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
