6.4 PAP Endorsements, Commercial Auto (BAP), Garage Coverage & Motor Carrier Forms

PAP Endorsements, Commercial Auto (BAP), Garage Coverage & Motor Carrier Forms

Quick Answer: To complete PSI Domain V, adjusters must master PAP Conditions (Parts E & F) and PAP Endorsements (PP 03 03, PP 03 06, PP 03 22, PP 03 23), the Business Auto Coverage Form (CA 00 01)—especially Covered Auto Designation Symbols 1 through 9 and 19, Specified Causes of Loss, and endorsements CA 99 10, CA 99 17, and CA 99 33—plus specialized commercial policies: the Garage Coverage Form (CA 00 05) (including Garagekeepers Legal Liability, Direct Primary, and Direct Excess triggers and the faulty workmanship exclusion), the Motor Carrier Coverage Form (CA 00 20) (Trailer Interchange Coverage), and On-Hook Towing Coverage.

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Personal Auto Policy Conditions (Parts E & F) & Selected Endorsements

Part E — Duties After an Accident or Loss

An insured seeking coverage under the PAP must comply with the following duties (failure to do so may prejudice coverage):

1. Prompt Notice: Notify the insurer promptly of how, when, and where the accident or loss happened.
2. Cooperation & Legal Papers: Cooperate with the insurer in the investigation, settlement, or defense of any claim or suit, and promptly send copies of any notices or legal papers received.
3. Medical Exams & Examination Under Oath (EUO): Submit as often as the insurer reasonably requires to physical exams by physicians the insurer selects and pays for, and to examination under oath while not in the presence of any other insured.
4. Police Notification: Promptly notify the police if a hit-and-run driver is involved (for Part C UM claims) OR if the vehicle or its equipment is stolen (for Part D theft claims).
5. Inspection Before Repair or Disposal (Part D): Take reasonable steps after loss to protect "your covered auto" or a "non-owned auto" from further loss (the insurer pays reasonable expenses incurred to do this), and permit the insurer to inspect and appraise the damaged property BEFORE its repair or disposal!

Part F — General Provisions

• Appraisal (Part D): If the insurer and insured fail to agree on the amount of loss under Part D, either party may demand an appraisal. Each party selects a competent and impartial appraiser, and the two appraisers select an umpire. A decision agreed to by any two of the three is binding as to the amount of loss. Each party pays its chosen appraiser and bears the expenses of the appraisal and umpire equally.
• Other Insurance (Primary vs. Excess): Any coverage the PAP provides with respect to an owned auto ("your covered auto") is primary, whereas any insurance the PAP provides for a vehicle you do NOT own (including a temporary substitute auto or rental car) is excess over any other collectible insurance, self-insurance, or service/protection plan. When two policies apply on the same level (both primary or both excess), each pays its pro rata share based on the ratio of its limit to the total of all applicable limits.
• Two or More Auto Policies (Anti-Stacking): If this policy and any other auto policy issued to "you" by the same insurer apply to the same accident, the maximum limit of liability under all the policies shall not exceed the highest applicable limit of liability under any one policy.
• Policy Period and Territory: Covers accidents and losses occurring during the policy period within the United States of America, its territories or possessions, Puerto Rico, or Canada, or while a covered auto is being transported between their ports. Mexico is NOT covered under an unendorsed PAP; driving into Mexico requires a separate Limited Mexico Coverage endorsement (PP 03 21) and primary liability coverage issued by a licensed Mexican insurer.

Selected Personal Auto Endorsements

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Commercial Auto: Business Auto Coverage Form (BAP — CA 00 01)

The ISO Business Auto Coverage Form (CA 00 01) is the standard commercial auto policy used by businesses whose primary operations are not auto dealerships (CA 00 05) or for-hire trucking fleets (CA 00 20). In Item Two of the BAP Declarations, coverage is activated ONLY for those vehicles represented by the numerical Covered Auto Designation Symbol(s) entered next to each coverage.

Memorize All 10 BAP Covered Auto Designation Symbols (Symbols 1–9 and 19)

BAP Physical Damage Coverages: Comprehensive vs. Specified Causes of Loss

Section III of the BAP offers Collision Coverage plus two choices for non-collision physical damage:

1. Comprehensive Coverage: Open-perils coverage for any cause of loss except the covered auto's collision with another object or its overturn.
2. Specified Causes of Loss Coverage: A lower-cost named-perils alternative to Comprehensive that pays ONLY for loss caused by:
   • Fire, lightning, or explosion;
   • Theft;
   • Windstorm, hail, or earthquake;
   • Flood;
   • Mischief or vandalism; or
   • The sinking, burning, collision, or derailment of any conveyance transporting the covered auto. (Exam Trap: Unlike Comprehensive, Specified Causes of Loss does NOT cover contact with a bird or animal [deer strike], falling objects not caused by windstorm, or simple glass breakage!)

Essential Commercial Auto Endorsements

• Drive Other Car Coverage — Broadened Coverage for Named Individuals (CA 99 10): Protects a corporate executive, partner, or business owner who does not have a Personal Auto Policy (because they drive a company-furnished auto) when that individual or their resident spouse rents or borrows a non-owned auto for personal, non-business use.
• Individual Named Insured (CA 99 17): Attached when the Named Insured on a BAP is an individual / sole proprietor. It broadens the BAP so the sole proprietor and their resident family members receive Personal Auto Policy-style coverage for personal use of private passenger autos.
• Employees as Insureds (CA 99 33): Under an unendorsed BAP, when an employee drives their own personal car on a company errand (Symbol 9), the employer business is covered if sued, but the employee is explicitly excluded from the definition of "insured." Attaching CA 99 33 makes any employee an "insured" while using a covered auto they own (or that a family member owns) in the employer's business or personal affairs, paying as excess over the employee's personal auto policy.

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Garage Coverage Form (CA 00 05), Motor Carrier Form (CA 00 20) & On-Hook Towing

1. Garage Coverage Form (CA 00 05)

(ISO's 2013 commercial auto program moved auto dealers to the Auto Dealers Coverage Form (CA 00 25), which uses the same building blocks; the PSI outline still tests the Garage form's structure described here.)

Designed for automobile, truck, trailer, and motorcycle dealerships and service garages (using Covered Auto Symbols 21 through 31, where Symbol 21 = Any Auto, Symbol 30 = Customer Autos Left for Service/Repair/Storage, and Symbol 31 = Dealer's Own Inventory Autos), the Garage Coverage Form combines three major coverages in one policy:

• Section II — Garage Liability Coverage: Covers "Garage Operations — Other Than Covered Autos" (premises slip-and-falls and completed operations/products liability) AND "Garage Operations — Covered Autos" (auto accidents involving dealer vehicles).
  • CRITICAL EXAM EXCLUSION — Defective Parts & Faulty Workmanship: If a dealership mechanic negligently installs defective brakes on a customer's car and the customer crashes into a utility pole on the way home, Garage Liability DOES pay for the resulting crash damage and bodily injuries, BUT EXCLUDES the cost to replace the defective brake parts or redo the faulty brake repair work itself ("work you performed" / "your product" exclusion).
• Section III — Garagekeepers Coverage (Symbol 30): Because Section II Liability excludes property in the insured's care, custody, or control, Garagekeepers Coverage is required to cover physical damage (Collision plus Comprehensive or Specified Causes of Loss) to a customer's auto left in the dealer's or repair shop's custody for service, repair, parking, or storage. It can be written on three trigger bases:
  1. Legal Liability (Default): Pays ONLY if the garage is legally liable (negligent) for the damage (e.g., an employee leaves keys in an unlocked customer car overnight and it is stolen, or crashes the customer car during a test drive). If a hailstorm or non-negligent fire damages customer cars on the lot, Legal Liability Garagekeepers pays $0!
  2. Direct Primary Coverage: Pays for covered damage to the customer's auto without regard to legal liability (even if the garage was not negligent), and pays as primary insurance ahead of the customer's own personal auto policy!
  3. Direct Excess Coverage: Pays for covered damage to the customer's auto without regard to legal liability, but only in excess over whatever is collectible under the customer's own personal auto policy (such as paying the customer's collision/comprehensive deductible).
• Section IV — Physical Damage Coverage (Symbol 31): Covers the dealer's own inventory of vehicles held for sale, demonstrators, and service vehicles.

2. Motor Carrier Coverage Form (CA 00 20) & Trailer Interchange

• Motor Carrier Coverage Form (CA 00 20): Tailored for businesses that transport goods or passengers by auto (both for-hire trucking companies and private carriers hauling their own goods), using Symbols 61 through 71.
• Trailer Interchange Coverage: A key section of CA 00 20 (also built into the older Truckers Coverage Form, CA 00 12) that covers the motor carrier's legal liability for physical damage (Collision, Comprehensive, or Specified Causes of Loss) to a non-owned trailer (and its equipment) while in the insured motor carrier's possession under a written Trailer Interchange Agreement.

3. On-Hook Towing Coverage

• On-Hook Towing Coverage: A specialized bailee physical damage coverage for towing and recovery businesses that covers legal liability (or direct damage) for physical loss (Collision and Comprehensive / Specified Causes of Loss) to a customer's non-owned vehicle while it is actively being hooked up, lifted, winched, towed, transported on a flatbed rollback, or unhooked by an insured tow truck.