Commercial Auto Insurance Flashcards by jamylee germany

__policy can be written as a monoline policy or can be included in the commercial package policy (CPP).

Commercial auto policy

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The commercial auto policy can be written as a monoline policy or can be included in the commercial package policy (CPP). A commercial auto policy must contain the following elements:

■ Common policy declarations
■ Common policy conditions
■ One of five separate coverage forms: business auto, business auto physical damage, garage, truckers, or motor carrier
■ Appropriate declarations for coverage form selected

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__is used to insure the private passenger and commercial auto exposures of all businesses other than garages (auto dealers, auto service businesses, etc.), truckers, and motor carriers (trucks hauling cargo). Because of the specialized nature of these businesses and their unique coverage needs, separate forms were designed to cover these risks.

Business auto coverage form

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The business auto coverage form is used to insure the private passenger and commercial auto exposures of all businesses other than garages (auto dealers, auto service businesses, etc.), truckers, and motor carriers (trucks hauling cargo). Because of the specialized nature of these businesses and their unique coverage needs, separate forms were designed to cover these risks.
The business auto coverage form includes:

■ liability coverage; and
■ physical damage coverage (comprehensive, specified causes of loss, and collision).
Uninsured motorists, medical payment, and underinsured motorists coverage can be added by endorsement.

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__is a land motor vehicle, trailer, or semitrailer, including any attached machinery or equipment, that is:

Auto

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__means __, sickness, or disease, including death resulting from any of these. Property damage means damage to or loss of use of tangible property.

Bodily Injury

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__means 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.

Pollutants

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Any auto the insured will use during the policy period, including autos that are owned, leased, hired, rented, or borrowed

Type of Auto Selected:
Symbol number::

Any auto Symbol 1

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Any auto the insured owns

Type & Symbol:

Owned autos only

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Any private passenger auto the insured owns

type and symbol:

Owned private passenger autos only

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Other types of vehicles the insured owns, such as trucks, trailers, buses, and motorcycles

Type and symbol:

Owned autos other than private passenger autos only

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Designates owned autos required to have no-fault benefits in a particular state
Type and symbol

owned autos subject to No-fault law

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Designates owned autos required to have uninsured motorists coverage in a particular state

Type and symbol:

6 Owned autos subject to compulsory uninsured motorists law

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Applies only to autos specifically listed in the business auto coverage form declarations

type and symbol:

7 Specifically described autos

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Only used for autos the insured has leased, hired, rented, or borrowed
Does not include autos rented or borrowed from employees

type and symbol

8 Hired autos only

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Only used for autos used in the insured’s business that are not leased, hired, rented, or borrowed
Includes autos owned by employees but used in the insured’s business or personal affairs

type of symbol

9 Nonowned autos only

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Autos that would be considered mobile equipment if they were not subject to compulsory or financial responsibility laws or other motor vehicle laws

type or symbol:

19 Mobile equipment subject to motor vehicle laws only

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note
With the exception of specifically described autos, autos acquired during the policy period are automatically covered. Coverage applies to newly acquired, specifically described autos based on several conditions. First, this coverage must be in place for existing autos with this symbol, or the new auto must replace an auto that was previously covered. Second, the insured must notify the insurer within
30 days after acquiring the new auto.

With the exception of specifically described autos, autos acquired during the policy period are automatically covered. Coverage applies to newly acquired, specifically described autos based on several conditions. First, this coverage must be in place for existing autos with this symbol, or the new auto must replace an auto that was previously covered. Second, the insured must notify the insurer within
30 days after acquiring the new auto.

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NOTE
If the insured has liability coverage under the policy, the following vehicles are also covered autos for liability coverage:
Temporary substitute autos (borrowed, rented, or hired auto to replace a covered vehicle that is disabled)

■ Trailers with a load capacity of 2,000 pounds or less
■ Mobile equipment while it is being towed or carried by a covered auto

■ Temporary substitute autos (borrowed, rented, or hired auto to replace a covered vehicle that is disabled)

■ Trailers with a load capacity of 2,000 pounds or less
■ Mobile equipment while it is being towed or carried by a covered auto

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In addition to the named insured, others have liability coverage while using a covered auto with permission. Employees are also considered an insured while driving a vehicle owned by the business or a vehicle for which the business is responsible.
Those who are not insureds include:

Those who are not insureds include:
■ a person who is working in an auto-type business; and
■ the owner of a hired or borrowed auto.

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The __ in the business auto coverage form is similar to that provided by the personal auto policy. The policy will pay all sums (up to the limit) for bodily injury and property damage an insured legally must pay caused by a covered auto accident. Coverage for defense costs and supplementary payments is also included

liability coverage

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Business auto liability coverage contains many of the same exclusions as personal auto liability coverage and some unique exclusions as well, including liability:

Commercial Auto Insurance

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Business auto liability coverage contains many of the same exclusions as personal auto liability coverage and some unique exclusions as well, including liability:

■ for expected or intended injuries;
■ assumed under contract or agreement (does not apply to liability the insured would have had if there were no contract or agreement or to contracts that meet the policy definition of an insured contract);
■ for work-related injuries to employees;
■ for damage to property owned by, transported by, or in the care, custody, or control of the insured;
■ for damage arising out of the movement of property by a mechanical device;
■ for bodily injury or property damage arising out of the operation of self-propelled vehicles with attached cherry pickers that are used to raise or lower workers, or that have permanently attached equipment, such as air compressors, pumps, and generators;
■ for pollution damage, except as specifically provided in the policy; and
■ for covered autos while being used for, or while practicing or preparing for, organized or professional racing, demolition, or stunting activities.

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The liability section of the business auto coverage form will cover the following expenses the insurer incurs as supplementary payments:
Bailed without the A

■ Cost of bail bonds up to $2,000 for violations because of a covered accident
■ Expenses the insured incurs at the insurer’s request, including the insured’s lost earnings up to
$250 a day because of time off from work
■ Court costs the insured is required to pay because of a suit
■ Interest that accrues after a judgment and before it is paid
■ All expenses incurred by the insurer
Note: Losses covered under the supplementary payments section are paid in addition to the policy’s limit of liability.

The __modify the policy’s liability coverage to meet other states’ financial responsibility requirements (minimum limits of liability) when the covered auto is being driven in that state.

out of state coverage extensions

Note The coverage territory for the business auto coverage form includes the United States and its territories and possessions, Puerto Rico, and Canada. In addition, the form provides worldwide liability coverage for private passenger autos the insured hires, leases, rents, or borrows without a driver for 30 days or less. The insured’s liability must be determined in a suit filed in the United States or its territories and possessions.

The coverage territory for the business auto coverage form includes the United States and its territories and possessions, Puerto Rico, and Canada. In addition, the form provides worldwide liability coverage for private passenger autos the insured hires, leases, rents, or borrows without a driver for 30 days or less. The insured’s liability must be determined in a suit filed in the United States or its territories and possessions.

* United States and its territories and possessions, Puerto Rico, and Canada * Worldwide if nonowned * Must be sued in United States and its territories and possessions, Puerto Rico, and Canada

Coverage Territory

NOTE The physical damage portion of the business auto coverage form contains three principal coverages: Collision covers overturn of the covered auto and collision with another object. ■ Other than Collision (aka comprehensive) coverage covers any loss, other than collision or overturn, that is not excluded by the policy (same as personal auto): – Glass breakage – Hitting a bird or animal – Falling objects ■ Specified causes of loss is a less expensive alternative to open peril comprehensive that covers only: – fire; – lightning; – explosion; – theft; – windstorm; – hail; – earthquake; – flood; – vandalism or mischief; and – sinking, burning, collision, or derailment of a conveyance transporting the covered auto (e.g., a ship).

``` ■ Collision covers overturn of the covered auto and collision with another object. ■ Other than Collision (aka comprehensive) coverage covers any loss, other than collision or overturn, that is not excluded by the policy (same as personal auto): – Glass breakage – Hitting a bird or animal – Falling objects ■ Specified causes of loss is a less expensive alternative to open peril comprehensive that covers only: – fire; – lightning; – explosion; – theft; – windstorm; – hail; – earthquake; – flood; – vandalism or mischief; and – sinking, burning, collision, or derailment of a conveyance transporting the covered auto (e.g., a ship). ```

The physical damage coverage exclusions are similar to those found in the physical damage section of the personal auto policy, including loss: ■ to sound reproducing and receiving equipment, tapes, and records; ■ from wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires; and ■ to covered autos while being used for, or while practicing or preparing for, organized or professional racing, demolition, or stunting activities.

■ to sound reproducing and receiving equipment, tapes, and records; ■ from wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires; and ■ to covered autos while being used for, or while practicing or preparing for, organized or professional racing, demolition, or stunting activities.

The insurer has three options for settling physical damage claims:

■ Pay Damages Return Stolen property Appraisal Damages Pay for, repair, or replace the damaged or stolen property ■ Return stolen property to the insured at the company’s expense and pay for any damages resulting from the theft ■ Take the damaged or stolen property at an agreed or appraised value In the event of a total loss, depreciation and physical condition will be considered when determining actual cash value

Legal Action Against Insurer:

No legal action unless insured complied with all terms

__ condition states that the business auto coverage form provides primary coverage for covered autos owned by the insured. The coverage is excess for losses involving nonowned covered autos.

Other Insurance

If more than one policy or coverage form issued by the same insurer applies to a loss, the amount that the insured can be paid is limited to the highest single policy limit

17.4.8 Two or More Policies Issued by the Same Insurer

* Auto dealers * Truck dealers * Motorcycle dealers * Commercial trailer dealers * Recreational vehicle dealers

Garage Eligibility

Note The garage coverage form is designed to cover dealerships, auto repair shops, and garages for day-to- day operations. This includes auto, truck, motorcycle, RV, truck-tractor (semis), and trailer dealers. The garage coverage form includes liability (casualty), garagekeepers (property), and physical damage (property) coverage. The casualty coverages of uninsured motorists, underinsured motorists, and medical payments coverage may be added by endorsement.

The garage coverage form is designed to cover dealerships, auto repair shops, and garages for day-to- day operations. This includes auto, truck, motorcycle, RV, truck-tractor (semis), and trailer dealers. The garage coverage form includes liability (casualty), garagekeepers (property), and physical damage (property) coverage. The casualty coverages of uninsured motorists, underinsured motorists, and medical payments coverage may be added by endorsement.

__Customers’ autos left with the insured for service, repair, storage, or safekeeping (called garagekeepers coverage, which we’ll cover later)

■ Symbol 30

__Physical damage coverage only for the dealers’ autos, including owned autos, autos for sale, and autos on consignment

■ Symbol 31

The garage coverage form covers both auto and business liability arising out of:

■ the ownership, maintenance, or use of covered autos; and | ■ garage operations (e.g., a customer falling at the insured’s premises).

__ covers damage to customers’ property that the insured has for servicing, repair, parking, or storage.

Garagekeepers insurance

__ coverage offers the same coverage as the business auto coverage form: comprehensive, specified causes of loss, and collision. Typically, auto dealers purchase physical damage coverage on a blanket basis (all vehicles covered under a single limit of insurance).

Garage physical damage

The business auto coverage form specifically excludes businesses that set themselves out for hire to haul the goods of others. Therefore, truckers must obtain coverage for their vehicles under the truckers coverage form, a modified version of the business auto coverage form that takes into consideration the special practices and regulations that apply to the trucking industry. The truckers coverage form includes three coverages: Liability ■ Trailer interchange ■ Physical damage The liability (casualty) and physical damage (property) coverages are similar to those provided under the business auto coverage form. We’ll discuss trailer interchange coverage in a moment.

The truckers coverage form includes three coverages: ■ Liability ■ Trailer interchange ■ Physical damage The liability (casualty) and physical damage (property) coverages are similar to those provided under the business auto coverage form. We’ll discuss trailer interchange coverage in a moment.

NOTE The limits of liability required by the Motor Carrier Act affect vehicles that have a gross vehicle weight of 10,000 pounds or more. The required limits are divided into three categories, depending on the kind of hazardous cargo hauled:

The limits of liability required by the Motor Carrier Act affect vehicles that have a gross vehicle weight of 10,000 pounds or more. The required limits are divided into three categories, depending on the kind of hazardous cargo hauled:

Truckers and other commercial carriers are subject to a number of regulations, such as the ___, that require trucking companies to certify that they are able to meet financial obligations if they become liable for injury or damage arising from their trucking operations.

Motor Carrier Act Of 1980

The most common method for satisfying these requirements is to obtain adequate truckers liability insurance coverage. If insurance is used to establish proof of financial responsibility, the ____must be attached to the policy. This endorsement provides public liability coverage for bodily injury, property damage, and environmental restoration.

MCS-90 endorsement

__covers damage to a specific trailer under the policy of the trucker in whose possession the trailer is at the time of loss. For coverage to apply, the trucker must be liable under a written interchange agreement, and the damage must be caused by a covered peril.

Trailer interchange insurance

Trailers borrowed or leased by the named insured for which liability for loss has been assumed under a written trailer interchange agreement What Symbol?

Symbol 48

__Trailers owned or hired by the named insured while the trailers are in someone else’s possession under a written trailer interchange agreement What Symbol?

Symbol 49

__form is for businesses that transport their own goods and property, and may haul the goods of others. The truckers coverage form is for a trucking company hired to haul the goods of others.

Motor Carrier Coverage Form

* Insured hauling any goods in own trucks | * Can include trailer interchange

Motor Carrier Form

The ___ extends business auto coverage to nonowned vehicles operated by the person (or spouse) named in the endorsement. Coverage does not apply to autos owned by the person named in the endorsement or spouse. ___coverage might be especially important if the named insured under a business auto coverage form is furnishing an auto to an employee who has no personal auto insurance.

drive other car—broadened coverage for named individuals (DOC) endorsement

__extends personal auto coverage to immediate family members of the named insured.

individual named insured endorsement

``` note Commercial Auto Endorsements (Any Form) • Drive other car • Covers individual named (and spouse) • Extends company insurance to nonowned vehicle • Individual named doesn’t own a vehicle • Individual named insured • Extends company insurance to family members • Additional insured—lessor • Covers leased vehicles as owned ```

``` Commercial Auto Endorsements (Any Form) • Drive other car • Covers individual named (and spouse) • Extends company insurance to nonowned vehicle • Individual named doesn’t own a vehicle • Individual named insured • Extends company insurance to family members • Additional insured—lessor • Covers leased vehicles as owned ```

___provides coverage for non-trucking use when the truck-tractor is not being used to haul or carry a trailer for others.

Bobtail Endorsement

Finally, when the __ is attached, mobile equipment is considered a covered auto

mobile equipment endorsement

Note Supplementary (Additional) Payments ■ Cost of bail bonds up to $2,000 for violations because of a covered accident ■ Expenses the insured incurs at the insurer’s request, including the insured’s lost earnings up to $250 a day because of time off from work ■ Court costs the insured is required to pay because of a suit ■ Interest that accrues after a judgment and before it is paid ■ All expenses incurred by the insurer

Supplementary (Additional) Payments ■ Cost of bail bonds up to $2,000 for violations because of a covered accident ■ Expenses the insured incurs at the insurer’s request, including the insured’s lost earnings up to $250 a day because of time off from work ■ Court costs the insured is required to pay because of a suit ■ Interest that accrues after a judgment and before it is paid ■ All expenses incurred by the insurer

Note Physical Damage Exclusions ■ To sound reproducing and receiving equipment, tapes, and records ■ From wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires ■ To covered autos while being used for, or while practicing or preparing for, organized or professional racing, demolition, or stunting activities

Physical Damage Exclusions ■ To sound reproducing and receiving equipment, tapes, and records ■ From wear and tear, freezing, mechanical or electrical breakdown, or road damage to tires ■ To covered autos while being used for, or while practicing or preparing for, organized or professional racing, demolition, or stunting activities