I have a question. We provide Garage Physical Damage Comprehensive Coverage to our insured (car dealer). The insured is filing a claim for a stolen vehicle.
Insured hired a transporting company to pick up a vehicle the dealer purchased, and have the vehicle delivered to the insured. The insured is stating that the transporting company never delivered the vehicle and has stolen it. The insured does not have the False Pretense Endorsement on his policy.
Will this claim be covered under Physical Damage Comprehensive Coverage? or would the insured had to have purchased False Pretense Coverage in order for the claim to be covered?
I attached a copy of our False Pretense Endorsement, and CA 00 05 03 10.
Arkansas Subscriber
The False Pretense endorsement is a proprietary endorsement, and since that coverage was not purchased by the insured it really is a moot point in this case. Therefore, our analysis focuses on the coverage that is provided in form CA 00 05.
Our records show that ISO withdrew form CA 00 05 in 2013 and replaced it with the CA 00 25 Auto Dealers Coverage form. Once ISO withdraws a form it is no longer supported by ISO, and the carrier should either replace it with the replacement form or file the form for their proprietary use. Typically, a carrier would have 3-4 years to update to the replacement form.
We looked at CA 00 25 and do not see an exclusion that would apply in this particular incident. The Theft exclusion applies if the theft or conversion was caused in any way by the insured, insured's employees or stockholders – but not a contract carrier.
The liability section has an exclusion for Hired Person but that only applies to Coverage C Locations and Operations Medical Payments Coverage so it would not be applicable in this situation.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.