12.5 Commercial Auto Endorsements
Key Takeaways
- Endorsements in the CA series tailor the BAP; the exam tests each endorsement's purpose and the gap it fills.
- Drive Other Car (CA 99 10) covers an individual with no personal auto policy when driving non-owned autos for personal use.
- Employees as Insureds (CA 99 33) and Hired Auto Physical Damage (CA 99 16) extend the BAP to employee-owned and rented autos.
- Experience modification factors above 1.00 surcharge premium and below 1.00 credit it; the mod multiplies the manual premium.
- The BAP's built-in transportation-expense benefit after a covered theft is $20/day up to a $600 maximum unless increased by endorsement.
Modifying the Business Auto Policy
The base BAP is rarely sufficient by itself; endorsements tailor it to specific exposures. Exam writers test the purpose of each common endorsement and the gap it fills. Endorsements are filed with form numbers in the CA series. Below are the most frequently tested.
High-Frequency Commercial Auto Endorsements
| Endorsement | Form | Purpose |
|---|---|---|
| Drive Other Car (DOC) | CA 99 10 | Extends liability/med pay/UM and physical damage to an individual (and spouse) who has no personally owned auto, when driving non-owned autos |
| Individual Named Insured | CA 99 17 | Treats a named individual and family members like personal-auto insureds under the BAP |
| Hired Auto Physical Damage | CA 99 16 / 20 01 | Adds physical damage to autos the insured hires/rents |
| Employees as Insureds | CA 99 33 | Makes employees insureds while using their own autos in business |
| Lessor – Additional Insured & Loss Payee | CA 20 01 | Protects a leasing company as AI and loss payee |
| Mobile Equipment | CA 20 15 | Schedules specified mobile equipment as covered autos |
| Pollution Liability – Broadened | CA 99 48 | Broadens covered pollution arising from covered autos |
Drive Other Car (DOC) — The Classic Gap
The Drive Other Car (CA 99 10) endorsement solves a recurring problem: a business owner whose only 'vehicle' is the company-owned car has NO personal auto policy. The BAP covers the company auto but not when that owner drives a borrowed or rented car for personal use. DOC fills this by extending liability, medical payments, UM/UIM, and physical damage to the named individual (and spouse/family) as though they had a personal auto policy. Without DOC, the owner has a serious personal-coverage gap.
Hired and Non-Owned Auto: The Most-Sold Endorsement
The most commonly tested commercial-auto endorsement combination is Hired Auto and Non-Owned Auto liability (symbols 8 and 9). It closes the gap for a business that rents vehicles or whose employees run errands in their own cars — without it, an accident in an employee's personal vehicle on company business can expose the business with no commercial-auto response. It does not provide physical damage for those autos unless Hired Auto Physical Damage is added.
Drive Other Car and Lessor Endorsements
Other recurring endorsements: Drive Other Car (DOC) extends coverage to executives who have no personally owned auto when they drive cars other than the company fleet (filling the family-member gap a personal policy would otherwise provide). The Additional Insured — Lessor endorsement names a leasing company as insured and loss payee on leased units. The Mobile Equipment and Pollution Liability — Broadened Coverage for Covered Autos (CA 99 48) endorsements address fuel/cargo pollution from a covered auto, a niche but tested point.
Rental Reimbursement and Audio/Electronic Equipment
Two physical-damage endorsements recur. Rental Reimbursement / Transportation Expense pays a daily amount for a substitute vehicle while a covered auto is repaired after a covered physical-damage loss, subject to a daily and aggregate cap. The Audio, Visual, and Data Electronic Equipment endorsement schedules added value for permanently installed electronics beyond the small built-in sublimit. Selecting these endorsements is part of tailoring a fleet program to the insured's actual exposures.
A small-business owner's only vehicle is titled to the corporation and insured on the BAP. She borrows a friend's car for a weekend personal trip and causes an accident. Which endorsement would have extended personal liability coverage to her in that borrowed auto?
Rating, Experience Modification, and Fleet Discounts
Commercial auto premiums for larger accounts may be experience rated. An experience modification factor (mod) above 1.00 surcharges a worse-than-average loss history; below 1.00 credits a better-than-average history.
Worked mod example: Manual premium is $50,000 and the account earns an experience mod of 0.85. Modified premium = $50,000 x 0.85 = $42,500 — a $7,500 credit for favorable loss experience. Conversely, a mod of 1.20 would yield $50,000 x 1.20 = $60,000, a $10,000 surcharge. The mod multiplies the manual premium BEFORE schedule-rating credits/debits and other discounts are applied.
A commercial auto account has a manual premium of $80,000 and an experience modification factor of 0.90. What is the modified premium before any other adjustments?
Additional Endorsements to Know
- Auto Medical Payments (CA 99 03): pays reasonable medical expenses for the insured and passengers regardless of fault, up to a per-person limit.
- Uninsured/Underinsured Motorists (CA 21 series): mandatory in many states; pays when the at-fault party has no/insufficient coverage.
- Rental Reimbursement / Transportation Expenses: the BAP provides up to $20 per day, $600 maximum for a private passenger temporary substitute after a covered theft — a commonly tested default that can be increased by endorsement.
Know which endorsements ADD an exposure (e.g., mobile equipment) versus EXTEND coverage to new insureds (DOC, employees-as-insureds).
Loss Payees, Additional Insureds, and Schedule Rating
When autos are financed or leased, the lienholder is named as a loss payee (paid for physical-damage losses) and, under the Lessor – Additional Insured and Loss Payee (CA 20 01), also as an additional insured for liability arising from the leased auto. The lessor's interest survives most acts of the named insured, similar to a standard mortgage clause on property.
Beyond experience rating, underwriters apply schedule rating credits and debits (often up to roughly +/-25%) for risk characteristics such as management experience, safety programs, driver-selection standards, and vehicle maintenance. Schedule modifications are applied AFTER the experience mod. So a $50,000 manual premium at a 0.90 mod ($45,000), then a 10% schedule credit, becomes $45,000 x 0.90 = $40,500 — sequence matters on the exam.