CLASSIFYING RISK–TRUCKERS

(April 2019)

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INTRODUCTION

The Truckers general liability classification is unusual because it does not include payroll for the individuals that the classification actually includes! It excludes truckers' payroll as well as the payroll for clerical and storage warehouse employees. This unusual situation is best explained by reviewing Insurance Services Office (ISO) CG 00 01–Commercial General Liability Coverage Form and the Commercial Lines Manual (CLM) General Liability Rules.

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

The first thing to examine is CG 00 01. Premium charges should be directly related to the coverage provided. A charge should not be made if there is no coverage. CG 00 01 contains an Aircraft, Auto, or Watercraft Exclusion. It excludes bodily injury or property damage liability coverage that arises out of owning, maintaining, or using an automobile. As a result, it does not apply while drivers operate or maintain motor vehicles.

In addition, there is no coverage when the vehicle is being loaded or unloaded. This is so important that ISO defined the term in CG 00 01. Loading begins when the trucker starts to move the object and doesn't end until it is where it should be.

As a result, CG 00 01 provides little or no coverage for the actions of truckers because it excludes nearly every aspect of the trucker's job. This means that a premium is not charged for the trucker’s exposure.

GENERAL LIABILITY MANUAL RULES

CLM General Liability Rule 24–Bases of Premium applies, details, and explains exactly what each premium base includes and excludes. The Truckers Code uses payroll as the basis of premium and the analysis begins with the payroll portion of this section. Payroll is defined, followed by what it includes and excludes. It excludes payroll of drivers and their helpers when their principal duties are for work on or in connection with automobiles. Although the term "trucker" is not used, the payroll of drivers and their helpers cannot be included in the classification without a special exception.

CLASS CODE 99793–TRUCKERS

This classification's title does not reveal much but the three notes include important information and instructions:

Storage warehouse operations are separately classified and rated. If the truck terminal has any storage or warehousing facilities or activities, another classification applies to those operations.
The payroll of terminal employees and garage and repair employees is used to calculate the premium.
Payroll of employees involved in collection activities or that deliver merchandise on foot is not used to calculate the premium.

As a result of these notes, certain employees and operations must be classified and charged for separately under other codes and classifications. It stands to reason that payrolls for any employee not engaged in clerical, trucking, or warehousing operations must be used. It becomes clear that a very large truck terminal with a large trucking payroll may generate little general liability premium because both the exposure and premium charge is based on the commercial automobile operations and not on general liability. This is logical and reflects the way it should be, because the general public is not usually present on trucking terminal premises making the exposure to loss minimal. The main liability exposure for most terminals is in vehicle maintenance and repair so those exposures are used to determine the premium.

WAREHOUSE EXPOSURES

One of two warehousing classifications must be used when a trucker operates a warehouse:

Class Code 99938: Warehouses is a Not Otherwise Classified (NOC) classification and is rated based on payroll. As a NOC classification, it should not be used if another code applies and is more appropriate.
Class Code 99917: Warehouse–Cold Storage–Public is used for cold storage warehouses. It specifically applies to public cold storage warehouses and does not include individual cold storage lockers.

Note: The other warehouse classifications apply to lessor's risk or private warehousing facilities. Warehousing operations must be examined carefully, and the operations understood before assigning a classification to them.