Chapter 3 – The Commercial Automobile Exposure

Question 1

commercial property policies routinely exclude

Answer 1

any payment for physical damage to automobiles owned or used by the insured

Question 2

private passenger

Answer 2

Registered in the name of the business, used primarily for business use are insured in the same manner. Due to the additional exposure for business use, an increased premium will normally be charged for third party liability coverages.

Question 3

Commercial vehicles

Answer 3

Generally used to transport the goods of the insured or those belonging to
others

Question 4

SEF No. 44 Family Protection Endorsement (underinsured or uninsured motorist)

Answer 4

Payment is limited to the difference between the liability insurance limit of the insureds policy and that carried by the motorist at fault.

Question 5

Accident Benefits

Answer 5

compulsory no fault coverage in all provinces, except Newfoundland

Coverage is generally provided for the following:

• Reimbursement of reasonable medical expenses
• Rehabilitation costs
• Funeral expenses
• Death benefits
• Loss of income

Question 6

Loss of use coverage starts immediately when…

Answer 6

• The damage is such that the vehicle cannot be operated under its own
  power
• If stolen, on the day following the report of the theft to the insurer or to the
  police
• Other instances, at the time the automobile is delivered for repair due to
  the loss or damage

Question 7

Loss of Use is not available on…

Answer 7

taxis, tractors, U-drive vehicles

and certain trailers

Question 8

SPF No. 8 Standard Lessor’s Contingent Automobile Policy

Answer 8

Agrees to indemnify the lessor for loss incurred as a direct result of the lessee’s failure to effect or maintain the automobile insurance required by the lease contract. The insurer agrees to pay the difference between the insurance purchased by the lessee and the amounts provided by this policy.

Question 9

SEF No.5d Conversion Coverage Endorsement

Answer 9

Covers losses caused by the dishonest acts of the lessee which result in the loss of the automobile to the lessor – can be used on short or long term leases

Question 10

SEF No.27 Legal Liability for Damage to Non-Owned

Automobiles Endorsement

Answer 10

eliminates the need for own

damage coverage from the lessor

Question 11

SEF No.27 Legal Liability for Damage to Non-Owned

Automobiles Endorsement restrictions…

Answer 11

• Coverage restricted to insured and spouse
• Coverage is for the same perils as are insured under the SPF No.1 Owners Form
• No more than one automobile may be rented or lased by insureds or their spouses at any one time
• Coverage is normally restricted to certain types of automobiles
• Coverage provided is subject to a maximum amount in any one
  occurrence

Question 12

Public omnibus

Answer 12

bus which serves several purposes at once, transporting both passengers and property

Question 13

Livery

Answer 13

one which is rented to others

Question 14

Jitney or sight seeing conveyance

Answer 14

a bus, often used to transport tourists on

local tours

Question 15

shall not be deemed to be the carrying of passengers

Answer 15

In return for the formers carriage in the automobile for the latter

Occasional and infrequent…carriage of another person who shares the cost of the trip

Carriage of a temporary or permanent domestic servant of the insured or his spouse

Carriage of the clients or customers or prospective client or customers

Occasional and infrequent…transportation of children to or from activities conducted as part of an educational program

Question 16

Scheduled Basis

Answer 16

Each automobile is specifically identified and coverages are not required to be the same for all automobiles.

Question 17

Fleet Basis

Answer 17

A minimum number of automobiles under a common ownership or control. Rate advantages when coverages are provided on a fleet policy.

Question 18

Scheduled Automobiles

Answer 18

Vehicles are specifically identified with coverages applicable and premiums charged.

Question 19

SEF No.21b Blanket Basis Fleet Endorsement

Answer 19

insured is required to provide the insurer with a complete schedule of all such automobiles at the time insurance is requested

Question 20

SEF No.21a Monthly Reporting Basis Fleet Endorsement

Answer 20

insurer agrees to calculate the premium on the basis of

receipts or mileage as reported to it

Question 21

Retrospective Rating

Answer 21

final premium charged will fall within an established minimum and maximum range. The insured’s loss ratio is a factor, this encourages insureds to develop and
maintain effective loss prevention programs.

Question 22

SPF No.6 Standard Non-Owned Automobile Policy

Answer 22

third party liability exposures of business owners

Coverage can be provided (i) separately or, as is most common, (ii) by way of endorsement to the Commercial General Liability Policy

Question 23

non-owned automobile

Answer 23

Owned by an employee
A hired automobile
Operated under contract for the insured

Question 24

Types of Garage Risks

Answer 24

• Automobile dealers
• Repair garages
• Service stations
• Storage garages
• Parking lots

Question 25

Garage Risks Excluded by Other Liability Policies

Answer 25

• Policy coverages do not extend to insure bodily injury or property damage arising…of…any automobile
• Coverage for personal property in the care, custody or control of the insured is excluded

Question 26

Owned Automobiles (Garage Policies)

Answer 26

automobiles for use by the principals and key sales staff, tow trucks, service loaners and automobiles being held for sale.

Question 27

Non-owned Automobiles (Garage Policies)

Answer 27

Customers - moving automobiles on the lot and test driving

Question 28

Exclusions - Garage Policies

Answer 28

• Loss or damage to property carried in or upon an automobile owned or driven by any person insured by this section…
• Loss or damage to any customer’s automobile

Question 29

SEF No.70 Named Chauffeur Endorsement

Answer 29

If the vehicle is driven by a designated employee only, used to reduce the premium charged on
Subsection 1 Collision or Upset

Question 30

Monthly Average Basis

Answer 30

insured selects an amount of insurance which represents the maximum value of owned automobiles expected at any one time

Question 31

Co-Insurance Basis

Answer 31

The insured is required to purchase an amount not less than 80% of the actual cash value of all owned automobile

Question 32

Garage Policies Exclusions

Answer 32

• Caused by the conversion, embezzlement, theft or secretion by any person in lawful possession of the automobile
• Caused by the voluntary parting with title or ownership
• Under Subsection 2 & 3 (Comprehensive, Specified Perils) for loss or damage by theft from any open lot or unroofed space owned, rented or controlled by the insured except the theft of an entire automobile

Question 33

SEF No.74 Open Lot Pilferage Endorsement –

Owned Automobiles

Answer 33

coverage for pilferage losses

Question 34

SEF No.77 Legal Liability for Comprehensive Damage to Customers’ Automobiles Endorsement (Including Open Lot Pilferage)

Answer 34

additional coverage for open lot pilferage for insureds that store customers automobiles in the open.

Question 35

SEF No.71 Excluding Owned Automobiles

Answer 35

delete all policy coverages on “any automobile owned, hired or leased by our licensed in the name of the insured” and used for automobiles already insured under a SPF No.1 Owner’s Form and related endorsements. This also results in a reduction in premium.

Question 36

SEF No.76 Additional Insured Endorsement (Broad Form)

Answer 36

regular or frequent use to a person who is not an active partner or full-time employee of the business