
Providing the right commercial auto coverage can be challenging especially considering the fact that many times the vehicles are not used exclusively for commercial purposes. In order to provide the appropriate protection, it is imperative to understand how the vehicle is titled and how and by whom the vehicle is used. Once ownership and use is ascertained, the policy can be issued with the correct named insured and necessary endorsements attached.
VEHICLES TITLED IN THE NAME OF AN INDIVIDUAL
Many times, the owner of a sole proprietorship will title a vehicle in an individual’s name rather than that of the business. If scheduled on a Commercial Auto policy, this may create coverage gaps in the event of a claim.
While personally-owned autos in general belong on a personal auto policy (PAP), occasionally a commercial insured may ask to include the auto on its commercial auto policy (CA). The agent must determine the legitimacy of the vehicle’s inclusion on the CA policy. Is the vehicle used primarily for use in the business or is the policyholder attempting to avoid rating based on a driving and accident history?
If the personally-owned vehicle is appropriately insured by a CA policy, the named insured on the policy must match the name on the title. When the owner of the vehicle and named insured are not the same, coverage gaps can occur. If a company has vehicles titled both in an individual’s name and that of the company, separate CA policies must be issued based on how the vehicles are titled.
Asking the right questions of commercial auto customers is key to
ensuring that the appropriate coverage is provided. When writing new
business, confirm how the vehicle is titled:
• Is a Commercial Auto Policy appropriate? Or should the vehicle be ensured on a personal auto policy?
• If more than one vehicle is being insured, is one policy appropriate or will two or more policies be required?
• Who will be driving the vehicle?
• Are any of the endorsements discussed above required?
The same questions should be asked whenever a vehicle is added to the policy and again during any pre-renewal review. Consider these commercial auto endorsements:
CA 99 17: Individual Named Insured Endorsement
The Individual Named Insured Endorsement fills that gap that occurs when a vehicle is insured under a CA policy but coverage is also needed for the insured and his or her family members for personal use of autos. The endorsement provides coverages similar to those which would be provided if a PAP were issued instead. The Individual Named Insured Endorsement also extends liability insurance and any physical damage insurance coverage to non-owned private passenger autos used by the named insured and family members, subject to certain exclusions, just as a PAP would.
Coverage under this endorsement applies to all vehicles covered under the policy that are of the private passenger type including vans and trucks.
This endorsement is available for use when a vehicle is titled in an individual name.
CA 99 33: Employees as Insureds
CA 99 10: Drive Other Car Coverage - Broadened Coverage for Named Insured Endorsement
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