12.5 Commercial Auto Endorsements
Key Takeaways
- Drive Other Car (CA 99 10) gives a named individual with no personal auto policy personal-auto-like coverage on non-owned autos.
- Hired auto physical damage and Symbol 9 non-owned liability fill recurring rented/employee-car gaps.
- Lessor Additional Insured (CA 20 01) names a leasing company as additional insured and loss payee.
- An experience mod below 1.00 credits premium; above 1.00 debits it (actual vs. expected losses).
- BAPs are often auditable: inception premium is a deposit, trued-up at expiration as vehicles change.
Tailoring the Commercial Auto Policy
The Business Auto Coverage Form is intentionally broad but generic; endorsements add, restrict, or modify coverage for specific exposures. Knowing the common ISO 'CA' endorsements by name and effect is heavily tested.
| Endorsement | Effect |
|---|---|
| Drive Other Car (CA 99 10) | Extends liability/med-pay/UM to named individuals while driving non-owned autos — used by executives with a company car but no personal auto policy |
| Hired Auto Physical Damage | Adds comprehensive/collision on rented/borrowed autos (Symbol 8 exposure) |
| Individual Named Insured (CA 99 17) | Broadens coverage so an individual owner and family get personal-auto-like protection on the BAP |
| Lessor – Additional Insured and Loss Payee (CA 20 01) | Names the lessor of a leased auto as additional insured and loss payee |
| Mobile Equipment (CA 20 15) | Schedules mobile equipment to be treated as covered autos |
| Fellow Employee Coverage (CA 20 55) | Deletes the fellow-employee exclusion so employees can sue co-employees |
Drive Other Car (DOC) in Detail
The BAP's 'who is an insured' rule does NOT cover a named individual while driving a NON-owned auto for personal use. An executive whose only vehicle is a company car therefore has a gap on weekends and rentals. Drive Other Car (CA 99 10) fills it by extending liability, medical payments, UM/UIM, and (optionally) physical damage to the named person and resident spouse while using autos the company does not own.
Trap: DOC is for individuals who have NO personal auto policy of their own — it mimics personal coverage. It is not a fleet-wide extension.
Hired and Non-Owned Liability
Two distinct gaps recur on the exam:
- Hired auto liability — needed when the business rents/leases vehicles; Symbol 1 already includes it, but Symbol 2 risks must add it.
- Employees as insureds for non-owned use — by endorsement, the named insured's vicarious liability when employees use their OWN cars on business is covered (Symbol 9), but the employee personally is not made an insured.
Rating Modifiers and the Experience-Mod Concept
Commercial auto premiums for larger fleets can be adjusted by an experience modification (experience mod / EMR) that compares the insured's actual losses to expected losses for similar risks.
Worked experience-mod example
If the expected losses for a fleet are $100,000 and the actual losses are $70,000, a simplified mod = actual / expected = 70,000 / 100,000 = 0.70. Applied to a $50,000 manual premium: $50,000 x 0.70 = $35,000 — a 30% credit for better-than-average loss experience. A mod above 1.00 (e.g., 1.25) is a debit, raising premium for worse-than-average losses.
Other rating levers
| Lever | Effect on premium |
|---|---|
| Higher deductible (physical damage) | Lowers premium |
| Fleet rating (9+ power units) | Blends fleet loss experience |
| Radius of operation / use class | Long-haul and commercial use cost more |
| Driver MVR / loss history | Surcharges for violations and at-fault claims |
Audit note: Because vehicles are added and deleted mid-term, the inception premium is a deposit premium and many BAPs are auditable, with the final premium trued-up at expiration.
More Endorsements You Must Recognize
Exam writers test the name-to-effect link for several additional ISO commercial-auto endorsements:
| Endorsement | Effect |
|---|---|
| Rental Reimbursement (CA 99 23) | Pays a daily/maximum amount for a substitute vehicle after a covered physical-damage loss |
| Auto Loan/Lease Gap (CA 04 79) | Pays the difference between the auto's ACV and the loan/lease balance after a total loss |
| Pollution Liability – Broadened (CA 99 48) | Restores limited coverage for pollutants being transported by a covered auto |
| Waiver of Transfer of Rights (CA 04 44) | Waives subrogation against a party named by contract |
| Expanded Transportation Expense | Increases the standard $20/day, $600-max transportation-expense allowance after theft of a private passenger auto |
Gap-coverage trap: Auto physical damage pays only ACV. If a financed truck is totaled while the loan balance exceeds ACV, the borrower still owes the lender the shortfall — only Loan/Lease Gap (CA 04 79) closes that hole.
Choosing Endorsements From a Fact Pattern
The practical skill the exam rewards is reading a business description and naming the gap-filling endorsement.
- A startup leases all its delivery vans -> Lessor Additional Insured (CA 20 01) plus hired-auto physical damage.
- The owner drives only the company SUV and has no personal policy -> Drive Other Car (CA 99 10).
- A contractor finances trucks with little money down -> Loan/Lease Gap (CA 04 79).
- Employees use personal cars for deliveries -> ensure Symbol 9 non-owned liability is on the declarations.
- A client contract requires the insured to waive subrogation -> Waiver of Transfer of Rights (CA 04 44).
Final synthesis: the Business Auto policy is a kit. Symbols decide WHICH autos; the coverage sections decide WHAT perils; endorsements close the remaining gaps; and rating modifiers, deductibles, and audits decide the PRICE. Hold those four layers separate and most commercial-auto questions resolve cleanly.
A company president drives a company-owned car as her only vehicle and has no personal auto policy. Which endorsement gives her personal-auto-like protection when she drives a rented car on vacation?
A fleet has expected losses of $200,000 and actual losses of $240,000, producing an experience mod of 1.20. Applied to a $60,000 manual premium, what is the modified premium?