(April 2019)
Motor carriers have exposures that the Insurance Services Office (ISO) CU 00 01–Commercial Liability Umbrella Coverage Form does not contemplate. As a result, endorsements must be added to eliminate gaps in coverages and conditions when commercial liability umbrella coverage is written on a motor carrier operation. The four endorsements analyzed below are specific to motor carriers. However, not all are used at the same time.
Note: ISO withdrew the Trucking Coverage form and has gradually been eliminating all references to trucking. The recent 09 18 endorsement change has resulted in titling changes and coverage changes to only motor carrier.
Bobtailing is a tractor that travels on the road without a trailer. Deadheading is a tractor that travels on the road pulling an empty trailer. If the named insured is a trucking operation, these situations do not cause it concern because owned tractors and trailers are always covered. In addition, hired tractors and trailers are covered during the period they are hired.
However, problems arise when an independent driver works for a specific trucking operation. Once that driver completes a trip and finishes the work, the insurance coverage the trucking operation provides to that driver ends. Bobtailing and deadheading are the two most common situations where independent drivers are not operating under another trucking company's operating authority and its insurance coverage.
To eliminate this gap in coverage, the independent driver may purchase primary motor carrier coverage and umbrella and be insured at all times. However, this is expensive and overlaps with the coverage the contracted trucking company provides when the independent is operating under that contracted trucking company’s authority and insurance coverage.
Another option for the independent driver is to purchase a Commercial Business Auto Coverage Form. To avoid overlap with the contracted trucking company's insurance coverage, CA 23 09–Motor Carriers–Insurance for Non-Trucking Use is attached to it. Similarly, CU 22 35–Motor Carriers–Insurance for Non-Trucking Use is attached to the umbrella. The CU 22 35 covers the same vehicles that the underlying coverage form insures.
This endorsement restricts coverage to only non-trucking activities by adding exclusions and modifying Who Is an Insured for the vehicles on the endorsement schedule.
Note: The insurance of the contracted trucking company the independent driver works for covers the trucking activities.
The exclusion added states that insurance does not apply to a covered auto while it carries property in any business or while used in the business of any party that rents it. Stated another way, the coverage this endorsement provides is limited to personal use of a tractor or tractor/trailer unit.
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Example: Mildred operates under contract with Great Freight. She drops her trailer at the local supermarket and heads home in her tractor. Unfortunately, she strikes a pedestrian she doesn't see because he was in her blind spot. When the pedestrian’s family sues her, Great Freight's insurance does not respond because Mildred was not operating under its authority at the time of the accident. However, because she had her own business auto coverage with the CU 22 35 is attached, her policy does respond. |
This change applies to only liability because of owning, maintaining, occupying or using a covered auto. No party in the business of hauling merchandise of others for hire by auto is an insured even if it is liable for the named insured's conduct.
Note: This is the only endorsement that continues to use the term “truckers” in the title. However, the term motor carrier is used within the endorsement itself.
This endorsement extends
the umbrella to insure the liability of third parties or their property for the
liability the named insured assumes as a subscribing carrier under the Uniform
Intermodal Interchange and Facilities Access Agreement and any subsequent
amendments. It should be attached whenever CA 23 17–Truckers–Uniform Intermodal
Interchange Endorsement Form UIIE–1 or its equivalent is attached to the
underlying auto coverage form or policy.
Who is an Insured
The part of 2. Who is an Insured that applies to only liability that is related to the owning, maintaining, or using of covered autos is completely removed and replaced. However, the section replaced applies only with respect to the named insured's motor carrier operations. If it engages in other operations, the parts of 2. Who is an Insured that did not change still apply to those operations.
1. Paragraphs 2. a, 2. b, (3), 2. b (4), and 2. b. (6) are unchanged.
2. Paragraph 2.b. explains which drivers are not considered insureds even if they do have the permission of the named insured to drive the vehicle. The following paragraphs in 2. b. are changed.
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Example:
Willard is a manager for Every Day Delivery, LLC. A box truck that Every
Day owns breaks down one day. Scenario 1: Willard borrows his brother’s box
truck to finish the deliveries. Willard’s brother is an insured under Every
Day’s umbrella. Scenario 2: Willard borrows his brother’s mini-van to finish the deliveries.
Willard’s brother is not an insured under Every Day’s umbrella. |
2. The following paragraphs in 2. b. are changed.
3. Paragraph 2. c. The wording in paragraph 2. c. in the umbrella is moved to paragraph 2. e. in this endorsement but is otherwise unchanged.
4. Paragraph 2.c. is an addition. It states that when the named insured hires or borrows a trailer from its owner or anyone else, that party is an insured in either of the following circumstances:
5. Paragraph 2. d. is an addition. It states that when the named insured leases a covered auto other than a trailer that the lessor is an insured when the leased auto is used in the named insured’s motor carrier’s for hire business. However, the lessor is an insured only when there is a written agreement and then only if the named insured does not hold the lessor harmless.
6. The following applies to only this endorsement and is a continuation of paragraph 2.
Certain entities are not insureds, even if they may appear to qualify based on other statements in Who is an Insured:
a. A motor carrier for hire and its employees or agents (other than the named insured and its employees) is not an insured:
A motor carrier may not meet either of the above criteria but still not be an insured because it requires the named insured to hold it harmless in its written contract.
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Example: Pedal Pushing hires a trailer from Genuine Trailers. Pedal Pushing jackknifes and seriously injures three different persons. The five persons injured agree to a $3,000,000 final settlement. Scenario 1: Genuine previously posted a bond to meet its financial obligations under the motor carrier law and does not have auto liability insurance. Genuine does not receive any benefit from Pedal Pushing's policy as an insured but Pedal Pushing is protected for its own obligations. Scenario 2: Genuine has auto liability coverage but the written contract states that Pedal Pushing holds Genuine harmless. Genuine is not an insured but coverage may still be available for it through the definition of covered contract. |
b. Rail, water, or air carriers and their employees or agents (other than the named insured and its employees) are not insureds for any trailer for bodily injury or property damage that occurs while that trailer is detached from a covered auto and is being transported, loaded, or unloaded from the carrier’s transporting unit.
Two definitions are added:
Motor carrier
This is not limited to a person. It includes organizations. The key is that the business of the person or organization must be transporting property as a commercial enterprise.
Trailer
This is not limited to just trailers. It also includes semitrailers and dollies that convert semitrailers to trailers. When a trailer interchange agreement is in place, the definition of trailer includes a container but only for the liability assumed in the agreement.
The lessee named on the endorsement schedule must receive at least a 30-day advance notice before liability coverage is reduced, or the policy is cancelled. This is similar to CA 23 12–Motor Carriers–Named Lessee as Insured but it is not identical. The important point is that the lessee's name and address must be scheduled.
Note: This endorsement is very important. If the insurance company does not send the required notice, coverage for the lessee continues, even though the named insured’s coverage does not.