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The Rough Notes Company Inc.



July 29
09:18 2021

An Unenviable Driving Situation

Usually there is a sharp line between personal driving situations and those that qualify as commercial activities. A given vehicle use should be accompanied by the proper type and level of protection. Vehicle accidents are often traumatic, especially if they involve serious injury or, even, death.

After an accident occurs, some calm should be introduced along the lines of having confidence in how insurance can assist with handling the financial consequences. Unfortunately, stumbling blocks can appear. In fact, it is often a loss that reveals problems which should never have existed. The ownership, operation and coverage should align so that, when needed, protection applies quickly and fully.

Below is a case where the vehicle’s use created confusion over who and how a serious loss was covered. The court had its say over the insurer’s reasoning for denying protection.

On April 24, 2017, Ty Kirby (Kirby) was involved in an accident with Mary Miller (Miller). Kirby was driving a 2002 Dodge Ram (Dodge Ram) owned by his employer, Bear Creek Gravel, Inc. (Bear Creek).

On the date of the accident, Kirby had just dropped off lunch to a co-worker and left the worksite. He collided with Miller’s vehicle at a nearby intersection.

The accident resulted in Miller’s death. Miller’s family sued Kirby for wrongful death by negligent operation of the vehicle. Kirby’s personal insurance carrier was Pioneer State Mutual Insurance Company (Pioneer). The policy covered Kirby even if he was not driving an owned auto. However, the policy excluded any vehicle furnished or available for his regular use. Pioneer denied liability coverage stating the Dodge Ram was provided to Kirby for regular use.

Kirby filed suit. The district court found that the regular use exclusion did not apply to the accident because Bear Creek imposed restrictions on Kirby’s utilization of the vehicle. The court ordered Pioneer to provide coverage for the accident.

Pioneer disagreed with the district court and filed an appeal. It argued that the district court erred as a matter of law in defining the term regular use. The Supreme Court of North Dakota had not precisely defined regular use. However, it did recognize that reasonable time and place restrictions on using a vehicle could lead to finding that a vehicle was not furnished for a person’s regular use.

Pioneer relied on Kunze v. State Farm Mut. Auto. Ins. Co., 197 N.W.2d 685, 694 (N.D.1972) and found that the court was required to find the vehicle furnished for Kirby’s regular use per this case. Pioneer stated that the Dodge Ram was furnished for business only and used strictly for business when the accident occurred. However, the court disagreed.

The Supreme Court found that the Dodge Ram was not furnished for Kirby’s regular use because of the restrictions placed on its use. Kirby could not operate the vehicle at any time. He needed permission to drive it and could not drive it while off duty. Kirby did not have his own set of keys to the vehicle and did not use it on weekends or in the evenings. The Supreme Court affirmed the district court’s decision. The regular use exclusion did not apply because of the many restrictions in place.

Editor’s Note: We are uncertain why personal insurance was pursued in this matter rather than the business insurance. It may be specific to North Dakota automobile laws.

Pioneer State Mutual Insurance Company, Plaintiff and Appellant v. Bear Creek Gravel Inc.; Pat and Delores Anderson; and Mary L. Miller, deceased, through her known Heirs Richard Miller, Sarah Miller Wohl, Jay Miller, and Betsey Seter a/k/a/ Betsy Seter, Defendants and Appellees and Auto-Owners Insurance Company; Ty Kirby, AAA Insurance; Defendants – No. 20200170 – Supreme Court State Of North Dakota – March 24, 2021

Personally, We Cover These Cars

Covered autos are identified in any primary vehicle policy. Identification involves including vehicle descriptions on the policy declaration pages, on a separate endorsement and according to policy wording that extends coverage to other categories vehicles.

The loss litigated in the court case we referenced in this newsletter was done so under a personal automobile insurance policy. Protection applies to vehicles that are owned by the policyholder. Coverage may be extended to vehicles that are not owned as well. Non owned situations occur if certain conditions are met, such as for cars that are borrowed or which are substitutes. The substitutions must be temporary due to, typically, an owned vehicle being unavailable because it has been damaged, destroyed or stolen.

Here is a discussion of covered automobiles from Gordis on Insurance found in Advantage Plus.

Hazards Covered

The PAP covers damages that the insured is legally obligated to pay to other (third) parties. In a certain states, an injured person is often entitled to policy benefits, regardless of whether or not the vehicle operator was at fault. This is mandated by statutes known as no-fault laws. These laws are discussed later in this topic.

Insurance coverage is for the ownership, maintenance, or use of the automobile designated in the policy. The basic policy also includes the following coverages:

  • Other Drivers and Interests
  • Non-owned Car
  • Temporary Substitute Automobile
  • Newly Acquired Automobiles
  • Trailers
  • Loading and Unloading


The policy covers accidents arising out of the operation of the automobile by the named insured, resident spouse and family members, or by any other person who reasonably believes that he or she is entitled to use the vehicle. The PAP protects any member of an insured household who uses a covered car, assuming that the driver has the named insured’s permission. The PAP also liberally covers an insured’s spouse. In the event that a named insured and his or her spouse become legally separated, the spouse who leaves the household remains covered for 90 days or until that person’s coverage is handled by another policy, whichever occurs first.

The policy also covers any person or organization legally responsible for the use of the described automobile. It is important to note that the coverage is not really for the employer, but rather coverage for the named insured’s legal liability that is related to the use of the vehicle. Depending upon the loss circumstances, after paying a claim, the insurer may be in a position to pursue an insured’s employer for reimbursement.

The personal automobile policy excludes a person or organization, including its agents or employees that operate an automobile repair shop, public garage, sales agency, service station, or public parking place. An exception is made when such an excluded person is a resident of the named insured’s household, or for any partner, agent, or employee of such resident while using a covered automobile.

The policy will cover the insured, his or her spouse, and resident relatives while driving any other automobile (with certain limitations). Similarly, the policy will cover persons or organizations legally responsible for the insured’s use of any other automobile, except one that is owned or hired by the applicable person or organization.

Non-owned car coverage provided by the policy responds as excess insurance over any other insurance covering the borrowed automobile itself.

The personal automobile policy isn’t intended to cover automobiles that are furnished or available for an insured’s regular use. The policy specifically excludes any other automobile owned by the insured or a member of his or her household because such automobiles should have their own insurance coverage. An exclusion exists for any automobile other than a temporary substitute automobile (discussed later in the topic) owned by or furnished for regular use to the insured or a member of his or her household other than a domestic servant.

The policy also excludes all automobiles used in the insured’s business or occupation other than private passenger vehicles. Finally, no coverage is available for any accident arising out of the operation of an automobile repair shop, public garage, sales agency, service station, or public parking place (these situations should be covered by a commercial auto policy).

Extended Non-Owned Coverage
The policy may be endorsed to cover the insured’s liability while driving a non-owned automobile that is furnished for his or her regular use, e.g., a company vehicle.

If the automobile described in the policy is unavailable while it is being repaired or serviced, or during a period when it has been lost or wrecked, the policy covers the use of any other automobile that acts as a substitute, provided the insured does not own the automobile. No notice of the substitution is required and no additional premium is charged.

If the automobile described in the policy is traded for a different one, the newly acquired vehicle is automatically covered without notice to the company. If the insured or insured’s spouse acquires a new car in addition to the one described in the policy, similar automatic coverage is extended to the new automobile. However, the extension applies only if the company insures all of the automobiles that are owned by the insured on the date of delivery of the new automobile. Also, the insured must notify the company within a given number of days. Thirty-days’ notice is typical for liability coverage, but shorter notice is likely when physical damage coverage is involved. No automatic coverage would extend, however, if the insured’s spouse who owns a car insured in another company were to acquire an additional automobile.

That’s Not The Commercial Approach

Protected vehicles are the main concern of commercial automobile policies as well. Rather than depend upon policy wording distributed among different areas of a personal auto policy, commercial (or business auto) policies use a more organized approach.

Vehicles that qualify for commercial insurance protection are indicated by selecting one or more automobile symbols. Each symbol is a description of, essentially, distinct vehicle categories which differ according to ownership status or vehicle type.

Below is a discussion of automobile symbols which are used to determine vehicles protected un a commercial auto policy. The excerpt is from ISO’s Business Auto Coverage Form Analysis under PF&M found in Advantage Plus.


Numbers are used to describe which autos are covered and for what coverages. These symbols are defined in the Description of Covered Auto Designation Symbols.

The Business Auto Declarations contains spaces next to each of the business auto coverages in which symbols can be entered. The entry of a symbol means that the coverage applies. The entered symbol explains what types of vehicle have that coverage.

A. Description of Covered Auto Designation Symbols

1–Any Auto

This is the broadest symbol designation and it has no limitations or restrictions. If the vehicle is an auto as defined by this coverage form, it is covered, subject to certain exclusions and conditions. Because of the broad scope of the coverage provided, many insurance companies use this symbol very cautiously. Even if a given company uses it for liability, it may not allow its use for physical damage. When Symbol 1 is used, no other symbol should appear in the same box.

2–Owned Autos Only

This symbol means that any auto the named insured owns is covered, including those acquired after the inception date. In addition, when this symbol is used with covered autos liability coverage, any owned or non-owned trailer pulled by an owned vehicle is also covered but only for covered auto liability.

3–Owned Private Passenger Autos Only

This symbol means that all private passenger type autos that the named insured owns are covered. This includes any private passenger type vehicle acquired after the inception date.

Note: The term private passenger auto is not defined in the coverage form. However, according to ISO rules, pickups, panel trucks and vans are considered private passenger for rating purposes as long as they are not used in business. This lack of definition could result in disputes.

4–Owned Autos Other Than Private Passenger Autos Only

This symbol means that all autos that are not considered to be private passenger types are covered if they are owned by the named insured. Those that are acquired after the inception date are also covered. Similar to Symbol 2 above, the covered autos liability coverage provided is extended to non-owned trailers pulled by this type of owned vehicle.

Note: The term private passenger auto is not defined in the coverage form. However, according to ISO rules, pickups, panel trucks and vans are considered private passenger for rating purposes as long as they are not used in business. This lack of definition could result in disputes.

5–Owned Autos Subject To No-Fault

An owned auto that is licensed or garaged in a state where no fault coverage is available is covered for no-fault coverages but only if the particular auto is required to have such coverage. Coverage also extends to such autos acquired after the inception date.

6–Owned Autos Subject To A Compulsory Uninsured Motorists Law

This symbol means that any auto the named insured owns that is garaged or licensed in a state that mandates uninsured motorists coverage is covered. It also applies to any auto acquired after the inception date.

This symbol does not apply to vehicles licensed or operated in states that allow the named insured to formally reject Uninsured Motorists coverage.

7–Specifically Described Autos

Only autos specifically scheduled and for which a premium charge is made are covered. Similar to Symbol 2 above, the covered autos liability coverage provided is extended to any non-owned trailer pulled by this type of owned vehicle.

8–Hired Autos Only

This symbol means that autos the named insured leases, hires, rents or borrows are covered. This symbol has a significant limitation. It does not include leased, hired, rented, or borrowed vehicles that are owned by an employee, partner, LLC member, or members of any of the preceding groups’ households.

Example: Perry drives a vehicle owned by his company, First-Up, Inc. First-Up’s declarations has symbols 2, 8 and 9 for liability and physical damage coverages. One snowy morning, Perry’s wife’s car is behind his in the driveway and, being late for work, he takes her vehicle. In his rush, he slides off the roadway. First-Up’s insurance company does not respond to this loss to Perry’s wife’s car because, although it was borrowed, the car was owned by a member of Perry’s household.

9–Non-Owned Autos Only

This symbol means that autos the named insured uses in its business but that it does not own, lease, hire, rent, or borrow are covered. These autos may be owned by employees, partners in the case of a partnership, members in the case of limited liability companies or members of the preceding group’s households. However, they are covered only while they are being used in either the named insured’s business or personal affairs.

Example: In the example above, First Up’s insurance company would have responded if Perry had used his wife’s car to drive to his first appointment instead of just to work.

19–Mobile Equipment Subject To Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only

This symbol means that land vehicles that meet the definition of mobile equipment except that they are subject to state-mandated registration and/or licensing are covered. This symbol is needed because of recent state laws that are mandating that certain types of mobile equipment be registered and/or licensed. The symbol applies only in those states where the mobile equipment must comply with motor vehicle laws.

Note: In some cases, more than one symbol may be used.

Manuscript Symbol

An additional manuscript symbol not mentioned in the Business Auto Coverage Form is available by adding endorsement CA 99 54–Covered Auto Designation Symbol. Symbol 10 is available for the Business Auto Coverage Form and applies based on what is listed and described on the endorsement. 

Example: Great One, Inc. wants covered autos liability coverage for all owned vehicles and physical damage coverage on all owned vehicles except one because it owns a high-valued antique automobile. Physical damage coverage on the antique automobile is written on a separate policy in a specialty market. Symbol 2 is used for liability coverage. However, Symbol 10 is used for comprehensive and collision coverages. Symbol 10 is defined on CA 99 54 as All Owned Autos except the 1959 Classic Rolls Royce.

 Note: There is no reference to symbol 10 in this item. Because of this, Paragraph B. below does not apply to any coverage that has only symbol 10. This means that when symbol 10 is used, no coverage applies for any newly acquired vehicle that would match the symbol 10 criteria.

Insurers and brokers that are looking for a market to provide coverage on difficult business auto or trucking situations, such as racing activities, should refer to the Automobiles, Trucks, or Recreational Vehicles section in The Insurance Marketplace, a publication of The Rough Notes Company, Inc.

Seeking Operational Information Is Rewarding

It’s always important to understand the details of a given operation. Without such information, it makes it problematic to arrange a sufficient insurance program. This results in poor service to the insured and to the general public when no protection is available to respond to a loss that could have been handled by insurance. It can also cause a serious issue to an agent who could lose a customer and even face litigation due to oversight or error.

The issue in the court case referenced is serious. No coverage was available, essentially, due to a regular feature of how the business was run not being identified and addressed. Insurance professionals routinely prove their value by displaying expertise in risk identification and exposure management.

Here is an excerpt from the Automobile section of the Road Pavers Questionnaire in the Commercial Risk Survey found in Advantage Plus.



List the names of the applicant’s drivers who maintain a Commercial Drivers License (CDL).


Are any of the applicant’s officers, partners, or employees furnished an automobile for their personal use? ___ Yes ___ No

Do individuals with an automobile furnished by the applicant purchase automobile insurance on autos they own personally?
___ Yes ___ No

Does the applicant use its own vehicles to tow special equipment such as air compressors or concrete mixers? ___ Yes ___ No

Are any of the applicant’s automobiles used in parades or other events? ___ Yes ___ No

Are any of the applicant’s vehicles laid up and out of service for more than 30 consecutive days or more due to seasonal operations?
___ Yes ___ No

If the applicant uses subcontractors, are procedures in place to monitor receiving certificates of insurance on a timely basis?
___ Yes ___ No ___ No subcontractors

If yes, describe.

Are any of the applicant’s automobiles equipped with cellular telephones, two-way radios, citizens band radios or similar devices? ___ Yes ___ No

How many automobiles are parked at each location overnight?

Does the applicant lease or rent vehicles with operators to others? ___ Yes ___ No

Does the applicant lease or rent vehicles without operators to others? ___ Yes ___ No

Does the applicant travel to Canada or Mexico? ___ Yes ___ No

Do the applicant’s vehicles have theft alarms? ___ Yes ___ No

Do employees take company trucks home? ___ Yes ___ No

If yes, answer the following:

Is the employee allowed to use the applicant’s vehicle for personal use? ___ Yes ___ No

Are other family members permitted to use the applicant’s vehicle? ___ Yes ___ No

Explain when an employee may take a truck home.

Does the applicant’s equipment exceed the standard width and require “oversize” designation? ___ Yes ___ No

If yes, describe the precautions taken to prevent damage to others.

Are drivers trained in cleanup procedures? ___ Yes ___ No



Is the applicant required to provide primary coverage for any hired or borrowed vehicles?
___ Yes ___ No

If yes, answer the following:

Will the applicant hire or borrow the same vehicle for more than six months? ___ Yes ___ No

Note: If yes, the auto should be covered in the same way as an owned vehicle is covered.

Does an employee of the applicant own the vehicle? ___ Yes ___ No

Does the applicant’s employee hire the vehicle in his or her own name to perform the applicant’s business?
___ Yes ___ No

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