Motor Carrier Form—Liability Coverage
Summary: This article discusses the insuring agreements and the exclusions that make up section II of the motor carrier coverage form; also included are the who is an insured clauses and the coverage extensions provided by CA 00 20. The wording of the insuring agreements and the exclusions and the other clauses that make up section II of CA 00 20 are taken from the business auto coverage form, CA 00 01 10 13. Even though the motor carrier form is meant to apply to a different type of auto exposure than is the business auto form, the bottom line is that both forms are commercial auto insurance policies, written to provide the insureds with, among other things, liability insurance for damages caused to another party due to the ownership, maintenance, or use of an auto.
Since the wording of the clauses in section II of CA 00 20 are the same as those in section II of the business auto coverage form (CA 00 01), see the section II article on CA 00 01 for analytical information. See, Business Auto Form — Liability Part.
Topics covered:
The liability insuring agreements on the motor carrier coverage form, CA 00 20, are the same as those on the business auto coverage form, CA 00 01. For an analysis of the insuring agreements, see Business Auto Form — Liability Coverage.
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 except:
(1)The owner, or any “employee”, agent, or driver of the owner, or anyone else from whom you hire or borrow a covered “auto”.
(2)Your “employee” or agent if the covered “auto” is owned by that “employee” or agent or a member of his or her household.
(3)Someone using a covered “auto” while he or she is working in a business of selling, servicing, repairing, parking or storing “autos” unless that business is yours.
(4)Anyone other than your “employees”, partners (if you are a partnership), members (if you are a limited liability company), a lessee, or borrower of a covered “auto” or any of their “employees”, while moving property to or from a covered “auto”.
(5)A partner (if you are a partnership), or member (if you are a limited liability company) for a covered “auto” owned by him or her or a member of his or her household.
Analysis
The clauses in this “who is an insured” section of CA 00 20 closely track with those found in the business auto form; for more analysis on these clauses, see Business Auto Form — Liability Coverage.
There are some differences to note. CA 00 20, as befits a form pertaining to motor carriers, mentions agents and drivers as exceptions to the status of “insureds”. Agents and drivers are terms more likely to appear in the motor carrier business than in a business that incidentally has a business auto exposure; for example, contrast a common carrier that is in the business of transporting goods and property with a publishing company that has a fleet of company cars it allows its salesmen to use on business calls.
Another set of differences is presented next in both the continuation of the “who is an insured” clauses and also in the “who is not an insured” clauses.
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, is being used exclusively in your business.
d.The lessor of a covered “auto” that is not a “trailer” or any “employee”, agent, or driver of the lessor while the “auto” is leased to you under a written agreement if the written agreement between the lessor and you does not require the lessor to hold you harmless and then only when the leased “auto” is used in your business as a “motor carrier” for hire.
e.Anyone liable for the conduct of an “insured” described above but only to the extent of that liability.
Analysis
Clauses c. and d. attempt to give coverage to those entities from whom the named insured hires or borrows or leases a vehicle for business purposes. This is a logical step since the owners of such vehicles would naturally be brought into a claim or lawsuit arising out of an accident simply because of their status of ownership. The owners should of course have their own insurance, but who among them would hire out or lease one of their vehicles to another party without that other party having an insurance policy to cover the actual driving or use exposure? Considering owners and lessors of hired and leased vehicles as insureds under the named insured's motor carrier form simply reflects normal business procedures.
The other main point to notice is that the vehicles have to be used in the business of the named insured. The named insured can't hire or lease or borrow someone else's vehicle and then let a third party use that vehicle in the third party's business or personal use. Even the named insured's using of the hired or borrowed or leased vehicle in his or her personal affairs, such as a vacation, is not acceptable under the terms of these clauses.
However, none of the following is an “insured”:
1.Any “motor carrier” for hire or his or her agents or “employees”, other than you and your “employees”:
(a) If the “motor carrier” is subject to motor carrier insurance requirements and meets them by means other than “auto” liability insurance.
(b) If the “motor carrier” 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 leased to that “motor carrier” and used in his or her business.
However, paragraph 1. above does not apply if you have leased an “auto” to the for-hire “motor carrier” under a written lease agreement in which you have held that “motor carrier” harmless.
2.Any rail, water, or air carrier or its “employees” or agents, other than you and your “employees”, for a “trailer” if “bodily injury” or “property damage” or a “covered pollution cost or expense” occurs while the “trailer” is detached from a covered “auto” you are using and:
(a) Is being transported by the carrier; or
(b) Is being loaded on or unloaded from any unit of transportation by the carrier.
Analysis
Paragraph 1.(a) applies to motor carriers who are self-insured or are bonded in compliance with Interstate Commerce Commission or Department of Transportation regulations; paragraph 1.(b) applies to those who do not have primary insurance. The insurer is simply stating here that, while it offers coverage for the named insured and certain others, it does not wish to extend that coverage to those who do not have (or who do not choose to purchase) primary insurance coverage; the named insured's policy is meant to benefit the named insured and not those who would seek protection from claims or lawsuits by mainly relying on the named insured and his or her good business sense.
A hold harmless agreement changes this attitude, however. Paragraphs 1.(a) and 1.(b) do not apply if the named insured leased an auto to the motor carrier under a written lease agreement in which the motor carrier has been held harmless by the named insured. In other words, if the named insured has assumed the tort liability of some other motor carrier to whom the named insured has leased an auto, the motor carrier coverage form of the named insured will honor that agreement (as an insured contract) and provide coverage to the for-hire motor carrier.
As for paragraphs 2.(a) and (b), this is meant to make the point that rail, water, or air are not “motor carriers” in accordance with the spirit and definition of the motor carrier coverage form and should not, therefore, be considered as insureds under that form. As a matter of course, such carriers should have insurance of their own — aviation or marine — that serves as a more appropriate tool for that particular type of exposure.
These supplementary payments and out of state coverage extensions are detailed in the discussion on the liability section of the business auto coverage form. See, Business Auto Form—Liability.
The exclusions on the liability section of CA 00 20 are the same as on the business auto form. For an analysis of the exclusions, see Business Auto Form — Liability Coverage.
The limit of insurance clauses are the same as the ones that appear on the business auto form. See, Business Auto Form — Liability Coverage.