(October 2019)
A coverage concern exists when a family’s only available vehicle is supplied or owned by a business. Commercial auto coverage is intended for vehicles used commercially, not personally. In such cases, there’s a need to fill the gap between personal and commercial coverage by providing coverage equal to what is offered by a personal auto policy. There are a variety of methods that can be used to address this gap but one of the simplest ways is to attach CA 99 10–Drive Other Car Coverage–Broadened Coverage for Named Individuals.
Individuals or families in the situation above may face several serious gaps in coverage.
1. Liability coverage is not available when the individual or family member is operating a hired or non-owned auto because coverage is available only when the company owned vehicle is being driven.
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Example: Marvin does not have a personal auto policy because his employer, Felix's Shoe Factory, supplies the car he drives. A friend, Pat, stops by one day and asks Marvin to drive him home using Pat’s car. Pat is dizzy, feels nauseous, and doesn't think he can get home safely. Marvin agrees to help out. On the way, Marvin takes his eyes off the road when Pat passes out, runs a stop sign, and collides with a minivan. Pat had only minimum limits on his policy, so Marvin is left with no insurance coverage for the damages and injury he caused. |
2. There is no Medical Payments or Uninsured/Underinsured Motorists coverage for the individual’s spouse or other family members.
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Example: Becky and her parents are permitted to drive her dad’s company-owned auto for personal use so none of them purchases a personal auto policy. Becky's friend, Karen, invites her to ride with her to the mall. On their way back home, a pick-up strikes Karen’s car and Becky is seriously injured. The other driver was uninsured, and Karen’s policy provides only minimum uninsured motorists limits. Becky’s family is responsible for the expenses that exceed Karen's Uninsured Motorists coverage limits. |
3. There is no coverage for physical damage loss to any hired or non-owned auto.
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Example: Freda was test-driving Jake’s bright red convertible. She had decided it was time to become a two-car family especially because her husband’s only vehicle was a company vehicle. Jake let the insurance coverage lapse because he couldn’t afford both the vehicle and the insurance payments. While test-driving the car Freda took a sharp turn too fast, ran off the road, and struck a tree. Luckily, the airbags deployed properly but Jake’s car was demolished. Freda still had to buy the car but without financial assistance from her husband's commercial auto coverage. |
CA 99 10 allows the named insured to designate the individuals who can be insured by the broadened coverage, but it does not make such coverage available on a blanket basis. Anyone can be scheduled, even persons who are not employees or who do not have any relationship to the business. The coverage section indicates automatic extensions beyond the scheduled individuals.
This endorsement provides six coverages, but coverage applies only if entries appear in the premium space for a specific coverage and for a specific individual.
The coverages available are:
Note: Underinsured Motorists coverage is automatically included if the named insured purchases uninsured motorist coverage with limits higher than basic limits. However, if underinsured motorists coverage is purchased separately, a premium and limit must be in the appropriate space on the endorsement schedule.
This endorsement is flexible. It can be structured and arranged to meet various needs because coverage is scheduled for each individual.
1. Liability coverage extends to non-owned or hired autos.
This coverage extension applies only to the named individual and a spouse residing in the same household. It does not apply to family members unless they are scheduled. Liability coverage applies to any auto that is hired or that is not owned by the individual while being used by the individual or spouse. However, this is subject to two exceptions:
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Example: Let’s revisit Marvin who hit a minivan when he ran a stop sign. Marvin would have been covered up to the limits on the endorsement schedule if CA 99 10 had been attached to his company’s business auto coverage. Coverage would have been provided for the damage and injury Marvin caused. |
2. Auto Medical Payments Coverage and Uninsured and Underinsured Motorists Coverage extends to non-owned or hired autos.
This modified coverage applies to the individual scheduled and all of his or her family members. Family members include any person related to the scheduled individual by blood, marriage, or adoption, provided they reside in the same household. This includes wards and foster children.
Auto medical payments, uninsured motorists, and underinsured motorists coverages apply but only scheduled for the individual. Limits must be selected. If no underinsured motorists limit is entered but the uninsured motorists limit is higher than the minimum required, the underinsured motorists limit is the same as the uninsured motorists limit.
CA 99 10 provides this coverage by changing the definition of “Who Is An Insured.” The named individual and all family members who reside in the same household are insureds under the coverage form but only for coverages for which a premium charge is made and only while the individual or a family member travels in an auto not owned by the insured, by the individual listed, or by any of family member.
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Example: Remember Becky who was injured as a passenger while returning home from a shopping trip? Under the modified coverage, Becky has underinsured motorists coverage up to the limit on the endorsement schedule. |
3. Physical damage coverage for non-owned or hired autos is amended.
This coverage extends to only the scheduled individual and his or her spouse residing in the same household. There is no coverage for other family members. It broadens the definition of covered auto to include a private passenger auto that is under the scheduled individual and spouse's control. The auto cannot be owned by the individual or any family member and cannot be used by the individual or spouse in a business operation involving auto repair, auto sales or parking.
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Example: Refer to the example above involving Freda and Jake’s red convertible. While the same accident occurs during the test drive, this time, CA 99 10 is attached to the business auto coverage form. Freda’s insurance pays Jake for the damage to his vehicle and she is free to use her own money to buy the car of her dreams. |
Little or no additional underwriting is required if the individual who drives the business auto is the only person that gains additional coverage because the insurance company has already evaluated that individual as a driver of a company auto. However, if the individual's spouse and/or family members are involved, their driving records should also be reviewed as part of the underwriting process.