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PF&M at a Glance Business Auto Policy
It is nearly impossible to imagine a world without motor vehicles. It is almost as difficult to imagine a commercial business that does not have some kind of commercial auto liability or physical damage exposure. The exposure could be from owned or leased vehicles or simply a hired car or non-owned auto situation. Even a simple incident can present a major liability exposure, because vehicles can cause tremendous property damage or bodily injury—and even death! There are several different commercial automobile policies. Most have a specific purpose and use, such as the Insurance Services Office (ISO) Truckers Policy, Garage Policy or Motor Carrier Policy. The Business Auto Policy (BAP) is by far the most common and frequently used policy, since it covers and applies to the majority of commercial risks and is not specific to a certain type or class of business. It is designed to respond to the needs of most commercial exposures and has numerous endorsements available to customize it to respond to special needs or situations. Any individual, business firm or corporation that owns or operates motor vehicles is eligible for coverage under the BAP. It covers damages the insured is legally obligated to pay for bodily injury or property damage resulting from the use of a motor vehicle and arising from the ownership, maintenance or use of the vehicle. Automobile liability policies also normally contain a provision requiring the policy to conform to the applicable state Motor Vehicle Financial Responsibility Law. In some situations, this provision requires an insurance company to pay for damages not covered or for which it is not otherwise responsible. The policy is usually written as a stand-alone form, but it can be one of the coverage parts of a package or multi-peril policy. Vehicles that are covered by the policy are indicated by a numerical designation that ranges from 1 for any auto to 7 for specifically described autos; 8 applies to hired autos and 9 to non-owned autos only. The policy term is usually annual but other periods can apply. Liability coverage provides insurance protection for bodily injury and property damage caused by an accident resulting from the ownership, maintenance or use of a covered vehicle, including pollution costs and expenses from the same accident. Physical damage includes comprehensive coverage, which is loss from any cause other than collision, and collision, which is impact with another object or overturn of the vehicle. Specified perils are a narrower defined set of loss causes compared to comprehensive coverage. Towing and labor coverage applies to costs to recover disabled vehicles. Other coverages, such as medical payments, are also available, as are endorsements that can enhance coverage in other areas. Please note that this is only a brief and simplified overview of this large and complex coverage area. A more complete and detailed discussion of the coverage can be found in the PF&M Analysis from The Rough Notes Company, Inc. Agency OnLine subscribers can refer to PF&M Section 220.1 for a more detailed discussion and additional information on this subject. * |
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