Commercial Auto Insurance

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Commercial Auto Insurance

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can be used to cover liability loss exposures, property lossexposures, and personal loss exposures arising out of the ownership,maintenance, or use of autosthe most common way a business canincur auto liability is through the negligent injury of persons or damage toproperty by an employee operating an auto owned by the business

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Response Liability

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rule of placing liability on the employer, is based on the fact that the employee was acting on behalf of the employer at the time of loss. The employer's liability in this situation is also referred to as avicarious liability

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Employers nonownership liability

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if an employee uses his or her own auto in performing jobduties, the empoyer is exposed to liability, because the auto is being used tofurther the employer's business

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The Garage Coverage Form

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contains optional garagekeepers coverage for insuring loss tocustomers' autos while they are in the custody of the insured auto or trailerdealerall other businesses that have abailee exposure for customers' autos can insure this loss exposure under agaragekeepers endorsement to their commercial auto coverage forms the only organizations eligibleare: auto and trailer dealers

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Auto Physical Damage Insurance

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covers damage to or destruction of a covered auto. Ordinarily,the insurer pays the cost of repairing the vehicle or its actual cash value,whichever is less

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Personal Loss Exposure

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describes the possbility of financial loss resulting frominjury, sickness, or death. Anyone who could suffer injury in an auto accidenthas a personal loss exposure

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Components of a Commercial Auto Coverage Part

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includes thedeclarations, a commercial auto coverage form, and any applicable endorsements.A commercial auto coverage part can be included in a commercial package policy(CPP) or issued as a monoline policy

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BusinessAuto Coverage Form coverage

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used to insure the auto loss exposures of anyorganizations that are not motor carriers (businesses that transport theproperty of others) or auto or trailer dealers. Also includes optionalprovisions for insuring physical damage to autos owned, leased, or hired by thenamed insured.

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Garagekeeper Coverage

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the coverage, included inthe Garage Coverage Form, for damage to customers' autos in the named insured'scares

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Auto Endorsements

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a variety of endorsementsare available for modifying the terms and conditions of the commercial auto coverageforms. Endorsements are commonly used to add coverages, to designate additionalinsureds, to add or omit exclusions, and to bring standard coverage forms intoconformity with state insurance regulations

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Business Auto Coverage Form(BACF)

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coverage symbols used todesignate covered autos allowed for customizing commercial auto coverage tomeet each insured's particular needs BACF consists of 5 sections"

-Section I- Covered Autos

-Section II- Liability Coverage

-Section III- Physical DamageCoverage-Section IV- Business AutoConditions

-Section V- Definitions

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Liability coverage of the Business Auto Coverage Form (BACF)

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important coverage because liability can arise from anorganization's owned, hired, or borrowed autos or from employee's autosoperated on behalf of the organizationThe liability coverage provisionsof the BACF include an insuring agreement, a definiton of who is insured.coverage extensions, exclusions, and a limit of insurance provisionble

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BACF Insuring Agreement

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the insurer expresses three distinct duties:1. a duty to pay damages2. a duty to pay "coveredpollution cost or expense"3. A duty to defend the insured

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Duty to Pay Damages

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the insurer agrees to pay all sums an "insured" mustlegally pay as damages because of "bodily injury" (BI) or"property damage" (PD) to which the insurance applies, caused by an"accident" and resulting from the ownership, maintenance, or use of acovered auto

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Duty to Defend

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the insurer has the right and duty to defend an insured againstany claim or suit alleging damages that would covered under the policy. Theclaim or suit only needs to allege damages that would be covered. Hence, theinsurer must defend against even false or fraudulent claims or suits as long asthey allege covered damages

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Coverage Extensions

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BACF liability coverage provides six supplementary payments,which are payable in addition to the limit of insurance:-all expenses incurred by theinsurer-up to $2,000 for the cost of bailbonds required because of a covered accident-the cost of bonds releasedattachments in any suit against the insured that the insurer defends -all reasonable expenses incurredby the insured at the insurer's request-all court costs taxed against theinsured in any suit against the insured defended by the insurer-all interest on the full amountof any judgment that accrues after entry of the judgment in any suit againstthe insured that the insurer defends","upwM5p

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BACF's Exclusions

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the exclusions that appear in the BACF's liability coveragesection impose several limitations on the liability insuring agreement:-expected or intended injury andcontractual liability exclusions-workers compensation and relatedexclusions-care, custody, or controlexlcusions-exclusions related to loading andunloading -operations and completedoperations exclusions-Pollution, War, and RacingExclusions

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Workers Compensation and Related Exclusions

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The BACF excludes any liability under a workers compensation,disability benefits, or unemployment compensation law. It effectivelyeliminates, subject to two exceptions, coverage for bodily injury to employeesof the insured that should be covered under workers compensation and employersliability insurance

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Care, Custody, or Control Exclusions

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no coverage exists forproperty owned by the insured or in the care, custody, or control of the insured

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Operations and Completed Operations Exclusions and employer

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Operations Exclusion: eliminates coverage for the operation ofseveral specified types of equipment attached to covered autosCompleted Operations Exclusions:clarifies that the BACF provides no coverage for completed operations performedwith the insured's autos

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Pollution, War, and Racing Exclusions

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eliminates coverage for bodily injury or property damage resulting fromthe discharge of any pollutants being transported or stored in, or moved to orfrom, a covered auto. By a specific exception, the exclusion does not apply tothe escape of fuels, lubricants, fluids, exhaust gases, or other similarpollutants needed for the functioning of the covered auto

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Collision Coverage

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insured direct and accidental loss or damage to a covered autocaused by collision with another object or by overturn

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Comprehensive Coverage

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insures direct and accidental loss or damage to a covered autoby any peril except collision or overturn or a peril specifically excluded

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Specified Causes of Loss Coverage

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coverage for direct and accidental loss caused by fire,lightning, explosion, theft, windstorm, hail, earthquake, flood, mischief,vandalism, or loss resulting from the sinking, burning, collision, orderailment of a conveyance transporting the covered auto

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Towing Coverage

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pays for necessary towing and labor costs due to the disablementof a covered private passenger auto. The labor must be performed at the placeof disablement. The limit for towning coverage is the most that the insurerwill pay for each

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Transportation Expenses

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a coverage extension forsubstitute transportation costs incurred when a private passenger-type auto hasbeen stolen. The insurer agrees to pay the cost of substitute transportationactually incurred by the named insureed, subject to a daily limit of $20 and atotal limit of $600. Payments begin 48 hours after the theft and end when theinsured auto is returned to use or when the insurer pays for the auto

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Loss of Use Expense Coverage

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pays for loss of use of a rental auto when an insured becomescontractually obligated to make such payments. The coverage extension for lossof use expenses provides up to $20 a day, to a maximum of $600, to cover thatexposure. These limits can be increased by endorsement

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Business Auto Physical Damage Insurance Exclusions

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certain types of losses that are likely to occur as a normalconsequence of prolonged use of the vehicle or the owner's neglect excludes coverage for autos whileused in organized races or demolition contests, including practice orpreparation for such activities. Finally, the physical damage section excludes"diminution in value," which the form defines as "actual orperceived loss in markt value" resulting from a covered auto being repaired

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Limit of Insurance

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the most the insurer will pay for a physical damage loss is thelesser of these values:-the actual cash value of theproperty at the time of loss-the cost of repairing orreplacing the property with other property of like kind or quality

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Bankruptcy

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bankruptcy or insolvency of the insured does not relieve theinsurer of any of its obligations under the policy. The insurer is stillobligated to make payments just as it would have been had the insured remainedsolvent

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Liberalization

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by providing more coverage at no extra cost when the insurer'srevised business auto form becomes effective, rather than on the policy renewaldate