Unit 17
Howard is driving his company-owned truck in another state and causes an accident. The state that he is driving in requires a minimum of $30,000 liability coverage, and his policy has a limit of $20,000. Howard is sued for $55,000 in damages arising out of the accident. How much will his policy pay?
$30,000.
The 'other insurance' condition states that the business auto coverage form provides
'primary coverage' for autos owned by the insured.
Garage Form Symbol 31:
- physical damage coverage only for the dealers' autos, including owned autos, autos for sale, and autos on consignment
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.
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:
-$750,000 for interstate transportation of nonhazardous property -$5,00,000 for interstate or intrastate (boundaries of the state) transportation of large quantities of certain hazardous materials, such as compressed gas, radioactive materials, explosives, or oil -$1,000,000 for interstate or intrastate transportation of oil or other hazardous wastes.
If the insured has liability coverage under the policy, what 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.
people who are not insured under commercial auto insurance:
-a person who is working in an auto-type business; and - the owner of a hired or borrowed auto.
The physical damage portions 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/animal -- falling objects -"Specified" causes of loss is a less expensive alteration to open peril comprehensive that covers only: --fire, lighting, explosion, theft, windstorm, hail ,earthquake, flood, vandalism or mischief; and sinking, burning, collision, or derailment of a conveyance transporting the covered auto
The liability sections of the business auto coverage form will cover these expenses the insurer incurs as "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
Garage Form Symbols 30:
-customers' autos left with the insured for service, repair, storage, or safekeeping (called garage keepers coverage)
The truckers coverage form includes three coverages:
-liability -trailer interchange (damage to customer's trailer) -physical damage
The insurer has three options for setting physical damage claims:
-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 theft -take the damaged or stolen property at an agreed or appraised value.
symbols used for trailer interchange coverage:
-symbol 48; and -symbol 49
The garage coverage form covers both auto and business liability arising out of:
-the ownership, maintenance, or use of covered autos; and - Garage operations.
an auto is considered something that is designed for:
-travel on public roads; or -subject to compulsory or financial responsibility laws or other motor vehicle laws.
the broadest coverage symbol is
1, because "any auto" includes all owned, hired, and nonowned autos.
The limits of liability required by the Motor Carrier Act affect all vehicles that have a gross vehicle weight of
10,000 pounds or more
Most restrictive coverage symbol is
7, because it applies only to specifically described autos listed in the declarations.
Which of the following is NOT included in the business auto coverage form? A) Uninsured motorist coverage B) comprehensive physical damage coverage C) Liability coverage D) Collision
A) Uninsured motorist coverage
consider an individual who operates a business and has business auto coverage but no personal insurance. Under the business auto policy, the sole proprietor would have coverage for any auto. Attaching the individual named insured endorsement to the business auto coverage form would extend what?
Attaching the individual named insured endorsement to the business auto coverage form would extend: coverage for the use of any auto to family members, subject to certain exclusions. -provides similar coverage to that provided by the personal auto policy.
The garage coverage form includes all of the following EXCEPT: A) garagekeepers (property) B) medical payments C) physical damage coverage D) liability (casualty)
B) medical payments
Business auto liability coverage contains many of the same exclusions as personal auto liability coverage and some unique exclusions as well, including liability:
Business auto liability coverage exclusions: -for expected or intended injuries -assumed under contract or agreement -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 - for covered autos while being used for, or while practicing or preparing for, organized or professional racing, demolition, or stunting activities.
Which business auto coverage form symbol is the "any auto" symbol used only to designate liability coverage? A) symbol 2 B) symbol 3 C) symbol 1 D) symbol 4
C) symbol 1
Which of the following is NOT included under the physical damage coverage portion of the business auto coverage form? A) flood B) earthquake C) hail D) Mechanical breakdown
D) Mechanical breakdown
All of the following are exclusions in business auto liability coverage EXCEPT: A) expected or intended injuries B) damage to property owned by the insured C) work-related injuries to employees D) defense costs
D) defense costs Defense costs are included in business auto liability coverage
Misha was involved in an auto accident in which three people were killed. When the accident occurred, she was driving a company car that she does not own. The victim's survivors file suit against Misha and her employer. What will provide coverage for Misha and her employer
Drive other car endorsement
Which symbol covers a customer's auto left with the insured for service?
Symbol 30
If an insured wants collision coverage for only a few autos out of an entire fleet, which symbol would be used on the declarations?
Symbol 7
In addition to the named insured, others have liability coverage while using
a covered auto with permission.
An auto is
a land motor vehicle, trailer, or semitrailer, including any attached machinery or equipment.
the garage coverage form uses ______________ to determine which autos are covered autos.
a numerical system
The liability coverage policy will pay
all sums (up to the limit) for bodily injury and property damage an insured legally must pay caused by an accident. -coverage for defense costs and supplementary payments is also included
Pollutants means
any solid, liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, chemicals, and waste. -waste includes materials to be recycled, reconditioned, or reclaimed.
Leased vehicles can be considered owned vehicles for coverage purposes by
attaching the 'additional insured- lessor endorsement' to the policy.
typically, auto dealers purchase physical damage coverage on a
blanket basis (all vehicles covered under a single limit of insurance)
Bodily injury means
bodily injury, sickness, or disease, including death resulting from any of these. -Property damage means damage to or loss of use of tangible property.
The insured selects what autos are to be considered covered autos for each coverage. These selections are contained in the
business auto declarations and are based on a numerical symbol system described in the policy.
The motor carrier coverage form is for
business that transport their own goods and property, and may haul the goods of others.
The business auto coverage form specifically excludes
businesses that set themselves out for hire to haul the goods of others.
A covered auto collided with another car and overturned causing a lot of damage. This auto is insured for collision and comprehensive coverage under the business auto coverage form. Which coverage would pay for this loss?
collision
When the 'mobile equipment endorsement' is attached, mobile equipment is considered a
covered auto
"trailer interchange insurance' covers
damage to a specific trailer under the policy of the trucker in whose possession the trailer is at the time of loss.
garage keepers insurance covers
damage to customers' property that the insured has for servicing, repair, parking, or storage
the liability section of the garage coverage form excludes liability for
damage to property of others in the care, custody, or control of the insured.
The garage coverage form is designed to cover
dealerships, auto repair shops, and garages for day-to-day operations. -includes auto, truck, motorcycle, RV, truck-tractor (semis), and trailer dealers
covered autos selections are listed on
declarations page of policy
In the event of a loss, depreciation (reduction) and physical condition will be considered when
determining actual cash value.
'The drive other car-broadened coverage for named individuals (DOC) endorsement'
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 spouse.
the truckers coverage form is for a trucking company hired to
haul the goods of others.
The 'individual named insured endorsement' extends personal auto coverage to
immediate family members of the named insured.
The garage coverage form includes
liability (casualty), garage keepers (property), and physical damage (property) coverage. -The casualty coverage of uninsured motorists, underinsured motorists, and medical payments coverage may be added by endorsement.
Those protected as insured under the garage coverage form as essentially the same as those insured for
liability under the business auto coverage form.
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
'primary coverage' is 'excess' for
losses involving 'nonowned' covered autos.
similar to the coverage provided for personal auto coverage, the insured may also add
medical payment, uninsured motorist, and underinsured motorist coverage by endorsement.
the 'out of state coverage extensions' modify
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. -increased limits if necessary
'additional insured- lessor endorsement' provides coverage for
non-trucking use when the truck-tractor is not being used to haul or carry a trailer for others.
when the business auto coverage form and other insurance cover on the same basis, the business auto coverage form pays
only its proportion share of the loss
The MCS-90 endorsement provides
public liability coverage for bodily injury, property damage, and environmental restoration.
An insured cannot take legal action against he insurance company unless
she has fully complied with all terms of the policy
The business auto coverage form provides for
situations where a business's autos are driven in more than one state.
"garage physical damage' coverage offers the same coverage as the 'business auto coverage form':
specified causes of loss, and collision.
coverage for ' the garage's liability for customers' autos in its care or custody' is provided under
the 'garagekeeprs insurance' section of the garage coverage form.
If insurance is used to establish proof of financial responsibility, what must be attached to the policy?
the MCS-90 endorsement
If more than one policy issued by the same insurer applies to a loss, the amount that the insured can be paid is limit to
the highest single policy
The insured cannot take legal action against the insurance company unless
the insured has fully complied with all the terms of the policy.
for coverage to apply on 'trailer interchange insurance',
the trucker must be liable under a 'written interchange agreement', and the damage must be caused by a covered peril. -covers damage to a nonowned trailer
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 'Motor carrier coverage form' is practically identical to the 'truckers coverage form'. like the 'truckers coverage form', it provides
trailer interchange coverage. Unlike the truckers form, owned private passenger autos may be covered autos in the motor carrier coverage form. -insured hauling any goods in own trucks -can include trailer interchange
Symbol 48 (trailer interchange coverage)
trailers borrowed or leased by the named insured for which liability for loss has been assumer under a written trailer interchange agreement.
Symbol 49 (trailer interchange coverage)
trailers owned or hired by the named insured while the trailers are in someone else's possession under a written trailer interchange agreement
Truckers and other commercial carriers are subject to a number of regulations, such as the 'Motor Carrier Act of 1980', 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.
Sam missed 3 days of work at her insurer's request. How much money will the supplementary payments form cover for Sam's lost earnings?
up to $250 a day
employees are also considered an insured while driving a vehicle owned by the business or a
vehicle for which the business is responsible.
'business auto coverage form' provides
worldwide liability coverage for private passenger autos the insured hires, leases, rents, or borrows without driver for 30 days or less.
