“Ehhhh…what's up, DOC?”

Who knew that when Bugs Bunny uttered those immortal words, he was talking not about the medical profession but about business auto insurance?

Yes, even cartoon creatures cannot resist the allure and romance of the CA 99 10. And, judging from the plethora of inquiries on this very subject lately reaching your correspondent's ears and inbox, neither can many of you.

To illustrate the reason for many such queries, let me briefly summarize a scenario I often use in class (and once related in this very column), wherein the boyfriend of a daughter of a corporate officer was driving a corporately owned vehicle at the time of an accident. Because of the extensive property damage inflicted on the store that he crashed into, the property owners sued the boyfriend. (The officer's wife had let their daughter take the car for a date, and the daughter had let her boyfriend drive.) My classroom query involved the insured status of this boyfriend under the ISO Business Auto Coverage (BAC) Form, where the named insured on the declarations page was listed as simply “ABC Inc.” If the corporate minutes indicate the corporate automobile was supplied to the corporate officer for business purposes only, whom does the BAC consider an “insured”? The answer, in the form itself, is just a few lines long:

1. Who Is An Insured
The following are “insureds”:
a. You for any covered “auto.”
b. Anyone else while using with your permission a covered “auto” you own, hire or borrow…

To determine the insured status of the boyfriend, we need to know only two things. First, is he a “You” as defined in the BAC? The BAC, like all ISO forms, addresses this issue on page 1: “Throughout this policy the words “you” and “your” refer to the Named Insured shown in the Declarations.” Unless the boyfriend is “ABC Inc.” (a legal impossibility), then the answer to the first question is “no.”

Second, is the boyfriend using the auto with “your” permission? Clearly not, since there is no indication that ABC Inc. granted any such permission to anyone other than the officer. The daughter gave the boyfriend permission to drive the car. But, since only the named insured can meet the policy condition of “with your permission,” the daughter clearly has no right to create permission–and thus coverage under the BAC–for her boyfriend to operate the vehicle.

At this point, our question is answered and we can move on to other issues. Except in class it never works that way. Someone always asks why the claim was filed against the boyfriend rather than the corporation, what limits the boyfriend had under his own personal auto policy (PAP), whether they would apply, and so forth. These are all reasonable questions that result in reasonable discussions.

Yet, at some point in every discussion, someone says, “If you agree that, according to the facts given, there is no coverage for the boyfriend under the BAC, how might such coverage be created?” At this juncture, one or more of the students suggests adding a “DOC” to the BAC. And that, dear friends, is just plain wrong.

First, for all the grief given ISO for creating a vast, dark morass of policy terminology and provisions that only a dead-languages expert in a drug-induced haze could possibly appreciate, this modest endorsement is a shining beacon. Those who generally refer to this endorsement by its proper ISO name–the CA 99 10 09 02–may be forgiven for missing this point. If you use its given English name–Drive Other Car Coverage–Broadened Coverage For Named Individ-uals–you are closer to home. We Americans, always in search of a shortcut, commonly refer to the form as Drive Other Car. In everyday industry usage, even this modest name has been shortened further to “DOC.”

For brevity in the following discussion, I'll use DOC, although in class I refer to it Drive Other Car, simply because that title describes the endorsement's purpose so well. The form specifically provides coverage when an insured is driving some “other car”–namely, a car “other” than one already covered by the BAC. Here is the liability insuring agreement from the DOC endorsement:

1. Any “auto” you don't own, hire or borrow is a covered “auto” for Liability Coverage while being used by any individual named in the Schedule or by his or her spouse while a resident of the same household except:
a. Any “auto” owned by that individual or by any member of his or her household.
b. Any “auto” used by that individual or his or her spouse while working in a business of selling, servicing, repairing or parking “autos.”

2. The following is added to Who Is An Insured: Any individual named in the Schedule and his or her spouse, while a resident of the same household, are “insureds” while using any covered “auto” described in Paragraph B.1. of this endorsement.

Since the boyfriend was driving an auto owned by the named insured (ABC Inc.), the DOC does not apply to the liability claim above. Its wording also makes clear the error made by other students who think securing a DOC is the best way to provide coverage for employees using their owned cars in the business of the named insured. The DOC specifically exempts from coverage “any auto owned by that individual or a member of her or her household.”

So when does the DOC provide value? Consider the following situation. Our corporate officer from the above scenario drives only a company owned car. He has no personal auto policy. He takes his family on vacation to a distant state, electing to fly rather than drive the company car. Upon landing, he rents a car in his own name, purely for personal use while on vacation. Is that rental car owned, hired or borrowed by the BAC named insured–ABC Inc.? No. Thus the rental car meets the first requirement for liability coverage to apply under the DOC. No coverage applies, however, unless the second coverage condition also is met. ABC's DOC endorsement must name the corporate officer as an individual in the endorsement schedule.

Don't overlook the importance of that second condition. Unless the individual corporate officer is named in the endorsement, the DOC provides no coverage. Furthermore, the DOC falls far short of creating the equivalent liability coverage provisions of a PAP, since it grants no automatic “insured” status to family members or other permissive users except the resident spouse of the individual named in the endorsement.

If only the corporate officer is named, and we consider the same family situation as in our boyfriend case, only the wife is automatically covered under the DOC while driving the rental car. The daughter has no such coverage, nor has the boyfriend. To obtain coverage for the daughter, other family members or anyone else who may use the “other” car, each person must be individually named on the DOC. While the wording is slightly different, similar limitations apply when the DOC is used to provide medical payments, uninsured motorist or physical damage coverage.

Finally, for those of you who need no-fault personal injury policies, one further caution is in order. The ISO DOC does not offer, nor does it provide an option to offer, PIP coverages. PIP requires a separate ISO endorsement, the CA 22 01, or Named Individuals–Broadened Personal Injury Protection Coverage. This is generally referred to as “broadened PIP” (evidently because NIBPIP is nearly meaningless as a word and sounds vaguely frog-like). Although it and the DOC often are used in similar situations, the former handles the “who is an insured” issue differently from the latter.

We've covered a lot here, so I'll leave you with a little ditty to help you remember the roles of the PAP, DOC and PIP.

If a corporate-insured name you use,
And a corporate automobile you choose,
Don't forget the P-A-P
Or, in its absence, D-O-C.
If D-O-C, be sure to bother
To name all who may use the “other.”
And for PIPsters, not quite done
Until you add the 22 01.

Now go out and enjoy some sun! Who says insurance isn't fun?

Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also Chief Fun Officer of www.insuranceisfun. com. Readers may contact Chris at chris@insuranceisfun.com.

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Policy Issues: Driving home a point about BAC and DOC coverage

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