementary Payments In addition to the limit of liability, supplementary payments include claims expenses incurred by the insurer, up to $2,000 for the cost of bail bonds required because of an accident, reasonable expenses incurred by the insured at insurer s request, including up to $250 per day for an insured s actual loss of earnings, costs taxed against an insured in a lawsuit defended by the insurer, and post-judgment interest. 2) Out-of-State Coverage Extensions If the financial responsibility of other states and jurisdictions require an insured vehicle to possess certain coverages and limits of liability when driving within their boundaries, the liability coverages provided by the business auto coverage form automatically conforms to the types of coverages and limits of liability required by any jurisdiction within the policy s coverage territory when being used in that jurisdiction. 2. Exclusions Liability coverage does not apply to: a. Expected or Intended Injury b. Contractual Liability assumed under any contract or agreement. c. Workers Compensation Bodily injury sustained by an employee while on the job. d. Employee Indemnification and Employer s Liability A legal liability of the named insured due to work-related accidents other than injuries covered by Workers Compensation statute. e. Fellow Employee Bodily injury to a fellow employee of the insured arising out of the course of the fellow employee s employment or while performing duties related to the conduct of the insured s business. f. Care, Custody, or Control Damage to property owned or transported by the insured, or in the insured s care, custody, or control. g. Handling of Property Before it is moved from the place where it is accepted by the insured or after it is moved to the place of final delivery by the insured; this is covered by the CGL policy. h. Movement of Property by Mechanical Device Bodily injury or property damage resulting from the movement of property by a mechanical device (unless the device is attached to a covered vehicle). i. Operations Bodily injury or property damage arising out of the operation of mobile equipment. (Such as power cranes.) j. Completed Operations Bodily injury or property damage arising out of the insured s work, after that work has been completed or abandoned. k. Pollution The exclusion is designed to eliminate coverage for pollutants being transported by a covered auto. l. War m. Racing A.D.Banker&Company 151

4 CHAPTER TEN 3. Limit of Liability The most the insurer will pay for the total of all damages and covered pollution cost or expense combined, resulting from any one accident, is the limit of liability shown in the Declarations. The limit of liability is paid regardless of the number of: a. Covered autos b. Insureds c. Premiums paid d. Claims made e. Vehicles involved in an accident Retention Question 3 Which of the following is NOT an insured under the Business Auto Coverage form? a. Fellow employee b. Named insured c. Person using a borrowed auto with permission of the insured d. Person liable for the conduct of the insured 10.4 Section III Physical Damage Coverage 1. Coverage a. The insurer will pay for a loss to a covered auto or its equipment under: 1) Comprehensive Coverage is provided for physical damage to a covered auto or its equipment on an open perils basis. The single peril excluded is collision, which is a vehicle s impact with another object or its overturn. 2) Specified Causes of Loss Coverage includes fire, lightning, or explosion; theft; windstorm, hail, or earthquake, flood, mischief or vandalism, and the sinking, burning, collision or derailment of a conveyance transporting the covered vehicle. If coverage for other perils is desired, Comprehensive should be purchased. 3) Collision Coverage is provided for the covered auto s impact with another object or its overturn. b. Towing The policy pays up to the limit in the Declarations for the costs of towing and labor incurred each time a covered private passenger type auto is disabled. Labor must be performed at the place of disablement. c. Glass Breakage Hitting a Bird or Animal Falling Objects or Missiles If the insured carries Comprehensive coverage, the insurer will pay for glass breakage, loss caused by hitting a bird or animal, and loss caused by falling objects or missiles. If glass breakage is caused by a collision, the insured may elect to have the loss considered a collision loss. d. Coverage Extensions 1) Transportation Expenses The policy pays up to $20 per day and up to a maximum of $600, for temporary transportation expenses of the insured for the total theft of a private passenger auto. Transportation expenses begin 48 hours after the theft of the vehicle and end when the covered auto is returned to use or the insurer pays for its loss. 2) Loss of Use Expenses If the insured hires a vehicle per a written rental contract or agreement, and without a driver, this coverage extension pays for loss of use expenses to the hired auto if loss is caused by a covered loss. The most paid for loss of use is $20 per day and up to a maximum $ A.D.Banker&Company

5 COMMERCIAL AUTO COVERAGE 2. Exclusions The insurer will not pay for loss caused by, or resulting from any of the following perils: a. Nuclear hazard, war, or military action. b. Professional or Organized racing, demolition contest, or stunt activity. c. Wear and tear, freezing, mechanical or electrical breakdown, or blowouts, punctures, or road damage to tires. d. Loss to any tapes, records, discs, electronic equipment, radar, or laser detectors. This exclusion does not apply to equipment designed SOLELY for the reproduction of sound that is permanently installed in the covered vehicle. 3. Limit of Insurance The most the insurer will pay for a loss, in any one accident, is the lesser of the actual cash value of the damaged or stolen property, or the cost of repairing or replacing the damaged or stolen property with property of like kind and quality. 4. Deductible a. The Declarations page of the commercial auto policy shows a deductible next to each of the physical damage coverages purchased by the insured. b. The standard deductible for collision, comprehensive, and specified causes of loss are $500; higher and lower deductibles are available. c. The deductible shown on the declarations applies per covered auto, per loss. d. The Comprehensive deductible does not apply to fire or lightning losses. Retention Question 4 What is the maximum the insurer will pay for a covered transportation expenses claim? a. $200 b. $400 c. $600 d. $ Section IV Business Auto Conditions The following conditions apply in addition to the Common Policy Conditions: 1. Loss Conditions Appraisal, duties in the event of an accident, legal action against the insurer, loss payment, and transfer of rights of recovery. 2. General Conditions Bankruptcy; concealment, misrepresentation, or fraud; liberalization; other insurance; premium audit; policy period, coverage territory; no benefit to bailee for physical damage. Retention Question 5 General Conditions in the business auto policy apply to which of the following? a. Appraisal b. Legal action against the insured c. Transfer of rights d. Bankruptcy A.D.Banker&Company 153

6 CHAPTER TEN 10.6 Section V Definitions 1. Accident Includes continuous or repeated exposure to the same conditions that results in bodily injury or property damage. 2. Auto A land motor vehicle, trailer, or semitrailer, designed for travel on public roads or any other vehicle subject to a compulsory or financial responsibility law or motor vehicle insurance law in the jurisdiction where the vehicle is licensed or principally garaged. Mobile equipment is not an auto. 3. Insured 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 seeks coverage or against whom a claim or suit is brought. 4. Loss Direct and accidental loss or damage. 5. Mobile Equipment Any of the following types of land vehicles, including any attached machinery or equipment: a. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads. b. Vehicles maintained for use solely on or next to premises owned or rented by the named insured. c. Vehicles that travel on crawler treads. d. Vehicles, whether self-propelled or not, that are maintained primarily to provide mobility to permanently mounted power cranes, shovels, loaders, diggers, drills, and road construction or resurfacing equipment (i.e., graders, scrapers, or rollers). 6. Pollutants 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. 7. Suit A civil proceeding in which damages are alleged because of bodily injury, property damage, or covered pollution cost or expense and to which the policy applies. A suit includes an arbitration proceeding and any other alternative dispute resolution proceeding. 8. Trailer A semi-trailer Garage Coverage Form 1. The Garage Coverage Form is designed to provide automobile liability and physical damage coverage, as well as general liability insurance for businesses that are engaged in the sale, service, parking, or storage of automobiles. Eligible businesses include automobile vehicle dealerships, sales agencies, repair shops, service stations, storage garages, and public parking places. 2. It eliminates the coverage gaps and overlaps found when other commercial lines policies are written by writing the following coverages on the same form: a. Premises liability b. Products liability c. Auto liability d. Auto physical damage coverage e. Garagekeepers coverage 154 A.D.Banker&Company

7 COMMERCIAL AUTO COVERAGE Section I Covered Autos 1. The garage coverage form provides a schedule of covered auto designation symbols in a similar fashion to the business auto coverage form. In addition to the nine types of vehicles insured by the business auto coverage form, the garage coverage form also includes symbols for vehicles that are unique to the auto business. Symbols 1-9 on the Business Auto Policy are the same as symbols in the Garage Coverage Form. There are two unique symbols under the Garage Coverage Form: a. Symbol 30 Autos left with the insured for service, repair, storage, or safekeeping. b. Symbol 31 Dealers autos physical damage coverages. 2. Coverage is typically written using a blanket limit of insurance. 3. Because an auto business is a bailee, and legally responsible for the vehicles left in its care, custody, or control, special insurance coverage is required. 4. The limit of liability for customers vehicles is usually expressed as a blanket limit, such as $100,000 for the total of all customer vehicles in the insured s care, custody, or control. Section II Liability Coverage 1. The garage coverage form provides two types of liability coverage. Liability coverage is provided for: a. Garage Operations Other than Autos is similar to commercial general liability insurance. b. Garage Operations Covered Autos is similar to business auto insurance. 2. Provides bodily injury and property damage liability coverage for losses resulting from garage operations. In addition, the form includes coverage for Premises and Operations Liability, Products Liability, and Completed Operations Liability. 3. Does not cover property in the care and custody of the insured, injuries covered by Workers Compensation, and liability arising from pollution or product recall. 4. A $100 deductible applies to all losses resulting from property damage to an auto as a result of work performed on that auto by the insured. Section III Garagekeepers Coverage The garage coverage form also provides garagekeepers coverage, which is insurance for amounts the insured is legally obligated to pay for loss or damage to a customer s vehicle and/ or equipment while it s in the insured s care for servicing, repair, parking, or storing. The insured may select the following coverage options that apply to customer s vehicles: 1. Comprehensive Coverage 2. Specified Causes of Loss This coverage covers fire, lightning, explosion, theft, mischief, or vandalism. 3. Collision Coverage Section IV Physical Damage Coverage The garage coverage form provides physical damage coverage for covered autos the named insured owns, hires, rents, leases, or borrows in the same fashion the business auto coverage form provides coverage. The coverage is for the insured s own vehicles and is the same as Physical Damage Coverage under the Business Auto Coverage Form. A.D.Banker&Company 155

8 CHAPTER TEN Retention Question 6 Which of the following covers the insured s legal obligations for damage to a customer s car? a. Auto liability b. Garagekeepers c. Physical damage d. General liability Retention Question 7 Which of the following is covered under Section III Garagekeepers on the Garage Coverage form? a. Completed Operations b. Vehicles and equipment owned by others in the care of the insured c. Uninsured Motorists d. Garage Operations 10.8 Business Auto Physical Damage Coverage Form The Business Auto Physical Damage Coverage Form contains virtually the same language as Section III of the Business Auto Coverage Form and only provides physical damage coverage. The symbol designations are limited to 5, instead of 9, and include: 1. Owned autos only 2. Owned private passenger autos only 3. Owned autos other than private passenger autos only 4. Specifically described autos 5. Hired autos only This form can be included as part of a commercial package policy. Retention Question 8 Which of the following is NOT one of the five symbol designations on the Business Auto Physical Damage Coverage form? a. Autos left for service b. Owned autos only c. Hired autos only d. Specifically described autos 10.9 Truckers and Motor Carrier Coverage Forms The Truckers Coverage Form and the Motor Carrier Coverage Form were designed to provide insurance for the unique exposures of common carriers and contract carriers. 1. A common carrier is a business, individual, or organization that carries persons or property for a fee, from one place to another. The persons or property being transported are, or belong to, the general public. A trucker is a common carrier and may transport goods belonging to several customers at the same time. 156 A.D.Banker&Company

9 COMMERCIAL AUTO COVERAGE 2. A contract carrier is a business, individual, or organization that carries persons or property for a fee, from one place to another. The persons or property being transported are only those of certain customers and NOT the general public. Unlike a common carrier, a contract carrier may refuse to carry persons or property for a fee. 3. Common carriers, or truckers, may use either of the coverage forms. 4. Contract carriers, or motor carriers, may only use the Motor Carrier Coverage Form. The Truckers Coverage Form The Truckers Coverage Form covers business exposures of motor carriers for hire who transport the goods of others. The Motor Carrier Coverage Form The Motor Carrier Coverage Form provides coverage for business exposures due to the transportation of goods owned by others for hire AND transporting their own property. 1. The motor carrier coverage form was designed to replace the truckers coverage form after the motor transportation industry was deregulated. It allows for greater flexibility in arranging insurance for the shipping of goods because the coverage provided, and the definition of insured, is based on the written agreements between the carrier/shipper and its customers rather than on government regulation. 2. Because truckers and motor carriers often hire independent owner/operators, these coverage forms contain two special coverage conditions. a. The first condition is contained in the Other Insurance Clause. The insurance of the insured trucker or motor carrier is primary, and the hired vehicle s coverage is excess. However, the insured s coverage will be excess if the insured leases a vehicle to another motor carrier. b. The second condition is called Trailer Interchange Coverage. Trailer interchange coverage is physical damage coverage (comprehensive, specified causes of loss, and/or collision coverage) for non-owned trailers and their equipment if they sustain a loss and the insured is legally responsible for the damage. Retention Question 9 All of the following statements regarding a common carrier covered under the Truckers and Motor Carrier Coverage form are correct, except: a. A business individual that carries the general public from one place to another for a fee b. A common carrier can also use the Motor Carrier Coverage Form c. A common carrier must use the Trucker Coverage Form d. A trucker that transports goods belonging to several customers at the same time Retention Question 10 What coverage under the Motor Carrier Coverage form provides physical damage coverage for non-owned trailers and equipment in the event of an at-fault accident? a. Other Insurance Clause b. Truckers Physical Damage Coverage c. Trailer Interchange Coverage d. Commercial Truckers Coverage A.D.Banker&Company 157

10 CHAPTER TEN Commercial Carrier Regulations The Motor Carrier Act of The Motor Carrier Regulatory Reform and Modernization Act, known as the Motor Carrier Act of 1980, deregulated the trucking industry. This deregulation affected price and entry controls in U.S. transportation, no longer allowing rate bureaus to interfere with a motor carrier s right to charge its own rates. 2. As a result of the Motor Carrier Act of 1980, the number of motor carriers doing business increased and the consumer costs associated with trucking decreased, as did wages to truckers. 3. The Act requires certain vehicles to carry specific minimum limits of liability insurance for the protection of the public and the environment. Those minimum limits range from $750,000 to $5 million per accident, depending upon the type of merchandise being transported (e.g., non-hazardous merchandise vs. specific types of hazardous substances). The Endorsement for Motor Carrier Policies of Insurance for Public Liability (Form MCS 90) This endorsement provides evidence of financial responsibility, on behalf of the motor carrier, to the Interstate Commerce Commission (ICC). The endorsement must be included on all policies, and a policy must meet the financial responsibility requirements of the Department of Transportation. The form must be carried in the cabin of the vehicle and must show: 1. The names of the motor carrier and the insurance company. 2. The policy number and policy dates. 3. Whether the insurance providing coverage is primary or excess. 4. The limits of liability provided by the policy. Retention Question 11 The passage of the Motor Carrier Act of 1980 resulted in all of the following, except: a. Deregulation of the trucking industry b. Prohibition of rating bureaus to develop the rates c. Mandatory minimum liability limits d. Increase in truckers wages Selected Commercial Auto Endorsements Auto Medical Payments Coverage 1. This endorsement allows the insured to purchase Medical Payments Coverage. The commercial auto forms do not automatically include this coverage. 2. Coverage is written with a limit per person, per accident, and pays up to the limit for necessary medical and funeral expenses resulting from bodily injury incurred within 3 years of an accident. Uninsured Motorists Coverage 1. This endorsement allows the insured to purchase Uninsured Motorists Coverage (the commercial auto forms do not automatically include this coverage). 2. The coverage provides payment for bodily injury to the insured and vehicle occupants when struck by an uninsured driver who is legally responsible for the accident. 158 A.D.Banker&Company

11 COMMERCIAL AUTO COVERAGE Individual Named Insured 1. This endorsement is used to add family members to the definition of insured under any of the auto coverage forms. It also eliminates the fellow employee exclusion for bodily injury to the employees of the named insured or any family member. 2. If the named insured owns at least one private passenger auto and insures it on the business auto policy for physical damage coverage, personal auto coverage will extend to non-owned autos as covered autos. 3. When purchased, the endorsement applies to all family members who are residents. Mobile Equipment 1. This is an endorsement that allows mobile equipment such as bulldozers, forklifts, and road construction equipment to be considered covered autos. 2. This type of equipment is not normally covered, except for liability arising while being carried or towed by a covered auto. Drive Other Car Broadened Coverage for Named Individuals 1. This endorsement may be added to any of the auto coverage forms and is designed for individuals who do not personally own and insure an auto. 2. This endorsement provides coverage for liability, auto medical payments, comprehensive, collision, uninsured motorists, and underinsured motorists if a limit of liability and premium is shown on the endorsement s schedule. Coverage applies to vehicles owned by the named insured and non-owned autos that aren t owned by the individual named in the endorsement or any family member of that individual. 3. Coverage is provided for the individual named on the endorsement and is extended to the named individual s resident spouse. Rental Reimbursement Coverage 1. The Rental Reimbursement Coverage endorsement may be added to all 5 of the business auto coverage forms and pays for rental reimbursement expenses incurred as the result of a covered loss to a vehicle named in the endorsement s schedule. 2. Because the business auto coverage forms only provide temporary transportation expenses coverage for the total theft of private passenger type vehicles, this is a valuable endorsement for businesses that own other types of vehicles and/or who want rental reimbursement coverage in the event of losses other than total thefts. Optional Limits Loss of Use Expenses The Optional Limits Loss of Use Expenses endorsement may be added to all five of the business auto coverage forms to increase the daily and maximum limits of liability paid for loss of use expenses under Hired Physical Damage coverage. Auto Loan/Lease Gap Coverage 1. The Auto Loan/Lease Gap Coverage endorsement may be added to all five of the business auto coverage forms. It pays any unpaid amount due on a lease or loan for a covered auto less other expenses, including the amount paid under physical damage coverage, overdue loan or lease payments, financial penalties, etc. 2. This is beneficial to an insured if the actual cash value of an insured vehicle is less than its outstanding loan. A.D.Banker&Company 159

12 CHAPTER TEN Lessor Additional Insured and Loss Payee This endorsement is used when the insured leases a vehicle and the owner/lessor requires that it be designated on the auto policy as additional insured and loss payee. Designated Insured This endorsement may be added to any of the auto coverage forms. It contains a schedule that lists a person or organization that is considered an insured under the liability coverage provided by the policy but does NOT change any of the provisions of the policy. Retention Question 12 Which of the following is true about the Individual Named Insured endorsement? a. Protects the named insured who does not own a car b. Applies to all resident family members c. Adds business coverage to a personal private passenger auto d. Coverage is provided only to those individuals listed on a Schedule Chapter Ten Lightning Facts 1. The Business Auto Coverage Form covers owned, leased, hired, rented, or borrowed private passenger autos, trucks, trailers, and semitrailers that are owned and used by the insured The Business Auto Coverage form provides liability coverage for trailers being towed by a covered vehicle, but does not provide automatic coverage for physical damage Section I Covered Autos contains Symbols designations 1-9 and 19 that describe the types of autos covered under the Business Auto Coverage form Section II Liability Coverage is provided for bodily injury or property damage caused by an accident for which the insured is legally responsible. An accident must occur within the policy territory, during the policy period, and result from the ownership, maintenance, or use of a covered auto An Insured is the named insured for any covered vehicle, anyone else using a covered vehicle with permission of the named insured, and anyone liable for the conduct of an insured, but only to the extent of that liability The Coverage Extensions include Supplementary Payments and Out of State Coverage Liability exclusions include expected or intended injury, contractual, Workers Compensation, employee indemnification and employer s liability, fellow employee, care, custody, or control, handling of property, movement of property by mechanical device, operations, completed operations, pollution, war, and racing Section III Physical Damage Coverage includes comprehensive, specified causes of loss, and collision coverages, towing, glass breakage, and coverage extensions including transportation expenses and loss of use expenses Comprehensive covers physical damage to a covered auto or its equipment on an open perils basis. Coverage is not provided for loss by collision, which is a covered vehicle s impact with another vehicle or object, or overturn Specified Causes of Loss provides coverage for the perils of fire, lightning, explosion, theft, wind, hail, earthquake, flood, mischief or vandalism, and sinking, burning, collision or derailment of a conveying vehicle Collision covers a covered vehicle s impact with another vehicle or object, or overturn A.D.Banker&Company

13 COMMERCIAL AUTO COVERAGE 12. Transportation Expenses begin 48 hours after the total theft of a private passenger auto and pays up to $20 per day, to a maximum of $600, for temporary transportation expenses Exclusions include nuclear hazard, war, or military action, organized racing, demolition contest, or stunt activity, wear and tear, freezing, mechanical or electrical breakdown, blowouts or punctures, and tapes, records, discs, electronic equipment, radar, or laser detectors The Limit of Insurance is the most the insurer will pay for all loss in any one accident. The amount paid will be the lesser of the actual cash value of the damaged or stolen property or the cost of repairing or replacing the damaged or stolen property with property of like kind and quality A Deductible applies per covered auto and per accident to comprehensive, specified causes of loss, and collision purchased by the insured. The standard deductible is $500, but higher and lower deductibles are available The Loss Conditions apply in addition to the Common Policy Conditions and include appraisal, duties in the event of an accident, legal action against the insurer, loss payment, and transfer of rights of recovery The General Conditions apply in addition to the Common Policy Conditions and covers bankruptcy, concealment, misrepresentation, or fraud, liberalization, other insurance, premium audit, policy period, and include territory The Garage Coverage Form provides automobile liability and physical damage coverage, as well as General Liability coverage for an insured that is engaged in the sale, service, repair, parking, or storage of automobiles The Garage Coverage Form eliminates the coverage gaps and overlaps found when other commercial lines policies are combined to provide Premises liability, Products liability Auto liability, Auto physical damage coverage, and Garagekeepers coverage Section I Covered Autos of the garage coverage form provides a schedule of covered auto designation symbols in a similar fashion to the business auto coverage form and adds two unique symbols for the Garage Coverage Form The garagekeepers limit of liability for customers vehicles is usually expressed as a blanket limit covering the total of all customer vehicles in the insured s care, custody, or control Section II Liability Coverage provides bodily injury and property damage liability coverage for losses resulting from garage operations, premises and operations liability, products liability, and completed operations liability Section III Garagekeepers Coverage is physical damage insurance for amounts the insured is legally obligated to pay for loss or damage to a customer s vehicle and/or equipment while it s in the insured s care for purposes of selling, servicing, repairing, parking, or storing Section IV Physical Damage Coverage provides physical damage coverage for covered autos the insured owns, hires, rents, leases, or borrows and is the same as Physical Damage Coverage under the Business Auto Coverage Form The Business Auto Physical Damage Coverage Form provides physical damage coverage for covered autos that meet any of five symbol designations; this form may be included on a commercial package policy The Truckers Coverage Form and the Motor Carrier Coverage Form provide insurance for the unique exposures of common carriers and contract carriers A common carrier is a business individual or organization that carries the general public or property owned by the general public for a fee, from one place to another, and may use either of the coverage forms A.D.Banker&Company 161

14 CHAPTER TEN 28. A contract carrier is a business, individual or organization that carries persons or property of certain customers only, from one place to another, for a fee and may refuse to carry persons or property. A contract carrier may only use the Motor Carrier Coverage Form The Truckers Coverage Form covers business exposures of motor carriers for hire that transport the goods of others The Motor Carrier Coverage Form covers business exposures of a firm transporting the goods of others for hire and transporting their own property The Motor Carrier Act of 1980 deregulated the trucking industry and requires certain vehicles to carry specific minimum limits of liability insurance for the protection of the public and the environment depending upon the type of merchandise being transported The Endorsement for Motor Carrier Policies of Insurance for Public Liability (Form MCS 90) provides evidence of financial responsibility meeting the DOT financial responsibility requirements, on behalf of the motor carrier, to the Interstate Commerce Commission (ICC) A.D.Banker&Company