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Insurance School - CIAB and HSI > Business Auto > Flashcards

Business Auto Flashcards

1
Q

What is the CA 00 01 form for?

A

Business auto coverage form - the primary insurance policy for protecting commercial enterprises against exposures.

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2
Q 
What covers the following:
Autos used in an insured business
Delivery vehicles
Fleets (such as taxis) 
Other commercially used autos
A

The BAP CA 00 01

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3
Q

What is the mechanism an insurer uses to classify autos insured under the BAP?

A

The nine designation symbols.

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4
Q

What is the purpose of the business auto policy

A

To protect commercial enterprises against exposures arising from the use of autos or trucks in the insured’s business.

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5
Q

Where can the designation symbols be found in the BAP? The designation symbols indicate which autos qualify as covered autos for each coverage being purchased by the insured.

A

The symbols are shown in item two of the policy declarations.

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6
Q

Symbol 1 in the BAP signifies what?

A

Any auto.

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7
Q

True or false - every time an auto is acquired, the insured needs to report it to the insurance company. The company BAP uses symbol 1.

A

False. 1 signifies any auto and automatically covers acquired autos for the duration of the policy period.

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8
Q

What symbol provides coverage for autos that the named insured owns, any acquired autos during the policy period, and for non owned trailers while they are attached to the owned autos?

A

Symbol 2.

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9
Q

Symbol 3 in the BAP covers what?

A

Symbol 3 provides coverage for owned private passenger autos only.

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10
Q

What are the autos defined by the CLM as “private passenger autos”?

A

The CLM defines a private passenger auto as a four wheel auto of the private passenger or station wagon type, including pick ups, panel trucks, or vans.

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11
Q

If a company owns only trucks and trailers and never uses private passenger autos, what symbol should they use in their BAP?

A

Symbol 4 - owned autos other than private passenger autos only, including acquired autos of the same type.

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12
Q

What symbol refers to owned autos subject to no fault law states?

A

Symbol 5 - it’s not necessary in states where the named insured has the right to buy no fault coverage but is not required by law. It’s used to provide no fault coverage for autos you own when required by law.

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13
Q

When is symbol six used?

A

Symbol 6 is used to trigger uninsured motorist coverage for autos you own when your state requires you to purchase uninsured motorist coverage.

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14
Q

What symbol covers the vehicles described in item three of the declarations page, and any trailer you don’t own that’s attached to a car or truck listed in the declarations.

A

Symbol 7

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15
Q

If your coverage is designated by symbol 7 and you acquire a new auto, will the new acquisition be covered without notifying your insurer?

A

No - if you acquire a new auto and symbol 7 is listed in your coverages, you must tell the insurer about the new vehicle.

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16
Q

Does symbol 8 cover cover any vehicle you hire, rent, lease, or borrow from any of your employees, partners, or members (if you are a limited liability company) or any members of their households?

A

no - it only includes vehicles you rent, hire, lease or borrow but it cannot include those from employees, partners, members of your or their households. It also only covers the insured, not employees.

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17
Q

Non-owned autos are vehicles you use in your business but do not own, hire, rent, lease, or borrow. What symbol is used to denote non owned autos only?

A

Symbol 9

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18
Q

Does Symbol 9 cover insured’s members of their household, employees, partners or LLC members use of non owned autos during company business and personal affairs, so long as it’s used in the insured’s name?

A

Yes.

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19
Q

If you purchase a commercial auto policy that covers only hired and non-owned autos (symbol 8 & 9) months after your policy begins you buy a forklift.

The law in your state requires you to insure a forklift for liability if you want to drive it on a public road. What symbol should you use for the forklift?

A

Symbol 19

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20
Q

Is towed or carried mobile equipment covered for liability coverage if it’s being towed/carried by a covered auto?

A

Yes.

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21
Q

The BAP is appropriate for all vehicles including (which one doesn’t apply): Delivery Vehicles, Fleets, Pickup and Vans, 18 Wheel Semi Trucks.

A

18 wheel semis.

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22
Q

What is the most comprehensive designation for company auto coverage?

A

Symbol 1

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23
Q

If symbols 1,2, 3, 4, 5, or 65 are entered next to coverage in item two of the declarations, what can be said of the autos acquired after the policy begins?

A

The same coverage would automatically apply to the acquired autos.

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24
Q

What is the load capacity in pounds are considered covered autos for liability coverage under the BAP?

A

2000 pounds or less.

25
Q

An unforeseen and unplanned event on the part of the insured is what?

A

An accident.

26
Q

The cost or expense arising out of any request, demand or order that the insured cleanup or respond to the effects of pollutants

A

Covered pollution cost or expense.

27
Q

What does “limit of insurance” mean?

A

The most the insurer will pay for the total of all damages and covered pollution cost or expense combined.

28
Q

Liability insuring agreement, coverage extensions, exclusions, and a provision concerning the limit of insurance are contained where?

A

Section II of the BAP - auto liability coverage / liability coverage insuring agreement.

29
Q

What are the three parts of the liability coverage insuring agreement?

A

Part 1 - the insurer agrees to pay all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies. The insured has to be legally liable for bodily injury or property damage caused by an auto accident.

Part 2 - the insurer promises to pay all sums that an insured legally must pay as a covered pollution cost or expense resulting from an auto accident. This is coverage for cleanup costs for a pollution spill for which the insured is liable.

Part 3 - describes the insurer’s duty to defend. The insurer agrees to defend any insured against a suit seeking damages or covered pollution cost or expense so long as it applies to the insurance.

30
Q

Who is insured under section II of the BAP?

A

The insured, anyone else who is driving a covered auto you own, hire, or borrow with your permission, and anyone who is liable for your conduct or the conduct of a permissive user / omnibus clause.

31
Q

the BAP consists of five sections - what are they?

A

(1) covered autos, (2) liability coverage, (3) physical damage coverage, (4) business auto conditions, and (5) business definitions.

32
Q

Supplementary payments diminish the limits available for claims or lawsuits. True or false?

A

False - supplementary payments are in addition to the limit of the insurance.

33
Q

Expenses incurred by the insurer, the cost of bail bonds as a result of an accident, the cost of bonds to release attachments, and all reasonable expenses incurred at the request of the insurer are examples of what?

A

Supplementary payments.

34
Q

What two items are included in coverage extensions?

A

Supplementary payments and Out of State Coverage.

35
Q

There are 13 what in the current BAP

A

Exclusions.

36
Q

Which exclusion is the expected or intended injury exclusion?

A

the first exclusion. Example: if the insured purposely hits a competitors delivery van - intending to cause damage - the damage would not be covered under the BAP.

37
Q

The second exclusion is also referred to as the what?

A

Contractual Exclusion. The BAP does not cover any liability assumed under any contract or agreement.

38
Q

What exclusions deal with workers comp and employee injury?

A

Exclusions 3, 4, and 5.

39
Q

Exclusion six is for care, custody, or control exclusion. What does this apply to? Why?

A

It applies to property damage or covered pollution cost or expense involving property owned or transported by the insured, or in the insured custody, care or control. Property damage to property owned by the insured should not be covered under a liability policy since, after all, the insured cannot be liable to himself. The coverage is more properly handled by a commercial property policy or an inland marine policy. Inland Marine is more appropriate for covering damaged to transported property as well.

40
Q

Exclusion 7 precludes what?

A

Exclusion 7 precludes coverage for BI or PD that results from the handling of property before it is moved from the place where it is accepted by the insured, or after it is moved from the covered auto to the place where it is finally delivered. If the insured has a CGL form and a BAP, there is liability coverage: 1. before moving property onto a covered auto, 2. while the property is being loaded onto the auto, 3. while the property is being transported on the covered auto, 4. while the property is being unloaded from the auto, 5. after the property has been finally delivered.

41
Q

The BAP does not cover BI or PD that results from the movement of property by a mechanical device unless the device is attached to the covered auto. What exclusion is this related to?

A

Exclusion 8.

42
Q

What exclusion relates to paragraphs 6b and 6c, excluding BI or PD coverage for equipment like cherry pickers and similar devices to raise and lower workers, air compressors, pumps and generators?

A

Exclusion 9 - the operation of the equipment itself is not covered.

43
Q

What exclusion is related to “completed operations” coverage?

A

Exclusion 10.

44
Q

Which exclusion relates to pollution?

A

Exclusion 11

45
Q

In part two of the liability insuring agreement under the BAP, what does the insurer promise to do?

A

To pay all sums the insured legally must pay as a covered pollution cost or expense resulting from an auto accident.

46
Q

Is a salesman using his own personal auto on company business an insured under the company BAP?

A

no - Anyone while using a covered auto owned, hired, or borrowed by the name insured is an insured under the BAP except for employees if the covered auto is owned by that employee.

47
Q

Supplementary payments under the BAP are all but one of the following items:

  • Expenses incurred by the insurer,
  • Bail bonds
  • the cost of bonds to release attachments
  • all reasonable expenses incurred by the insured at the request of the insurer
  • all costs taxed against the insured in any suit the insurer defends
  • Hospital costs incurred by the insured after an auto accident
  • all interest on the full amount of any judgment that accrues after entry of the judgment against the insured.
A

Hospital costs incurred by the insured after an auto accident are not covered by the BAP.

48
Q

The pollution exclusion (11) excludes any exposure - from before being moved onto a covered auto through transit on the covered auto and on to final disposition - under the BAP. What exceptions are allowed to this exclusion?

A

The first exception applies to substances that are needed for (or result from) the normal operation of a vehicle or its parts. Examples are gasoline, engine oil, brake fluid, and exhaust fumes. If such substances are released from an insured vehicle that is damaged in an auto accident and the insured business is sued as a result, the suit should be covered if two conditions are met:

The pollutants are released from the part of the auto designed to hold or store them. For example, gasoline is released from the vehicle’s gas tank, not from a gallon jug of gasoline stored in the trunk.
The damaged vehicle qualifies as an auto (it is not mobile equipment).

The second exception applies to pollutants released due to the upset, overturn or damage to their container (or to the pollutants themselves) as the result of an auto accident. The accident must occur away from your premises and involve a covered auto. In addition, the pollutants cannot be located in or on the covered auto.

49
Q

Is the insurer liable for BI or PD due to war?

A

No =- Insurance companies do not cover damages caused by war for a couple reasons. First, if war breaks out in a country, it could cause a catastrophic amount of damage. It would likely bankrupt the insurance company to cover such damages; thus, they cannot afford to cover this risk. Moreover, if an insured individual decides to join the military and go to war, they are voluntarily putting themselves at a much higher risk of getting disabled or killed. As a result, many life and disability policies do not cover losses from war.

50
Q

The final exclusion on the CA 00 01 applies to what?

A

Racing exposures - high risk activities such as racing should be insured under specialty lines.

51
Q

What does section III of the BAP form provide?

A

Physical damage coverage.

52
Q

What dos Section III of the BAP include

A
  • coverage agreements
  • coverage extension
  • exclusions
  • limit of insurance information
  • deductible provision
53
Q

The coverage agreement under Section III of the BAP states that the insurer will pay for a loss that is a direct and accidental loss or damage to a covered auto. Does this include loss that is of consequence of an accident? ex: loss of business profit after a business vehicle is totaled in an accident.

A

No - Consequential damage or loss of use coverage is not covered under Section III of the BAP>

54
Q

What types of coverages are available for physical damage coverage?

A

Comprehensive coverage - coverage from any loss other than collision.

A specified cause of loss like flood, mischief, burning, etc. spelled out in the policy.

Collision coverage for loss covered by the auto’s collision with another object or its overturn.

55
Q

If the insured chooses 100 of coverage for towing, and the vehicle breaks down five times in one week, what will be covered?

A

the insurer pays the limit in the declarations each time a covered private passenger auto is disabled. if the insured auto breaks down five times in a week and has to be towed each time, the insured has at least the chosen amount of 100 available for each tow.

56
Q

What conditions must be met for temporary transportation expense coverage?

A

The covered auto must be stolen, it must be a passenger type vehicle, and the insured must have purchased either comprehensive or specified the causes of loss coverage on the auto.

57
Q

When would loss of use expenses come into play?

A

If an insured damages a rental car, the loss of use expenses would cover the rental agency loss of use.

58
Q

how many exclusions apply to the physical damage section of the BAP?

A

six:

  • Nuclear hazard or war exclusion
  • racing or demolition contest or stunting activity. This is available from a specialty market.
  • War and tear exclusion including blow outs, punctures, wear and tear, freezing and mechanical/electrical breakdown.
  • Loss to certain equipment including electronic equipment, audio/visual or data electronic devices, and radar detection equipment,
  • Loss due to diminution in value.

Insurance School - CIAB and HSI (2 decks)

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