Answer by Laurie Infantino AFIS, CISC, CIC, CRIS, ACSR, CISR
President of Insurance Community Center
I would suggest you consider the Maximum Period of Indemnity option which provide 120 days coverage with no monthly maximum applicable. Do it on the combo form so they get the EE. There is no coinsurance on this option. No penalty for not having the right amount…it is a more expense form from a rate factor standpoint but you are writing a lot less limit.
Question 2 -
Hi Laurie, I have a coverage scenario to run by you. I have an answer but wanted to get your feedback.
A patriarch (Mr K) of a business who no longer has ownership in the business continues to work for the business. Mr K leases his vehicle (that he owns and is registered to him) to the company and it is put on the business auto policy for coverage. Mr K drives the leased vehicle for the business use and his own personal use.
Is Mr K not covered when he drives the leased vehicle (for the business use AND his personal use) due to the exceptions in A.1.b.(1) & (2) of the Business Auto Coverage Form? And if not covered, what is the best approach to get him coverage?
I feel that there is no coverage for Mr K when he drives the leased vehicle that he owns due to A.1.b.(1) & (2) and the best way to get coverage for him driving the vehicle is to; 1) add him as a Named Insured so he becomes a "you" and not an "anyone else" or 2) put the vehicle ownership & registration in the company name.
Thoughts? I appreciate any feedback you can provide. Some have said to add the Lessor AI endorsement but that doesn't seem to work cause some versions have the lessor as owner exception in them.
Answer by Al Parizo, AFIS
This commercial auto endorsement (CA 99 47) may be used to afford coverage on a primary basis on an auto that is owned by an employee of the named insured and is described on the endorsement. The described auto will be considered a covered auto the named insured owns and not a covered auto the named insured hires, borrows, or leases. The difference is important because, under the CA 99 47 endorsement, the policy would provide primary coverage for those vehicles. An unendorsed commercial auto policy would only provide excess coverage" (IRMI article, available on line).
I am attaching a copy of CA 99 47 for your review. This appears to be a viable solution to the scenario described.