(April 2019)
The Insurance Services Office (ISO) CU 00 01– Commercial Liability Umbrella Coverage Form is usually written to reflect commercial general liability and commercial auto as the underlying coverages. However, if the underlying coverage is an auto dealer coverage form instead, the commercial liability umbrella coverage form must be endorsed to reflect that situation. Therefore, ISO rules require attaching CU 22 31–Auto Dealers Endorsement to the commercial liability umbrella coverage form whenever the garage or the auto dealers coverage form is the underlying coverage.
Note: This endorsement was modified in 09 18 to reflect that ISO had replaced the CA 00 05–Garage Form with the CA 00 25 Auto Dealers Coverage Form.
The endorsement schedule has a space to check for Liability Coverage for Customers. If the box is checked, Paragraph B.2.b. (4) of Section I–Bodily Injury and Property Damage Liability in this endorsement does not apply. Checking the box means that the customer is an insured when using a covered auto with the named insured’s permission.
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Example: Serena is an employee of Big Car Lot. She notices that Jerry seems very interested in a particular car and asks if he wants to take it out for a test drive. He agrees and is soon driving the vehicle with Serena as a passenger, explaining its many wonderful features. Jerry accidently pulls into traffic and strikes another vehicle. If the box on the endorsement schedule is checked, Jerry is an insured under Big Car Lot’s policy for actions brought against him because of the accident. If the box is not checked, Big Car Lot is still covered but Jerry is not. |
The rest of the endorsement revises or replaces sections of the commercial liability umbrella coverage form with sections that apply to auto dealers coverage.
Section I–Bodily Injury and
Property Damage Liability
A. Exclusions
A new exclusion is added, and one is revised. These are needed to mesh with CA 00 25 coverage form. 1 Exclusion o. Damage to Your Work is completely replaced. One major change is that all property damage to the named insured's work is excluded. There is no requirement to include it in the products and completed operations hazard. Property damage is excluded if it is due to either the work or from parts, materials, or equipment used with the work. This matches the wording in CA 00 25–Auto Dealers Coverage Form Exclusion 4. m.
2. Leased Autos
This added exclusion involves leased autos. It excludes covered autos leased or rented to others. The exclusion's exception extends coverage to covered autos rented to customers while their vehicles are left with the named insured for service or repair. This matches the wording in CA 00 25–Auto Dealers Coverage Form Exclusion 4.g.
B. Who Is an Insured
The endorsement completely replaces paragraph 2. of The Who is An Insured section. This paragraph relates to liability directly related to owning, maintaining, or using covered autos. This listing is identical to the CU 00 01 except for changes to, 2.b. (4), and 2.d.
The change in 2.b.(4)
involves the complete removal of anyone while moving property to or from
a covered auto as an insured unless they are an employee, a member, a lessee, a
borrower or any of their employees.
A new 2.b.(4) is put in the place of the one above that was removed. The named insured’s customers are insureds. This applies only when an “X” is NOT entered in the endorsement’s schedule.
d. This new item states that the named insured's employee is an insured while he or she uses an auto that the named insured does not own, hire, or borrow provided the auto is being used in either the named insured's business or personal affairs. Basically, the vehicle must be used for the benefit of the named insured, not the employee.
Garagekeepers coverage is provided on a following form basis but only if the underlying coverage form or policy provides garagekeepers coverage. Because this is following form coverage, the underlying coverage form, or policy defines the coverage and conditions. Under no circumstance will this coverage be broader than that provided by the underlying.
A. Four definitions are revised, and one is eliminated.
1. Insured Contract
Items (f) and (g) are modified to replace the term “business” with the term “auto dealership.”
2. Property Damage
This definition is identical to the definition in CU 00 01 except that it
does not mention electronic data. This means that damage to electronic damage may
be considered property damage.
3. Your product
This includes:
a. Goods or products the named insured made or sold in an auto dealership by the named insured or an auto dealership the named insured acquired
b. Providing or failing to provide instructions or warnings
Note: This significantly limits the definition of product but is the definition in CA 00 25.
4. Your work
This includes:
a. Work that others performed on the named insured's behalf
b. Providing or failing to provide instructions or warnings
Note: This significantly limits the definition of work but matches the definition in CA 00 25.
5. The products completed operations hazard definition is removed because that definition is not in CA 00 25.
B. The definition
of auto dealer operations is added, and it matches the definition of auto
dealer operations in the
CA 00 25.
Auto dealership operations
Auto dealers operations are not only the auto dealer operations being conducted but also the owning and maintaining of those locations where they are being conducted. Owning, maintaining, and using parts of a road or other access that adjoins such locations is also considered auto dealer operations. The definition also includes owning, maintaining, or using covered autos as well as any other operations if they are either necessary or incidental to the auto dealership.
CU 24 16–Broad Form Products
Coverage
This endorsement is attached only when CA 00 25–Auto Dealers Coverage Form provides the underlying insurance. This endorsement does only one thing. It eliminates exclusion n. Damage to Your Product. This means that there is coverage if the named insured’s product is damaged by itself or any part of itself. This is especially important because the named insured’s product is an automobile and the named insured services the automobiles it sells. The named insured would have almost no products coverage if this exclusion was not removed.
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Example: Peggy purchases a tractor from Lightning Rod Motors for $150,000. The next day, she picks up a semi-trailer to make her run when she notices smoke. She pulls to the side of the road and escapes just as the tractor catches fire. The investigation reveals that Lightning Rod’s neglect to replace an oil pan when prepping the tractor for Peggy caused the fire. Without this endorsement, the damage to the tractor is excluded but the damage to the semi-trailer is covered. Lightning Rod is responsible for the tractor because it is the product. |