Summary: Physical damage and liability insurance for truckers (persons or organizations “engaged in the business of transporting property by auto for hire”), including coverage of the specialized liability exposure created by trailer interchange agreements, is provided in the truckers coverage form of Insurance Services Office, CA 00 12 03 06. The truckers form replaces earlier methods of arranging equivalent coverage by means of a number of endorsements to the comprehensive or basic automobile policy. Like the business auto coverage form that replaced those earlier contracts, the ISO truckers coverage form features a simplified-language format.
In most respects, the words and phrases that make up the truckers form follow the language of the business auto coverage form (CA 00 01 03 06) and the motor carrier coverage form (CA 00 20 03 06). For example, the liability coverage insuring agreement on all the forms states that the insurer will pay all sums that the insured legally must pay as damages due to injury caused by an accident and resulting from the ownership, maintenance, or use of a covered auto. As befits its specialized purpose, however, the truckers form does alter certain provisions and adds other provisions to fit coverage more precisely to the loss exposures faced by for-hire carriers of property.
The following discussion centers, therefore, on the areas of the truckers form that are unique to that form. Provisions of the truckers coverage form not discussed in these pages are those that are identical to the corresponding provisions of the business auto form and the motor carrier coverage form.
Covered Autos
The truckers form makes use of a set of numerical symbols for designating which autos qualify as “covered autos,” just as the business auto and motor carrier forms do. The truckers symbols and the categories of vehicles they designate are as follows:
41 — Any “Autos”
42 — Owned “Autos” Only. Only the “autos” you own (and for liability coverage any “trailers” you don't own while connected to a power unit you own). This includes those “autos” you acquire ownership of after the policy begins.
43 — Owned Commercial “Autos” Only. Only those trucks, tractors and “trailers” you own (and for liability coverage any “trailers” you don't own while connected to a power unit you own). This includes those trucks, tractors and “trailers” you acquire ownership of after the policy begins.
44 — Owned “Autos” Subject to No-Fault. Only those “autos” you own that are required to have no-fault benefits in the state where they are licensed or principally garaged. This includes those “autos” you acquire ownership of after the policy begins provided they are subject to the no-fault law in the state where they are licensed or principally garaged.
45 — Owned “Autos” Subject to a Compulsory Uninsured Motorists Law. Only those “autos” you own that, because of the law in the state where they are licensed or principally garaged, are required to have and cannot reject uninsured motorists insurance. This includes those “autos” you acquire ownership of after the policy begins provided they are subject to the same state uninsured motorists requirement.
46 — Specifically Described “Autos”. Only those “autos” described in ITEM THREE of the truckers declarations page for which a premium charge is shown (and for liability coverage any “trailers” you don't own while attached to any power unit described in ITEM THREE).
47 — Hired “Autos” Only. Only those “autos” you lease, hire, rent or borrow. This does not include any “private passenger type auto” you lease, hire, rent or borrow from any member of your household, any of your “employees”, partners (if you are a partnership), members (if you are a limited liability company), or agents or members of their households.
48 — “Trailers” in Your Possession Under a Written Trailer or Equipment Interchange Agreement. Only those “trailers” you do not own while in your possession under a written “trailer” or equipment interchange agreement in which you assume liability for “loss” to the “trailers” while in your possession.
49 — Your “Trailers” in the Possession of Anyone Else Under a Written Trailer Interchange Agreement. Only those “trailers” you own or hire while in the possession of anyone else under a written “trailer” interchange agreement. When symbol “49″ is entered next to a physical damage coverage in ITEM TWO of the declarations, the physical damage coverage exclusion relating to “loss” to a “trailer” in the possession of anyone else does not apply to that coverage.
50 — Nonowned “Autos” Only. Only those “autos” you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes “private passenger type autos” owned by your “employees”, partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs.
59 – Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only. Only those “autos” that are land vehicles and that would qualify under the definition of “mobile equipment” under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged.
Analysis
These symbols that designate covered autos are different from those used on the motor carrier form in that different numbers are used to describe the covered autos. The actual description of the covered autos is the same except that the truckers form does not have a symbol for “owned private passenger type autos only” like the motor carrier form does. This reflects the reality that a truckers policy is meant simply to provide insurance for other than private passenger type autos. For an analysis of the symbols for covered autos in the motor carrier form, see Motor Carrier Coverage Form; the article is on the Auto D.1 pages.
Another point is that excluded under the “hired autos only” designation on the truckers form (and for that matter, on the motor carrier form) are private passenger type autos hired or borrowed by the insured from an employee, partner, member of a limited liability company, agent, or household member. The corresponding designation in the business auto coverage form (BAP) excludes all autos hired or borrowed from any of the named insured's employees or partners or members of their households. The truckers form and the motor carrier form cover under this designation—while the BAP does not—trucks, tractors, and trailers hired or borrowed from the employee. And, unlike the BAP, the truckers form and the motor carrier form exclude from coverage under this designation a private passenger auto hired or borrowed from a member of the named insured's household.
For more information on the symbols for covered autos in the business auto form, see Business Auto Form; Auto A.3.
Liability Coverage
The provisions in this section of the truckers form contain the liability insuring agreements, the “who is an insured” information, coverage extensions, exclusions, and limit of insurance information. These provisions are the same as those that appear in the motor carrier form for the most part; for an analysis of the liability coverage provisions, see Motor Carrier Form—Liability Coverage; Auto D.2.
The “who is an insured” provisions do offer slight differences between the truckers form and the motor carrier form. The differences center around the use of the term “trucker” as opposed to “motor carrier” and the truckers form excluding private passenger type autos, unlike the motor carrier form. The provisions that are different on the truckers form are shown below.
The following are “insureds”:
b. Anyone else while using with your permission a covered “auto” you own, hire, or borrow except:
(1) The owner or anyone else from whom you hire or borrow a covered “private passenger type auto”.
(2) Your “employee” or agent if the covered “auto” is a “private passenger type auto” and is owned by that “employee” or agent or a member of his or her household.
(3) A partner (if you are a partnership), or a member (if you are a limited liability company), for a covered “private passenger type auto” owned by him or her or a member of his or her household.
Analysis
The emphasis here is on the “private passenger type auto”. The motor carrier form does not use that phrase in the who is an insured provisions and the truckers form does so to show that the truckers form is not meant to apply to private passenger or station wagon type autos; note that the business auto form, like the motor carrier form, does not use that “private passenger type auto” phrase in its who is an insured provisions either.
Note also that this feature of the truckers coverage form, like the inclusion of non-private passenger type vehicles as covered autos under symbol 47 (hired autos), is designed to extend coverage in situations when employee-owners of trucks use their vehicles in the named insured's business. Such employee-owners need only coverage of the liability exposures created by the nontrucking use of their vehicles. They can arrange this coverage under a business auto coverage form written with a standard endorsement (CA 23 09 02 99) that excludes all but these nontrucking liability exposures.
c. The owner or anyone else from whom you hire or borrow a covered “auto” that is a “trailer” while the “trailer” is connected to another covered “auto” that is a power unit, or, if not connected:
(1) Is being used exclusively in your business as a “trucker”; and
(2) Is being used pursuant to operating rights granted to you by a public authority.
Analysis
This provision differs from the one in the motor carrier form by its emphasis on the trucking business of the named insured. The motor carrier form simply talks about a trailer not connected being used exclusively in the business of the named insured; the truckers form talks about a trailer not connected being used exclusively in the named insured's business as a trucker and being used pursuant to operating rights granted by a public authority (which is, of course, what truckers need to operate on the public roads).
d. The owner or anyone else from whom you hire or borrow a covered “auto” that is not a “trailer” while the covered “auto”:
(1) Is being used exclusively in your business as a “trucker”; and
(2) Is being used pursuant to operating rights granted to you by a public authority.
Analysis
This provision is not in the motor carrier form or the business auto form and is simply a replay of paragraph c. except that the hired or borrowed auto is not a trailer. The emphasis on the named insured being a trucker that is present in paragraph c. is here also.
However, none of the following is an “insured”:
a. Any “trucker” or his or her agents or “employees”, other than you and your “employees”:
(1) If the “trucker” is subject to motor carrier insurance requirements and meets them by a means other than “auto” liability insurance.
(2) If the “trucker” is not insured for hired “autos” under an “auto” liability insurance form that insures on a primary basis the owners of the “autos” and their agents and “employees” while the “autos” are being used exclusively in the “truckers” business and pursuant to operating rights granted to the “trucker” by a public authority.
Analysis
This provision appears on the motor carrier form except that that form uses the term “motor carrier” as opposed to the truckers form which uses the term “trucker”. For an analysis of this provision, see Motor Carrier Form—Liability Coverage.
Trailer Interchange Coverage
This section appears on both the truckers form and the motor carrier form.
A. Coverage
1. We will pay all sums you legally must pay as damages because of “loss” to a “trailer” you don't own or its equipment under:
a. Comprehensive Coverage. From any cause except:
(1) The “trailer's” collision with another object; or
(2) The “trailer's” overturn.
b. Specified Causes of Loss Coverage. Caused by:
(1) Fire, lightning, or explosion;
(2) Theft;
(3) Windstorm, hail, or earthquake;
(4) Flood;
(5) Mischief or vandalism; or
(6) The sinking, burning, collision, or derailment of any conveyance transporting the “trailer”.
c. Collision Coverage. Caused by:
(1) The “trailer's” collision with another object; or
(2) The “trailer's” overturn.
2. We have the right and duty to defend any “insured” against a “suit” asking for these damages. However, we have no duty to defend any “insured” against a “suit” seeking damages for any “loss” to which this insurance does not apply. We may investigate and settle any claim or “suit” as we consider appropriate. Our duty to defend or settle ends for a coverage when the Limit of Insurance for that coverage has been exhausted by payment of judgments or settlements.
3. Coverage Extensions
Analysis
Entering into a trailer interchange agreement is a common business practice among truckers, who often find it more economical to pull other truckers' trailers with their own tractors when scheduling trips, and the location of trailers at various points makes such temporary trades convenient for the parties involved. Coverage for damage to trailers being used in such an agreement is customarily to be provided by the trucker who has possession of the trailer when damage occurs. And, in fact, most trailer interchange agreements impose broad liability on truckers who use other truckers' trailers as part of the agreement. The truckers form's standard liability exclusions pertaining to property in the insured care, custody, or control, and liability assumed under any contract or agreement, however, preclude ordinary liability coverage for such an exposure. Separate coverage is therefore necessary and is provided under section III of the truckers coverage form.
While trailer interchange insurance is provided on terms similar to those characteristic of physical damage coverage (the same options of comprehensive, specified causes of loss, and collision coverage), it is a form of legal liability insurance, applicable only to loss for which the insured “legally must pay as damages” and to which one of the insured perils responds. The insured's legal obligation to pay may derive from the terms of a trailer interchange agreement.
Trailer interchange coverage applies only to trailers not owned by the insured and to the equipment of these trailers. Furthermore, the coverage is based on a “loss” which is defined as direct and accidental loss or damage. In other words, the coverage applies only to direct physical damage to the nonowned trailer; loss of use costs or lost profits, for example, are not covered under the trailer interchange section of the truckers form.
The insuring agreements include the duty to pay and the duty to defend, the usual duties that are found on liability policies. The insurer makes a point of noting that it will not defend any insured against any lawsuit for damages for any loss to which the truckers form does not apply. This is in response to some courts finding a duty to defend even if there is no applicable coverage just because the policy did not have a specific statement in it to the effect that no applicable coverage equals no duty to defend.
The duty to defend clause also points out that the insurer has the right to investigate and settle a claim or lawsuit; the insured has no say in the matter based on the insurance contract's terms.
Finally, the insurer informs the insured that the duty to defend or settle ends at a certain time, namely, when the limit of insurance has been exhausted by payment of judgments or settlements. This is not to say that the insurer has the automatic right to deposit the total limit of insurance in escrow with a court and then walk away from the defense of the insured even before trial procedures begin. Courts look at such tactics very carefully and very disapprovingly.
The coverage extensions are similar to those found in the liability coverage section of the business auto form, and are basically supplementary payments that are in addition to the limits of insurance. For an analysis, see Business Auto Form—Liability Coverage; Auto A.4.
B. Exclusions
The exclusions that apply to the trailer interchange coverage are similar to those found in the physical damage coverage section of the business auto form. For an analysis of these exclusions, see Business Auto Form” Physical Damage Coverage; that article is on the Auto A.5 pages.
One thing to note here is that the exclusions include a statement that the insurer “will not pay for loss of use.” This simply reinforces the insuring agreement (discussed above) that the coverage is for a “loss” to a nonowned trailer, that is, a direct loss and not an indirect loss such as loss of use. And, note that there is no exclusion for damage to any tapes, records, or any data electronic equipment as there is on the auto physical damage coverage.
C. Limit of Insurance and Deductible
The most we will pay for “loss” to any one “trailer” is the least of the following amounts minus any applicable deductible shown in the Declarations:
1. The actual cash value of the damaged or stolen property at the time of the “loss”.
2. The cost of repairing or replacing the damaged or stolen property with other property of like kind and quality.
3. The Limit of Insurance shown in the Declarations.
Analysis
This provision lists the options that the insurer reserves unto itself for the payment of a loss. Whichever of the three options that present the insurer with the least amount it must pay, that is the option that will be used. It seems odd that this provision would be linked with an insuring agreement that promises to pay “all sums the named insured legally must pay as damages.” However, trailer interchange coverage is basically physical damage coverage for a tangible object and it should not be an insurmountable test for anyone, insurer or insured or claimant, to settle on a proper amount to cover any damage done. Besides, the insured who enters into trailer interchange agreements should be aware of the amount of liability to which he is submitting himself and plan accordingly.
Physical Damage Coverage
The provisions in this section of CA 00 12 03 06 are similar to those found on the business auto coverage form and the motor carrier form. For an analysis, see Business Auto Form—Physical Damage Coverage. This article is in the Auto A.5 pages. For more information on the motor carrier policy, see Motor Carrier Form—Physical Damage Coverages. This article is in the Auto D.3 pages.
Truckers Conditions
The conditions that affect the truckers form are similar to those found on the business auto form and the motor carrier form. For more information, see Business Auto Form—Conditions and Motor Carrier Form—Conditions and Definitions. These articles are in the Auto A.6 and Auto D.4 pages, respectively.
Note that because of the frequent interchange of equipment among truckers and the insurance complications entailed by the combination of trailers and power units that may not be covered on the same basis, the truckers form's other insurance provisions are more detailed than those of the business auto coverage form.
Also, with respect to a covered auto that is hired or borrowed by the named insured, the liability coverage is primary over other applicable insurance while the unit is used exclusively in the named insured's business and under operating rights granted by a public authority. Conversely, truckers liability coverage is excess over any other collectible insurance with respect to a covered auto owned by the named insured that is rented or loaned to another. In other situations, the policy provides primary coverage for any covered auto the named insured owns and excess coverage for nonowned covered autos.
Special provisions apply with respect to covered trailers while connected to a power unit. If the power unit is not also a covered auto, the policy provides excess coverage. If the power unit is a covered auto, the primary or excess status of the truckers coverage on the trailer is governed by the status of the coverage on the power unit itself, as determined by the criteria outlined above. For example, if trucker A, the named insured under a truckers coverage form, agrees to lend an owned, covered trailer to trucker B to be pulled by one of trucker B's tractors, the arrangement would result—from trucker A's point of view—in a covered trailer's being attached to a power unit that is not a covered auto. Trucker A's policy therefore would provide only excess coverage on the trailer borrowed by trucker B. Assuming that trucker B also has a truckers coverage form, that form's liability coverage will be primary with respect to the borrowed trailer since, from trucker B's point of view, a covered trailer is attached to a power unit that his policy covers on a primary basis.
If, in the example above, the equipment borrowed were not just a trailer but a combined tractor and trailer, trucker A's liability insurance on the trailer would again be excess but for the reason, in this case, that the trailer is attached to a covered power unit (A's tractor lent to B) to which trucker A's policy applies on an excess basis.
Definitions
The definitions on the truckers form are the same as those that appear on the business auto form and the motor carrier form except that the truckers form does define the term “trucker”. For an analysis of the definitions, see Business Auto Definitions and Motor Carrier Form—Conditions and Definitions. These articles are in the Auto A.2 and AutoD.4 pages, respectively.
The term “trucker” is defined as follows:
“Trucker” means any person or organization engaged in the business of transporting property by “auto” for hire.
Analysis
This item represents perhaps the soul of the truckers coverage form. The form is meant to provide insurance for the exposures faced by a trucker engaged in his or her chosen business. Therefore, the meaning of “trucker” is important for the proper application of the coverage form.
The definition is a broad one but it does convey the point that a trucker is one who transports property by auto for hire; that is, a trucker is one whose main business and whose business purpose is transporting property. Transporting property is not a sideline or an incidental aspect of the trucker's business; it is the business.