12.5 Commercial Auto Endorsements
Key Takeaways
- Drive Other Car (CA 99 10) extends liability and physical damage to named individuals using non-owned autos - vital for executives with no personal auto policy.
- Hired Auto and Employer's Non-Ownership Liability fill the rental and employee-car gaps when only owned-auto symbols are scheduled.
- Rental Reimbursement (CA 99 23) pays a daily/maximum amount for a substitute vehicle while a covered auto is repaired after a covered loss.
- An Additional Insured endorsement extends liability to a named party such as a lessor or contracting client to satisfy a written contract.
- Experience rating uses an experience modification factor: a mod above 1.00 surcharges premium and below 1.00 credits it.
Filling Coverage Gaps
The base form leaves predictable gaps that endorsements close. The most-tested ones:
| Endorsement | ISO Form | What It Does |
|---|---|---|
| Drive Other Car (DOC) | CA 99 10 | Liability, med-pay, UM, and physical damage for named individuals using non-owned autos |
| Hired Auto Physical Damage | varies | Adds physical damage on rented/leased autos (Symbol 8 base) |
| Employer's Non-Ownership Liability | within form | Protects the employer for employee-owned autos used in business (Symbol 9 base) |
| Rental Reimbursement | CA 99 23 | Pays a daily amount for a substitute vehicle during covered repairs |
| Additional Insured | CA 20 series | Extends liability to a named party (lessor, client) per contract |
| Lessor - Additional Insured & Loss Payee | CA 20 01 | Names a leasing company for liability and loss payment |
Drive Other Car
Drive Other Car (DOC) matters when an individual is furnished a company vehicle and therefore carries no personal auto policy. Because the Business Auto Coverage Form's liability does not protect that person while driving a borrowed or rented private auto, DOC restores the protection a personal auto policy would provide, for the named individual and usually their spouse and resident relatives.
Rental Reimbursement - Worked Example
A delivery van suffers a covered collision and is in the shop 9 days. The Rental Reimbursement (CA 99 23) endorsement provides $50 per day up to a $1,500 maximum.
- 9 days x $50 = $450 paid (well under the $1,500 cap).
- Had repairs taken 35 days, payment would stop at the $1,500 maximum, not $1,750.
Rental reimbursement only triggers after a covered physical-damage loss; it does not pay for routine maintenance downtime.
Additional Insured and Loss Payee
A lessor, contracting client, or financing company often requires being named on the policy by written contract. An Additional Insured endorsement extends liability protection to that party for the insured's operations; a Loss Payee receives physical-damage loss proceeds. The Lessor - Additional Insured and Loss Payee (CA 20 01) combines both for leased vehicles - a common exam pairing.
Experience Rating and the Mod
Larger commercial auto accounts are experience rated: past losses adjust future premium through an experience modification factor (the mod).
- A mod of 1.00 is average (no change).
- A mod above 1.00 (e.g., 1.25) is a surcharge - worse-than-average losses.
- A mod below 1.00 (e.g., 0.85) is a credit - better-than-average losses.
Worked example: A fleet's manual (base) premium is $40,000 and its experience mod is 1.15.
- Modified premium = $40,000 x 1.15 = $46,000.
- If the mod were 0.90 instead: $40,000 x 0.90 = $36,000.
The mod rewards loss control and penalizes frequency, giving insureds a direct financial incentive to reduce accidents.
Common Endorsement Traps
| Trap | Reality |
|---|---|
| DOC protects the corporation | No - DOC protects the named individual with no personal auto |
| Rental reimbursement caps at the daily figure | No - it caps at the stated maximum total |
| Additional insured gets physical-damage proceeds | No - that is the loss payee role |
| A mod above 1.00 lowers premium | No - above 1.00 surcharges; below 1.00 credits |
Hired and Non-Owned Liability
Many small accounts schedule only owned-auto symbols and discover two recurring gaps. Hired Auto Liability covers autos the firm rents, leases, hires, or borrows (the Symbol 8 exposure), while Employer's Non-Ownership Liability protects the firm against vicarious liability when employees run business errands in their own cars (the Symbol 9 exposure).
- Hired and non-owned liability are inexpensive because they add no owned units to rate.
- Non-owned liability protects only the employer, never the employee, whose personal auto policy stays primary.
- A salesperson who occasionally rents a car and uses their own vehicle for client visits creates both exposures - the firm needs hired and non-owned coverage to be whole.
When to Use Each Endorsement
| Situation | Endorsement to Add |
|---|---|
| Executive furnished a company car, no personal auto | Drive Other Car (CA 99 10) |
| Firm frequently rents trucks | Hired Auto Physical Damage |
| Employees use personal cars for errands | Employer's Non-Ownership Liability |
| Bank finances the fleet | Lessor - Additional Insured and Loss Payee (CA 20 01) |
| Client contract requires being named | Additional Insured (CA 20 series) |
These endorsements are how the producer adapts a standard form to a real account, and the exam routinely presents a fact pattern with a gap and asks which endorsement closes it.
High-Yield Commercial Auto Endorsements
The exam expects recognition of common Business Auto endorsements by purpose:
| Endorsement | Purpose |
|---|---|
| Hired Auto / Non-Owned (Symbols 8 & 9) | Liability for rented and employees' autos used in business |
| Drive Other Car (DOC) | Extends coverage to a key person (and family) driving non-owned autos when the company furnishes their only vehicle |
| Individual Named Insured | Adds personal-auto-style coverage for an individual owner of the business |
| Rental Reimbursement | Pays for a substitute vehicle after a covered physical-damage loss |
| Pollution Liability — Broadened Coverage for Covered Autos | Restores limited pollution coverage for cargo/upset |
| Lessor — Additional Insured | Protects a vehicle lessor as additional insured/loss payee |
| Mobile Equipment | Coordinates equipment that may fall between auto and CGL |
Drive Other Car and the Pollution Trap
Drive Other Car (DOC) fills a personal gap: a company executive whose only car is the business auto has no personal auto policy, so when they borrow or rent a car for personal use they would be uncovered. DOC extends liability, Med Pay, UM, and physical damage to that executive (and resident family) as if they had a PAP.
The Business Auto form contains a broad pollution exclusion; the Pollution Liability — Broadened Coverage endorsement gives back coverage for pollution caused by an accident involving the covered auto's normal cargo/fuel (an upset of the truck spilling its own fuel), but not for pollutants the truck is hauling as cargo — that requires separate environmental/MCS-90 treatment.
Worked trap: a tanker overturns and its diesel fuel tank ruptures, contaminating soil. The broadened pollution endorsement may respond (fuel for the auto's operation). If instead the cargo of chemicals it was hauling spills, the auto pollution endorsement does not respond — the carrier needs pollution/cargo coverage and the MCS-90 for the public-protection minimum. Matching the endorsement to the exposure (DOC for the no-personal-car executive; HNOA for employee-driven cars) is the recurring exam pattern.
A covered auto is in the shop 9 days after a covered collision. Rental Reimbursement pays $50 per day up to a $1,500 maximum. How much is paid?
A commercial auto account has a manual premium of $40,000 and an experience modification factor of 1.20. What is the modified premium, and what does the mod indicate?