The Insurance Services Office, Inc. (ISO), has made and filed a group of changes and revisions to the various commercial auto programs. The changes have been labeled the 1998 Multistate Commercial Auto Revisions, which may be a little confusing as state approvals did not start until February 1, 1999, at the earliest.
The 1998 revisions contain three new mandatory coverages, and a limited number of new optional coverages, as well as editorial corrections. The mandatory changes broaden the coverage offered. The 1998 revisions are not extensive; however, they are beneficial.
The editorial updates and corrections will not be discussed in this article.
Mandatory coverage changes
The three new mandatory coverage changes (discussed below) are accomplished by attaching a new mandatory multistate endorsement, CA 00 22-Changes in Commercial Auto Coverage Forms, to all five commercial auto coverage forms. These forms are the Business Auto coverage form, the Business Auto Physical Damage coverage form, the Garage coverage form, the Motor Carrier coverage form and the Truckers coverage form.
Two coverage grants are added along with a change in the definition of Insured Contract, all of which broaden the protection offered.
1. Loss of Use--Rental Vehicle Coverage has been added. If an insured rents or leases a private passenger type vehicle and that vehicle is damaged, the lease or rental agreement usually obligates the insured to reimburse the rental or lease operation for the loss of use that operation experiences while the vehicle is out of service being repaired. This coverage adds payment for expenses an insured may be legally obligated to pay to the rental or lease operation--up to $15 per day with a maximum of $450.
Again, the vehicle must be a private passenger type only and must be hired without a driver.
2. Limited Worldwide Coverage for Hired Autos is a second new coverage added for private passenger type vehicles that are hired without a driver. If an insured rents or leases a private passenger type auto for 30 days or less, anywhere in the world, there is coverage for damages that an insured incurs and is legally obligated to pay based upon a suit brought within the United States, its territories, possessions, Puerto Rico or Canada. There is also coverage for any settlement that the insurer agrees to.
3. Definition of Insured Contract has been amended in all of the commercial auto programs (except the Garage program) to make it consistent and compatible with the similar definition found in the Commercial General Liability policy. The Garage program did not contain a definition of "insured contract" in the past and so the definition has been newly added to the Garage coverage form.
The area of change revolves around the exception for demolition and construction operations within 50 feet of railroad property. Previously in commercial auto, any person or organization involved in demolition and construction operations that an insured was obligated to indemnify was excluded. The general liability definition and now the new business auto definition exclude only indemnity for railroads.
New endorsements available
with Commercial Auto programs
The endorsements listed below are new optional coverages that may be purchased and apply to all five of the Commercial Auto programs except that the Fellow Employee coverages do not apply to the Business Auto Physical Damage coverage form because it does not provide liability coverage.
CA 01 21-Limited Mexico Coverage
If the insured travels into Mexico on a trip that is 10 days or less and not more than 25 miles from the United States border, this endorsement is available to provide limited coverage. The intent of this endorsement is to extend the coverage territory to the border towns of Mexico if an insured should be involved in an accident with another U.S. citizen.
Liability insurance must be purchased separately through a licensed Mexican insurance company. To be covered by this policy, any suit must be brought in the United States and the suit cannot involve a Mexican citizen or resident. The insurance provided by the endorsement is excess over the Mexican insurance and other collectible insurance.
CA 20 54-Employee Hired Autos
Should an employee hire an auto in his/her own name as an individual to perform business-related duties and activities for his/her employer, there would be liability coverage via this endorsement if the hire was done with the permission and approval of the employer.
CA 20 55-Fellow Employee Coverage
If an employer wishes to delete the fellow employee exclusion for all employees from the Commercial Auto coverage form, this endorsement may be purchased.
CA 20 56-Fellow Employee Exclusions For Designated Employees/Positions
If an employer wishes to delete the fellow employee exclusion for specific employees or specific positions only from the Commercial Auto coverage form, this endorsement may be purchased. *
©COPYRIGHT: The Rough Notes Magazine, 1999