CA 23 30–MOTOR CARRIER ENDORSEMENT

(October 2019)

INTRODUCTION

A motor carrier has two options. It can obtain insurance coverage using CA 00 20– Motor Carrier’s Coverage Form or use CA 00 01–Business Auto Coverage Form accompanied by CA 23 30–Motor Carrier Endorsement. The second approach is appropriate for businesses that engage in other operations in addition to trucking.

Example: Mona, who owns a floral shop, married an employee of the trucking firm she used. They decide to start their own trucking operation. Mona has seven vehicles, but only two are part of the trucking operation. Instead of having two separate policies, she purchases the Business Auto Coverage Form including CA 23 30–Motor Carrier Endorsement.

GENERAL INFORMATION

An entry can be made for Named Insured and Endorsement Effective Date. It is very important to note that when such an entry is made, it overrides the information on the policy Declarations.

If a named insured that is not listed on the policy declarations is entered or if ONLY one of multiple named insureds that are on the policy Declarations is entered could lead to confusion The best solution, in most cases, is to leave the named insured blank if the desire is to have the same named insured(s) that is on the declarations receive the benefits of this endorsement.

Likewise, the endorsement effective date should be entered ONLY if the date is different from the effective date entered on the policy declarations. A change could lead to confusion and possible lack of coverage.

SCHEDULE

Four different items are addressed in this schedule.

1. Hired provisions

This part of the schedule replaces only the liability cost of hire provisions on the Business Auto Coverage Form declarations with the following, but it applies only to those autos used in motor carrier operations.

Covered Auto Liability Coverage–Rating Basis, Cost Of Hire–Autos Used In Your Motor Carrier Operations (Other than Mobile or Farm Equipment)

This section provides spaces to enter:

• Estimated Cost Of Hire for Primary Coverage
• Estimated Cost Of Hire for Excess Coverage
• Estimated Premium for each

Note: The premium is subject to audit.

Cost of hire is defined as the amount the named insured incurs to hire vehicles. The cost must include the remuneration of drivers and helpers of those vehicles. The cost must also include the costs of repair, maintenance, and fuel of the vehicles.

Note: This is identical to the liability portion of Item 4 on the Business Auto Declarations but the entered estimated costs and premium are only those that apply to the motor carrier operations.

2. Gross Receipts or Mileage Rating Basis

This part of the schedule is identical to Item 6 on the Business Auto Declarations, but the gross receipts or mileage entered is only that derived from the motor carrier operations.

Schedule for Gross Receipts or Mileage Rating Basis

This endorsement can be rated based on gross receipts or per vehicle. This schedule is completed only if rating based on gross receipts is selected. It is completed for only the vehicles used in the motor carrier operation. Estimated yearly gross receipts, the rates per $100 of gross receipts, and the premiums for liability and medical payments are placed in the spaces provided.

This section also defines gross receipts. Gross receipts are amounts the named insured is entitled to because of transporting persons or property. There is no limitation based on who originates the shipment. It includes receipts from equipment rental to non-truckers and 15% of equipment rental to truckers.

Gross receipts does not include amounts the named insured must pay to railroads, steamship lines, airlines and other motor carriers that operate under their own permits. Advertising revenue, taxes collected separately and sent to a governmental division, C.O.D. collections for the cost of mail or merchandise, including collection fees, and warehouse fees are subtracted.

3. Schedule of Trailer Interchange Coverage

This schedule is completed only when trailer interchange coverage is required. The estimated premium for each physical damage coverage selected is entered in the spaces provided. A dollar value entered in the limit of insurance spaces should be less than the actual cash value because only the least of the cost to repair, the actual cash value of the limit of insurance is used.

4. Physical Damage Coverage

When an “X” is placed in the box next to Comprehensive, Specified Causes of Loss, or Collision it means that the Physical Damage Exclusion that is described later in this endorsement is eliminated for that coverage.

CA 23 30–MOTOR CARRIER ENDORSEMENT ANALYSIS

This section opens by stating that it applies only to the named insured's motor carrier operations and not to any other operations.

A. Who Is an Insured Changes

The Who Is an Insured in Section II-Liability in the Business Auto Coverage Form is deleted and replaced by the following.

1. Who Is an Insured

a. The named insured is an insured for any covered auto.

b. Anyone else using a covered auto the named insured owns, hires, or borrows with the permission of the named insured is an insured. However, the following are not insureds:

• The owner from whom the named insured hires or borrows a covered auto. An employee, agent, or driver of the owner of the covered auto is also not an insured.

Example: Mona’s husband, John, is on a trucking run. Midway through the run, he parks the truck and rents a sedan from Hired Miles, Inc. under the name of Mona’s Florists, so he can meet a potential customer. Hired Miles is not an insured and no one employed by Hired Miles is an insured under Mona’s policy.

• When the covered auto is owned by an employee or an agent of the named insured or by a family member of either of those, the employee or agent who owns the vehicle or whose family members owns the vehicle is not an insured.

Example: Mona’s employee Felicia agrees to deliver a floral arrangement to a customer. None of Mona’s vehicles are available so Felicia used her own vehicle to make the delivery. When an accident occurs, Mona’s is covered as an insured, but Felicia is not because she is driving her own vehicle. This means that her personal auto insurance should respond to defend her while this policy will respond in defending Mona’s.

• A person who is providing business services connected to auto sales, service, repair, parking, or storage. This does not apply when such services are the being provided by the named insured's business.

Example: John’s rig has brake problems and he takes it to Wayside Trucking Repairs for service. Wayside’s mechanic fixes the brakes and drives the rig to test them. The brakes fail; the rig strikes an overpass and causes major damage. Because of this limitation, Mona’s policy does not respond because the mechanic is not an insured.

• Any party moving property to or from a covered auto, other than the named insured’s employees, partners, members, lessees, borrowers, or their employees

Example: While John unloads his cargo, an employee of the firm accepting the shipment enters the trailer to help out and drops a large container on a passerby. The passerby's injuries are not covered under Mona’s policy because that employee is not an insured.

• The named insured's partners, or its members for a covered auto which is owned by the partners, members or members of their families

Note: When a partner borrows a spouse’s car for company business, the spouse is not an insured.

c. When the named insured hires or borrows a trailer, the owner of that trailer is an insured as long as the trailer is connected to a covered power unit. The trailer owner is also an insured when that trailer is not connected to the power unit provided it is being used exclusively in the named insured’s business.

d. When the named insured leases an auto that is not a trailer, the lessor is an insured as long as it is used in the named insured’s motor carrier business. This applies only if there a written agreement between the named insured and lessor for the lease and that agreement does not require the lessor to hold the named insured harmless.

e. Anyone liable for an insured's conduct but only to the extent of that liability

THE FOLLOWING ITEMS EXPLAIN THE ADDITIONAL PARTIES WHO ARE NOT INSUREDS

a. This item does not apply to the named insured. A for-hire motor carrier motor, its agents, and its employees are not insureds under the following circumstances:

• The motor carrier meets its motor carrier insurance requirements by a means other than auto liability insurance.
• The motor carrier does not use an auto liability insurance coverage form to provide primary hired auto coverage for the owners of autos leased to the motor carrier and the owners’ agents and employees. This applies while those autos are being used in the motor carrier’s business.

b. This item applies only to trailers. Rail, water and air carriers and their employees and agents are not insureds for bodily injury or property damage while the trailer is detached from the named insured’s covered auto that is used with that trailer. This applies when the trailer in being loaded onto any type of transport provided by that carrier, while being transported and when being unloaded from that transport. The only exception is that the named insured and its employees remain insureds.

Example: John delivers a trailer to a train. While that trailer is being loaded onto the train the door flips open causing the cargo to shift and the trailer to fall onto the other trailer. The carrier agent unloading the trailer is not an insured under this policy for any damage caused. However, if John is found to be liable for not securing the latch on the trailer, he would be covered as an insured.

B. Trailer Interchange Coverage Added

1. Coverage

a. This is physical damage coverage for non-owned trailers. Loss or damage to a non-owned trailer for which the named insured is legally liable is payable under the following circumstances:

• The named insured must be in possession of the trailer at the time of the damage
• The named insured must assume the liability for such a loss to the trailer under a written interchange agreement.

b. The loss or damage must be due to:

• Comprehensive Coverage which is loss or damage from any cause except the trailer’s overturn or its collision with another object
• Specified Causes of Loss Coverage, which is loss or damage caused by fire, lightning, explosion, theft, windstorm, hail, earthquake, flood, mischief or vandalism. When the trailer is being transported on another conveyance, specified causes of loss is also loss or damage due to the sinking, burning, collision, or derailment of that conveyance.
• Collision Coverage which is the loss or damage caused when the trailer overturns or collides with another object

c. The insurance company has the right and duty to defend any suit that is seeking damages if the damages are covered by this insurance. The insurance company is not required to defend against any other suit. The insurance company decides which claims and suits are investigated or settled or litigated. Once the limit of insurance is exhausted by the payment of awards or judgment, the insurance company is not required to any additional defense.

d. Coverage Extensions consists of five supplementary payments in addition to the Limit of Insurance.

• Expenses the insurance company incurs

• The costs to purchase bonds that are required to release attachments but only for amounts that are within the Limit of Insurance
• Reasonable expenses the named insured incurs but only those incurred at the insurance company’s request. Up to $250 per day of actual lost earnings is paid when time must be taken from work.
• Costs that are taxed against the insured in suits the insurance company defends with the exception of attorney’s fees or expenses assessed against the insured.
• Interest on the full amount of a judgment that accrues after it is entered. The insurance company no longer has to pay interest after it offers to pay or deposits the part of the judgment within the Limit of Insurance with the court.

2. Exclusions

a. The insurance company does not pay for loss or damage caused by or resulting from the following, even if another cause contributes to it and occurs concurrently or in any sequence to the loss.

• Nuclear Hazard is the explosion of any weapon using atomic fission or fusion, or nuclear reaction, radiation or radioactive contamination, regardless of how caused.
• War or Military Action is declared or undeclared war, civil war, warlike action by a military force, including acts of defense or to hinder any such insurrection, rebellion, revolution, usurped power, or any action to hinder or defend against any of these.

b. The insurance company does not pay for loss of use

c. Coverage does not apply to loss or damage when caused by and confined to wear and tear, freezing, mechanical, or electrical breakdown, or from blowouts, punctures or other road damage to tires. This exclusion does not apply if any of these losses are the result of a total theft of the vehicle.

Example: John is driving his tractor and pulling a hired trailer for which he is legally liable when he strikes a bridge abutment. The collision damages the trailer body and the tires on the right side of the trailer blow out. In this case, the tire damage is covered because the loss was not confined to only the tires.

3. Limit of Insurance

The most the insurance company pays for loss or damage to any one trailer is the least of the:

• Actual cash value of the damaged or stolen property at the time of loss
• Cost to repair or replace the damaged or stolen property with similar property
• Limit of Insurance on the declarations

Example: The trailer damaged in the abutment accident above cost $8,000 when purchased new. Its actual cash value is now $2,000, due to its age and condition, and the cost to repair it is $3,500. The limit of insurance for this coverage is $10,000. The insurance company pays $2,000 because it is the least of the three values.

4. Deductible

Although three items are listed, they each basically say the same thing. The lowest valuation amount selected in item 3. above is further reduced by the deductible on the schedule.

C. Physical Damage Coverage Change

There is no coverage for any covered auto that is in the possession of another party with whom the named insured has a written trailer interchange agreement that includes that auto. The only exception to this exclusion is that the loss payee will be paid for its interest in the damaged auto. However, the named insured must then reimburse the insurance company for that payment.

Note: A selection on the schedule will override this exclusion.

D. Other Insurance

These provisions replace the Other Insurance Condition in the Business Auto Coverage Form.

5. Other Insurance–Primary and Excess Insurance Provisions

a. This liability insurance is primary for the named insured's covered autos that another motor carrier hires or borrows if a written agreement between them requires that the named insured as lessor hold the motor carrier as lessee harmless. However, it is excess over any other collectible insurance if the written agreement does not have this requirement.

b. This liability coverage is primary when the named insured hires or borrows a covered auto from another motor carrier if a written agreement between them does not require that the other motor carrier, as lessor, to hold the named insured, as lessee, harmless. However, this applies only when the named insured uses the covered auto exclusively in its motor carrier operations. Coverage is excess over any other collectible insurance if the written agreement requires the lessor to be primary.

c. With respect to trailers, when the power unit is a covered auto, this liability coverage is provided on the same primary or excess basis as the covered auto. When the power unit is not a covered unit, coverage is excess.

d. Trailer Interchange Coverage is primary.

e. The insurance provided is primary for any covered auto the named insured owns and excess for covered autos it does not own. The only exceptions are those described in paragraphs a. – d. above.

f. Under hired auto physical damage coverage, a covered auto the named insured leases, hires, rents, or borrows is considered an owned covered auto. The one exception is when such autos come with a driver.

g. This covered auto liability coverage is always primary when liability is assumed in an insured contract, regardless of the provisions above.

Note: This supersedes the provisions of paragraph 5.e. above.

h. When multiple carriers cover a loss on the same basis all companies will pay their share on a proportional basis.

Note: Ratios are determined based on each company’s limits as a percentage of all limits available. Losses are proportioned among companies accordingly.

E. Additional Definitions

These defined terms are used in this endorsement:

1. Motor carrier is a person or organization providing transport of property as an auto for hire as a commercial enterprise.

2. Trailer includes not only semitrailers but also the dollies that convert semitrailers to trailers. Under Trailer Interchange Coverage containers are also trailers.