(October 2019)
PF&M subscribers in
any manual or electronic form are permitted to reprint the following sample
insurance proposal language when preparing insurance presentations for their
commercial insurance customers. Other uses require permission from The Rough Notes
Company, Inc.
The following
paragraph or similar language should be included in all insurance proposals:
Consult the policy for definitions and
limitations. The terms of this proposal do not represent contract terms. The
policy is subject to company underwriting practices.
This proposal language is not intended to be an entire insurance
proposal. A client specific section including the name and address of the
insured, the insurance company(s) and the agent, and information about them, a
list of locations, limits, deductibles, and similar customer specific items are
not included and should be prepared.
The intent of any insurance proposal is not to be a reproduction of the
insurance policy, but to give a summary of possible coverages.
Paragraphs explaining coverages unique to this policy form may be the
most important addition to your insurance proposal and sales effort. Coverage
examples can be tailored to your individual customer. Be careful when altering
any proposal language not to expand coverage beyond what the policy intends.
This proposal should be combined with proposals for other lines of
business, such as commercial property, general liability, workers compensation,
and umbrella liability, for a complete account proposal.
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Business Auto Coverage Form.
ISO Business Coverage Form Endorsements Checklist lists all
endorsements available to use with the Business Auto Coverage Form.
It is difficult to imagine a commercial business enterprise that does not have some type of automobile liability and/or physical damage exposure. Losses may arise from operations of owned, leased, hired, rented, or non-owned vehicles and certain mobile equipment subject to financial responsibility or other motor vehicle insurance laws. Even with an exposure as simple as an office employee driving his or her personal auto to pick up supplies, the potential liability exposure is significant because even a private passenger vehicle is capable of producing deadly results.
The Business Auto Coverage Form is designed to respond to the commercial vehicle exposures and requirements of most business enterprises and has many different endorsements available to customize it to respond to special needs or situations. It provides selected liability and physical damage coverages on vehicles used for commercial purposes.
The numerical symbols entered in the covered autos column on the declarations define which vehicles have what coverage. Only autos that are within the symbol type definition are covered.
All vehicles that are defined as autos are covered. These could be owned, hired, borrowed, or non-owned.
Autos the named insured owns, and any autos acquired during the policy period.
Private passenger autos, such as sedans or station wagons, are symbol 3 as are pickups, panel trucks and vans that are not used for business. Any such private passenger autos acquired during the policy period are also covered.
Autos that are not considered private passenger autos, such as trucks and tractors and any such auto acquired during the policy period. However, pickups, panel trucks, and vans that are not used in business are not part of this symbol.
Coverage applies only for no-fault or personal injury protection on autos located in no-fault states. It also includes any autos acquired during the policy period provided that they must have no-fault benefits in the state where they are licensed or principally garaged.
Autos that are licensed or principally garaged in a state where uninsured motorist coverage is compulsory. Any autos acquired during the policy period that are subject to the same state uninsured motorists requirement are also covered.
Newly acquired autos are covered for only 30 days and that coverage is subject to restrictions.
Coverage applies only to leased, hired, rented, or borrowed vehicles.
These are vehicles the named insured does not own but that are used in its business. Vehicles owned by employees or partners and their household members are covered while being used on the named insured's business or personal affairs but only for the named insured's interest.
Coverage applies to only autos that are land vehicles and are considered mobile equipment except that they are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or at their principal garaging location.
Symbols 1, 2, 3, 4, 5, 6, and 19 cover newly acquired vehicles of the type described for the remainder of the policy period. If symbol 7 is used, newly acquired replacement vehicles are covered for up to 30 days but only if the insurance company insures all owned autos.
If liability coverage is provided, the following are also covered autos for liability coverage:
The insurance company pays all sums an insured is legally obligated to pay as damages because of bodily injury or property damage covered by this insurance and caused by an accident resulting from owning, maintaining, or using a covered auto. Pollution cost or expense that is a consequence of the same covered accident is also covered.
The company has both the right and duty to defend any insured in a suit requesting such damages or pollution costs and expenses but only if coverage is available under this insurance. The insurance company makes the decision as to when and how to investigate, settle, or litigate, as it deems appropriate. Any defense obligation ends when the liability limit of insurance is used up paying judgments and settlements.
Who Is an Insured
Supplementary Payments
With respect to claims it investigates or settles, or suits against the insured it defends, the insurance company pays:
These payments do not reduce the limit of insurance.
Out-Of-State Coverage
Extensions
When a covered auto is away from the state in which it is licensed, the insurance company:
Liability exclusions must be examined carefully because many of them have conditions, exceptions, limitations or restrictions not indicated below. Coverage does not apply to:
Damages for bodily injury or property damage the insured expects or intends are not covered.
Liability that is assumed under any contract or agreement is excluded. Coverage does apply to liability for damages the insured would have even without the contract or agreement and to liability that is assumed in an insured contract or agreement
Damages resulting from any requirement or obligation of the insured imposed by any workers compensation, disability benefits, unemployment compensation, or similar law are excluded.
Damages for bodily injury to an employee of the insured are excluded. Damage to any family member of the employee that is consequential to the bodily injury to the employee is also excluded.
Bodily injury to any fellow employee of the insured when it happens during the employment or performance of duties related to the conduct of the insured's business is excluded. Consequential injury to household members of the injured employee is also excluded.
Property damage to property the insured owns or transports, or property that is in its care, custody or control is excluded. This exclusion also applies to covered pollution costs or expenses involving the same property but does not apply to liability the insured assumes under a sidetrack agreement.
Bodily injury or property damage as a result of handling property before it is moved from the place where the insured accepts it for movement into or onto the covered auto or after the insured removes it from the covered auto at the final delivery destination is not covered.
Bodily injury or property damage as a result of moving property by a mechanical device other than a hand truck is excluded, unless the device is attached to the covered auto.
Bodily injury or property damage arising out of the operation of certain mobile equipment as defined is excluded. This exclusion also applies to machinery or equipment that would qualify as mobile equipment if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law in the state where it is licensed or principally garaged.
Bodily injury or property damage that is due to the named insured's work that is complete or abandoned is not covered. Work that is otherwise complete but that may require service, maintenance, correction, repair or replacement is treated as completed.
Damages for bodily injury, property damage and pollution cost or expense arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants are excluded. There are several exceptions that should be carefully reviewed.
Damages for bodily injury or property damage caused in any way by war, undeclared war, and civil war, including warlike action by a military force and actions taken by a government to prevent or defend against attacks involving military personnel or agents are excluded. This includes rebellion, revolution, insurrection, or unlawful seizure of power and actions taken to prevent or defend against these acts.
Covered autos used in any professional or organized racing, demolition contest or stunting activity are excluded. This includes practicing for such events or activities. Coverage also does not apply while the covered auto is being prepared for such contests or activities.
The most the insurance company pays for the total of all damages and covered pollution costs and expense resulting from any one accident is the limit of insurance on the declarations. This limit applies regardless of the number of autos, insureds, premiums paid, claims made, or vehicles involved in the accident. Bodily injury, property damage and pollution costs and expense resulting from continuous or repeated exposure to essentially the same conditions is considered as resulting from one accident.
The insurance company pays for losses to covered autos or their equipment based on entries on the declarations. The coverages available are:
When glass breakage results from an object striking the vehicle, the named insured can choose to submit the loss as either a comprehensive or a collision loss.
The insurance company also pays the following expenses:
Physical Damage exclusions must be examined carefully because many of them have conditions, exceptions, limitations, or restrictions not indicated below. The insurance company does not pay for loss caused by any of the following, regardless of any other cause or events that contributes to the loss concurrently or in any sequence.
Loss caused by or resulting from explosion of any weapon employing atomic fission or fusion, or nuclear reaction, radiation or radioactive contamination is excluded, regardless of cause.
There is no coverage for loss caused in any way by or resulting from war, undeclared war, and civil war, including warlike action by a military force and actions taken by a government to prevent or defend against attacks involving military personnel or agents. This includes rebellion, revolution, insurrection, or unlawful seizure of power and actions taken to prevent or defend against these acts.
Coverage does not apply to covered autos used in any professional or organized racing, demolition contest, or stunting activity. Coverage also does not apply during practice or while the covered auto is being prepared for such contests or activities.
All of these are excluded but only if the loss is confined to one or more of these causes of loss. This exclusion does not apply when the entire auto is stolen.
There is no coverage for loss or damage to:
The Electronic Equipment and Devices exclusion does not apply to equipment and accessories permanently installed or removable from a permanently installed unit housing it. Covered equipment and accessories must be operated only with the power provided by the auto's electrical system. The exclusion also does not apply to any other electronic equipment necessary for normal operation of the covered auto, for monitoring its operating systems.
Coverage does not apply to loss to a covered auto due to a reduction in its value because of a loss.
The most the insurance company pays for loss in any one accident is the lesser of the actual cash value of the damaged or stolen property at the time of loss or the cost to repair or replace the damaged or stolen property with property of similar kind and quality. The company adjusts for depreciation and physical condition in determining actual cash value in case of total loss. If repair or replacement results in better than similar kind and quality, the insurance company does not pay for the amount or value of the betterment.
Electronic equipment located in or on a vehicle in a place other than intended by the auto manufacturer is subject to a $1,000 sublimit.
The insurance company's obligation to pay for, or to repair, return or replace damaged or stolen property, is reduced by the applicable deductible for each covered auto. The comprehensive coverage deductible does not apply to losses caused by fire or lightning.
These conditions apply in addition to the Common Policy Conditions.
If the named insured and the insurance company cannot agree on the amount of loss, either may demand an appraisal. The process is described in the coverage form.
The insurance company is not obligated to provide coverage unless the named insured fully complies with its listed duties.
No party has the right to join the insurance
company in any manner unless and until all coverage form terms and conditions are completely met and complied with.
The insurance company has three options to pay claims.
When the insurance company pays a loss, it receives all rights the insured has against others to recover for that loss.
The insurance company is not relieved of its obligations if the insured or its estate becomes bankrupt or insolvent.
Coverage provided by this form is void when fraud, concealment, or misrepresentation occurs regarding the initial application or a loss.
If the insurance company revises this coverage form to provide additional coverage without a premium charge, the additional coverage automatically applies to this coverage form on the date the revision takes effect in the state involved.
Multiple insurance policies may apply to a single loss. This section explains how this coverage form will respond.
The estimated premium is based on the named insured's estimates as of the effective date of coverage. An audit may take place at the end of the year to establish a final premium.
The insurance company covers accidents and losses that occur during the policy period and within the coverage territory as defined in the coverage form.
If two or more coverage forms or policies issued by the same insurance company apply to the same accident, the most paid is the highest applicable limit provided by any of the coverage forms. This condition does not apply to any coverage form or policy issued by the same company specifically as excess coverage over the coverage provided by this coverage form.
Refer to the coverage form for a list and description of definitions used in it.