12.5 Commercial Auto Endorsements

Common Business Auto endorsements

The Business Auto Coverage Form is routinely modified by endorsements that add coverage, restrict it, or satisfy a statutory requirement. The exam expects recognition of the major ISO endorsements by name and effect:

Drive Other Car (DOC) in depth

The Drive Other Car endorsement is heavily tested because it solves a real gap. A business owner whose only auto is a company car has no personal auto policy, so when they drive a borrowed or rented auto, the Business Auto form (which insures the named entity, not the individual) may not respond. DOC adds, for scheduled individuals:

• Liability for autos the individual does not own.
• Medical payments, uninsured/underinsured motorist coverage as scheduled.
• Coverage for the individual's spouse and family members.

Trap: DOC applies to autos other than those owned by or furnished to the named individual — it is designed for occasional use of non-owned autos, not to insure a second car the executive owns.

Endorsements that interact with rating and other coverages

• Hired Auto Physical Damage (CA 99 03): because hired-auto symbols (8) give liability only, this endorsement is required to insure physical damage on rented vehicles. Rating is often by cost of hire (total rental dollars). Worked example: a contractor rents loaders generating $50,000 of annual cost of hire at a rate of $2.50 per $100; the physical-damage premium is $50,000 / 100 x $2.50 = $1,250.
• Lessor - Additional Insured and Loss Payee (CA 20 01): required by leasing companies; if the lessee fails to insure, the endorsement provides the lessor a measure of protection and names them as loss payee.
• Audio, Visual and Data Electronic Equipment and Towing and Labor add-ons schedule small specialty exposures.

Remember the experience-rating context too: commercial auto premiums for larger fleets are adjusted by an experience modification factor (mod). A mod below 1.00 reflects better-than-average losses (a credit); a mod above 1.00 is a debit. Example: a manual premium of $40,000 at a mod of 0.85 yields a modified premium of $40,000 x 0.85 = $34,000.

Common Commercial Auto Endorsements

Commercial auto policies are tailored with endorsements that adjust who and what is covered:

Exam trap: The Drive Other Car (DOC) endorsement is the classic answer when a corporate executive who owns no personal vehicle drives company cars and occasionally borrows others - it grants the broad personal-style coverage the individual lacks because the auto policy is in the company's name. The Individual Named Insured endorsement similarly extends personal-lines-type protections (such as coverage as a pedestrian and for non-owned autos) to an individual who owns the commercial auto policy.

Matching the Endorsement to the Exposure

Selecting the right commercial auto endorsement is a frequent application question. Use the exposure to drive the answer:

Exam tip: Drive Other Car is the answer whenever a company-titled policy leaves an executive personally unprotected when driving non-company vehicles - because the policy is in the corporation's name, the individual would otherwise have no coverage as if they owned a PAP. The Individual Named Insured endorsement extends personal-auto-type coverages (pedestrian/Med Pay, non-owned auto) to a sole proprietor whose only auto policy is the business one. Always read whose name is on the policy before recommending an endorsement.