ISO is revising certain forms and endorsements, as well as introducing some new endorsements based on growing needs. One of these new endorsements is the CA 98 02 Partners or Members as Lessors form. While the CA 99 47 Employee as Lessor form exists and provides coverage for a vehicle leased to the named insured by an employee, ISO has received requests for additional options for partners or limited liability company members as lessors as well.
The purpose of this new endorsement is to provide coverage to a partner (if the named insured is a partnership) or a member (if the named insured is an LLC) when they lease a covered auto to the insured business. The partner or member will be considered an insured for liability coverage.
The CA 98 02 can be applied to the Auto Dealers Coverage Form, the Business Auto Coverage Form, or the Motor Carrier Coverage Form. The endorsement states that all other provisions of the coverage form apply unless modified by this endorsement.
The named insured and endorsement effective must be listed in the schedule. Then the covered auto must be listed as well.
A. Any "auto" described in the Schedule will be considered a covered "auto" you own and not a covered "auto" you hire, borrow or lease.
B. While any covered "auto" described in the Schedule is leased to you by a partner (if you are a partnership) or a member (if you are a limited liability company), the Who Is An Insured Provision under Covered Autos Liability Coverage is changed to include that partner or a member as an "insured".
Analysis
The form clearly states that any "auto" listed in the schedule will be considered a covered "auto" you own and not a covered "auto" you hire, borrow or lease. This broadens coverage for the insured.
The form further states that while any covered "auto" listed in the schedule is leased to the insured by a partner (if the insured is a partnership) or a member (if the insured is an LLC) the Who Is An Insured Clause under Covered Autos Liability Coverage is changed to include that partner or member as an "insured".
For reference, that language from the CA 00 01 11 20 Business Auto Coverage Form is here:
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 except:
(1) The owner or anyone else from whom you hire or borrow a covered "auto". This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own.
(2) Your "employee" if the covered "auto" is owned by that "employee" 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) or a lessee or borrower or any of their "employees", while moving property to or from a covered "auto".
(5) A partner (if you are a partnership) or a 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.
c. Anyone liable for the conduct of an "insured" described above but only to the extent of that liability.
ANALYSIS
This endorsement broadens coverage so that if the vehicle owned by a partner or member is scheduled on to the policy, there is liability coverage available.
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Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and Arc Network. 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.