12.5 Commercial Auto Endorsements

Tailoring the Commercial Auto Policy

The BACF and Motor Carrier forms are routinely modified with ISO endorsements that add, restrict, or broaden coverage. The national exam tests both the endorsement name/number and its effect. Below are the high-frequency endorsements every candidate should recognize.

High-Frequency Commercial Auto Endorsements

Drive Other Car (DOC) in Depth

The Drive Other Car endorsement (CA 99 10) is a frequent exam item. A commercial auto policy issued to a corporation does not cover the named executives when they drive a borrowed or rented car for personal use, because the corporation — not the individual — is the named insured. DOC fills this gap:

• It treats the scheduled individual (and resident spouse) as a named insured when using an auto the corporation does not own.
• It can add Liability, Auto Medical Payments, Uninsured/Underinsured Motorists, and Physical Damage.

Trap: DOC does NOT apply to autos the named insured owns; it is strictly for other (non-owned) cars.

Hired Auto Physical Damage — Worked Numeric

The BACF grants liability on hired autos (Symbol 8) but no physical damage. To protect a rented box truck, the insured adds Hired Auto Physical Damage (CA 99 23).

Example: a rented truck (ACV $40,000) is damaged in a collision; repairs cost $12,000. The endorsement carries a $1,000 collision deductible, and coverage is limited to the lesser of ACV, cost to repair, or any stated limit of $35,000.

• The lesser of repair ($12,000), ACV ($40,000), and the $35,000 limit is $12,000.
• Payment = $12,000 − $1,000 deductible = $11,000.

Note some forms also reimburse the rental company's loss-of-use charges up to a daily/aggregate sublimit.

Experience Modification and the Rating Connection

While endorsements modify coverage, commercial auto premium is influenced by loss history through an experience modification factor (mod). A mod compares the insured's actual losses to expected losses for its class:

• Mod = 1.00 is average; below 1.00 earns a credit (better-than-average losses); above 1.00 is a debit (worse-than-average).

Worked example: a fleet's manual premium is $50,000 and its experience mod is 0.85. The modified premium = $50,000 × 0.85 = $42,500, a $7,500 credit. A mod of 1.20 on the same fleet would yield $50,000 × 1.20 = $60,000. Trap: the mod multiplies the manual premium; it is not a flat dollar deduction.

Drive Other Car and Individual Named Insured

The Drive Other Car (DOC) endorsement fills a gap for individuals (owners, executives) who are furnished a company auto and have no personal auto policy: it extends liability, medical payments, and UM/UIM to the named individual (and family) when driving other, non-owned autos, so they are not left bare off the job. The Individual Named Insured endorsement performs a similar personal-coverage broadening when a sole proprietor's vehicles are on a commercial policy.

Hired Auto Physical Damage — Worked Numeric

A business rents a $45,000 truck and buys Hired Auto Physical Damage with a $1,000 collision deductible. The truck is damaged in a covered collision; repair cost is $12,000.

Without this endorsement, the rental company's damage waiver or the renter's own funds would absorb the loss, because Symbol 8 (hired autos) alone provides liability, not physical damage.

Endorsement Recap

Commercial-auto premium ties to the experience modification and exposure base, so reducing frequency through fleet safety programs lowers the rated premium over time.

Matching Endorsements to Gaps

Commercial-auto endorsement questions are gap-and-fix exercises. The Drive Other Car endorsement closes the gap for an executive who drives a company car but carries no personal auto policy, extending liability, medical payments, and uninsured-motorist coverage to the individual and family when driving other non-owned autos. Hired-auto physical damage closes the gap that Symbol 8 leaves, because Symbol 8 provides only liability on rented vehicles and not collision or comprehensive.

The lessor additional-insured endorsement satisfies a lease requirement, and the mobile-equipment endorsement handles equipment that is also licensable for road use. When a stem describes a coverage shortfall, the answer is the endorsement whose purpose matches that exact gap, and recognizing that premium ties to the experience modification reinforces why fleet-safety programs that lower frequency eventually lower the rated cost of the entire commercial-auto account.