4/F - Commercial Auto Flashcards
Basic Business Auto Policy (BAP)
Designed for most commercial auto owners
5 Sections to the BAP
- Covered Autos
- Liability Coverage
- Physical Damage Coverage
- Conditions
- Definitions
Coverage Symbols 1-3
Section 1 of the BAP uses numeric symbols to indicate what vehicles are covered under each sort of coverage in the policy
Symbol #1 - Any auto: usually only liability
Symbol #2 - Any owned vehicle
Symbol #3 - Owned private passenger vehicle, not trucks, buses, etc.
Coverage Symbols 4-6
More symbols used in the Covered Auto sections:
- Symbol #4 - Owned vehicles other than passenger: trucks, buses, specialty
- Symbol #5 - Owned autos subject to no-fault insurance
- Symbol #6 - Owned autos subject to compulsory uninsured motorist law
Coverage Symbols #7-#9 & #19
More symbols used in the Covered Auto sections:
- Symbol #7 - Specifically Described Autos
- Symbol #8 - Hired Autos
- Symbol #9 - Non-owned vehicles (provides liability coverage)
- Symbol #19 - Mobile Equipment subject to Compulsory Auto Financial Responsibility requirements
Business Gets a New Vehicle
Coverage Symbols
When a business gets a new vehicle:
- Under symbol 1: no reporting required
- Under symbol 7: insured must report getting the new auto within 30 days
BAP Section II: Legal Liability
Section II of the BAP covers:
- The insured’s liability, up to policy limits
- Supplementary payments
- Defense costs of the insured, not subject to policy limit
“Insured” means:
- Named insureds
- Those operating covered vehicle with permission
- Anyone who becomes liable for conduct of insured
- Employees, while moving property to/from a covered auto
BAP Section III: Physical Damage
Comprehensive and Collision coverages:
- Collision: collision with another car or object, overturn
- Comprehensive: other events, including hail, fire, contact with animals, etc.
Settlement is for Actual Cash Value (ACV)
Limit of Insurance provision: If, after a loss, the insured gets a better car than they had before the loss, the amount of this “betterment” is not covered
Exclusions:
- War & nuclear activity
- Wear & tear
- Freezing
- Mechanical or electrical breakdown
- Blowouts, punctures, etc.
- Aftermarket electronics
Necessary, factory-installed electronics are covered.
BAP Section IV: Conditions
- Subrogation
- Reporting duties
- Who, when, and how of policy changes
- Policy territory (where geographically the policy is in force)
- Other conditions
Other Insurance
Policy condition that clarifies who pays what if two insurance policies apply to the same loss
- When the accident involves the insured’s own car, his insurance is primary
- When it involves a covered auto that the insured doesn’t own, the other insurance is primary
- BAP provides primary coverage for hired autos-unless the auto comes with a driver
- If a BAP covers the same loss on the same basis as another policy, the two policies split the cost
BAP Section V: Definitions
Some definitions:
- Auto: passenger cars, trucks, buses and specialty vehicles; includes self-propelled vehicles that provide mobility to attached machinery or equipment
- excludes vehicles (mobile equipment) that are not designed for public roads and vehicles that provide mobility to permanently attached machinery or equipment, but are not self-propelled
- Pollution: clean-up of pollution from normal automotive fluids covered, spills of transported materials not covered
- Accident: includes continuous or repeated exposure to the same condition that results in bodily injury or property damage
Uninsured/Underinsured & Named Individuals Broadened PIP
BAP Endorsements
- Uninsured/Underinsured: pays when the person at fault for damages does not have the liability insurance to cover them
- Named Individuals Broadened PIP: insured can extend the policy’s PIP coverage to include specific people, such as an employee who doesn’t have his own car
Medical Payments & Individual Named Insured
BAP Endorsements, cont’d
- Medical Payments/PIP: adds coverage for medical injuries caused by accidents. Includes the named insured and any relatives and household members
- Individual Named Insured: adds insured’s personal auto to business policy
Drive Other Car, Employees as Additional Insured, & Mobile Equipment
BAP Endorsements, cont’d
- Drive Other Car: covers named people and their spouses for the use of cars that they do not own and are not covered under the BAP
- Employee as Additional Insured: covers employees while using their personal cars for business purposes
- Mobile Equipment: adds coverage for mobile equipment
Garage and Garage-keepers Insurance
Need for Garage-keepers insurance:
- General Liability excludes “items in care, custody, and control” of insured
- Garage policy covers these items
Garage and Garage-keepers Insurance Coverage
Without regard to liability:
- Direct excess coverage: pays losses in excess of vehicle owner’s coverage
- Direct primary coverage: splits the whole loss with the vehicle owner’s insurance coverage
Garage and Garage-keepers Insurance Additional Hazards
Garage policy covers 2 additional hazards:
- Premises/Operations: injury or damages suffered on premises
- Products/Completed Services: for defective items or service
Garage Policy Sections:
- Section I: Covered Autos
- Section II: Liability Coverage
- Section III: Garage-keepers Insurance
- Section IV: Physical Damage
Covered Persons: insured, insured’s employees, and anyone who uses a covered auto with permission
Section I: Coverage Symbols
Coverage Symbols
- Symbol #21: Any Auto
- Symbol #22: Owned Autos Only
- Symbol #23: Owned Private Passenger Autos Only
- Symbol #24: Owned Autos Other than Passenger Autos Only
- Symbol #25: Owned Autos Subject to No-Fault Benefits
- Symbol #26: Owned Autos Subject to Compulsory Uninsured Motorist Laws
- Symbol #27: Specifically Described Autos
- Symbol #28: Hired Autos Only
- Symbol #29: Non-Owned Autos Used in Garage Business
Garage-keepers only:
- Symbol #30: Autos Left For Service, Repair, Storage, and Safekeeping (mandatory for garages)
- Symbol #31: Dealers Autos
Section II: Liability
Garage Liability Policy Exclusions:
- Watercraft or aircraft, unless on premises
- Workers’ comp injuries
- Pollution damage
- Loss of use of property caused by delays or failures of the insured
- Product or work recalls
- Real or personal property in insured’s care, custody, and control
Section III: Garage-keepers Insurance
Bailment & Bailee Coverage
Garage-keepers insurance covers items in the care, custody and control of the insured.
Bailment: when goods are in someone’s care, custody, and control
Bailee Coverage: insurance coverage on goods in someone’s care, custody, and control
Forms of Protection
Garage-keepers Insurance offers 3 forms of protection:
- Comprehensive
- Collision or overturn
- Specific causes of loss, including:
a. fire
b. lightning and explosions
c. theft
d. malicious mischief
e. vandalism
Deductibles: per auto with a maximum per loss
Exclusions
Section III: not covered under Garage Liability
Exclusions to Garage-keepers insurance:
- Theft by insiders
- Contractual liability (may be covered in other section of policy)
- Aftermarket sound or radar equipment
- Racing, acts of war, rebellion, etc.
Section IV: Physical Damage
Like the BAP, but includes blanket limit on entire inventory
Garage Policy: Endorsements
Endorsements:
- Personal Injury Protection (PIP)
- Medical Payments
- Uninsured/Under-insured Motorist
- Drive Other Car Coverage: covers the liability of the business owner and family members, no matter what car they are driving
- False Pretense Coverage: covers the loss of cars when people steal them through a trick of scheme
Trucker’s Insurance Policy
Truckers
Individuals or businesses who take possession of property for the purpose of transport
Trucker’s policy:
- Adds several provisions to BAP coverage
- Meets the extra insurance needs of trucking industry
Policy structure:
- Section I: Covered Autos
- Section II: Liability
- Section III: Physical Damage
Characteristic of the Trucker’s Policy
- Symbols: 41-49 (instead of 1-9)
- Liability coverage: includes people who hire out or lend their cars to the insured for business purposes
- Trailer Interchange coverage: covers damage to other people’s trailers in the care of the insured for transport purposes
Motor Carrier Policy
- Used as alternative to Trucker’s Policy
- “Motor Carrier” may transport goods or passengers
- “Common Carrier”: offers the transportation services on a regular basis
Same as the Trucker’s Policy in most ways
- Symbols: 61-71
- Endorsement for Motor Carrier Policies of Insurance of Public Liability: helps insured comply with laws regarding the transport of hazardous and non-hazardous cargo
