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Your Big “I” Technical Affairs Committee Scores Wins in 2022

What is TAC?

This is TAC's mission statement.

“The Technical Affairs Committee is the resource and unrelenting advocate for IIIABA members and consumers with respect to the property and casualty insurance products that members sell and service. The TAC advocates on behalf of members and consumers within industry advisory organizations, primarily ISO, NCCI, and ACORD, with interaction with AAIS and Surety Association of America as needed. The TAC also acts as a resource to state associations to promote and support an agents grassroots network in order to work effectively with state insurance regulators."

TAC refers to policy coverage, rating issues and other issues. We advocate for you and your customers, usually with ISO, and other advisory organizations. We're there to try to resolve standards, policy and other issues that arise as you service your customers.

The committee consists of several agent members and one state associations member, along with a liaison from national staff and a liaison from the Big “I"s executive committee. Members generally serve one-to-three-year terms.

We meet annually in the spring at ISO headquarters and as needed with other advisory groups.

We also work closely with the Mid-American Insurance Conference, which meets every November with representatives from ISO, NCCI, and ACORD.

How TAC Works

TAC develops an agenda that is typically 180-to-250 pages long that covers all lines of coverage, from homeowners to the general liability forms. Whenever you see a state filing that broadens or restricts coverage, this change invariably arises from the work of either the TAC or the Mid-America Conference working in tandem.

Our committee members work for months before we meet with ISO to develop and refine the agenda from the previous year's meeting with ISO, then add new coverage item concerns as our working agents see them arise in their agencies.

In short, TAC works year-round to identify coverage concerns, whether that is adding new coverages to manage emerging risks, or revisions to increase clarity of policy language and prevent coverage issues. And folks, some of these changes remained on the TAC/ISO agenda for years before we achieved language revisions.

TAC is a valuable resource for all committees in that we are coverage “geeks" and can assist with ongoing issues of coverage language and other coverage concerns.

To learn more about TAC, listen to Bill Wilson's overview of this committee at this link.

In 2022, we had some spectacular results at our last meeting with ISO. Here are some of the accomplishments we achieved in the last year. Here are some of the positive changes we experienced with ISO.

Homeowners

Dockless Rental Scooters, Low Speed Motorized Vehicles & Motorized Assisted Vehicles

Rental scooters offered by companies such as Lime and Bird are becoming more and more common in large and even some mid-sized cities. These scooters are available for rental using an app on the renter's phone. Likewise, insureds also rent segways, motorized bicycles, electric scooters and other such vehicles while on vacation or other outings.

The issue for insureds is that neither the PAP nor the HO policy provides coverage for the use of such equipment. Also, it's doubtful a PUP will provide coverage; and if it does, protection will be subject to a Self-Insured Retention (SIR).

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Vacation Watercraft Endorsement

ISO's Homeowners' (HO) policy contains a watercraft exclusion potentially detrimental to vacationers. The watercraft exclusion contains ownership, length, engine type and horsepower exclusions and coverages granted via exceptions. Few (if any) agents know these exclusions and exceptions by heart, and no insured knows them.

When insured's go on vacation, there may be occasions when a watercraft is rented for recreational purposes. The insured is likely unaware that such rental is not covered by their HO policy because they probably didn't call their agent before going on vacation or while on vacation as they are standing in line to rent the watercraft.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Marijuana HO Modifications

Colorado was one of the first states to legalize medical marijuana and subsequently recreational marijuana. Now, despite the continued prohibition of marijuana by the Federal Government, almost half the states have legalized medical marijuana and a handful of states have legalized recreational marijuana.

The Federal Government has decided to not prosecute individuals within these states provided the individuals comply with the specific state laws. Historically, when policyholders made claims for marijuana-related losses under their homeowners' policies, the claims were denied because marijuana possession was considered unlawful under federal law. More recently, the courts are considering these claims based upon existing policy language in those states which have legalized medical and/or recreational cannabis because of the ambiguity in federal enforcement of the Controlled Substance Act relating to marijuana. As the pot industry evolves in states like Colorado, and with the possibility that the federal government will legalize marijuana, coverage for marijuana-related issues need to be considered by HO carriers and the insurance industry.

We brought six emerging questions to ISO. Contact me for further detail if you're interested in these changes suggested.

JUNE 2022 ISO RESPONSE

This item(s) was/were addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Additional Living Expenses when the Named Insured Dies Issue

The sole owner of a house was killed in a fire that resulted in a total property loss. Her daughter lived with her but escaped the fire. The HO adjuster has denied the loss of use claim of the daughter, citing this policy language:

Coverage D – Loss Of Use

1. Additional Living Expense

If a loss covered under Section I makes that part of the "residence premises" where you reside not fit to live in, we cover any necessary increase in living expenses incurred by you so that your household can maintain its normal standard of living.

Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere.

This policy provision covers the additional living expenses of the entire household but says they must be "incurred by you." So, if the mother had survived, the entire additional household expenses would be covered but, since she perished in the fire, the additional living expenses of resident family members would not be covered. TAC suggested revising the language above so that surviving resident family members can recover additional living expenses.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Deductible Application When Limit Is Less Than 80% Of RC Issue

In the 2011 HO filing, the following policy change was made:

If, at the time of loss, the amount of insurance in this policy on the damaged building is less than 80% of the full replacement cost of the building immediately before the loss, we will pay the greater of the following amounts, but not more than the limit of liability under this policy that applies to the building:

(1) The actual cash value of that part of the building damaged; or

(2) That proportion of the cost to repair or replace, after application of any deductible and without deduction for depreciation, that part of the building damaged, which the total amount of insurance in this policy on the damaged building bears to 80% of the replacement cost of the building.

The filing did not explain why this phrase was deleted or what the intended impact is other than to “enhance consistency with respect to the provision in the related condition":

Based on input from several participating insurers, removing reference to "after application of any deductible" in the Section I – Conditions, Loss Settlement, to enhance consistency with respect to the provisions in the related condition;

Historically, when this valuation provision is invoked, the deductible is subtracted from the loss prior to the proportional calculation, as was clearly stated in the pre-2011 language. We have had two different sources opine that this change results in the deductible being applied after the calculation just as it is done in commercial lines (e.g., the CP 00 10) when there is a coinsurance penalty, though the filing, again, is silent as to the purpose of this change.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Business Definition Dollar Threshold

One criterion for triggering the “business" exclusion in the HO forms is the following:

Any other activity engaged in for money or other compensation, except the following:

(1) One or more activities, not described in (2) through (4) below, for which no "insured" receives more than $2,000 in total compensation for the 12 months before the beginning of the policy period;

Given that consumers often sell cars, boats, RVs, and other items for significant amounts on eBay, Craig's List, and other forums, short of such activity constituting a “trade, profession or occupation," we believe that this limit is grossly inadequate.

TAC suggested removing this dollar limit or increasing it to at least $10,000.

Use Of A Riding Mower Away From A Residence

Homeowners policies currently contain the following exclusion [emphasis added]:

SECTION II – EXCLUSIONS A. "Motor Vehicle Liability"

2. If Exclusion A.1. does not apply, there is still no coverage for "motor vehicle liability", unless the "motor vehicle" is:

a. In dead storage on an "insured location";

b. Used solely to service a residence;

Homeowners often own vacant lots, in some cases for the purpose of building a home in the future. These vacant lots usually need mowing. This exclusion, though, removes any coverage for maintaining these properties with a riding lawn mower. On the other hand, under Exclusion A.2.d., an insured would be covered while operating an ATV, dirt bike, or other high powered recreational motor vehicle designed for use off public roads.

In addition, homeowners may borrow or rent a riding mower or other type of service motor vehicle (e.g., a backhoe). Since such vehicles may be used at many locations, they would likely not meet the “solely" stipulation. In contrast, a nonowned ATV, dirt bike, or other high powered recreational motor vehicle designed for use off public roads is covered anywhere in the world.

TAC suggested adding the following Exclusion to A2,

c. A riding lawnmower

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Business Use of A Riding Mower

Homeowners policies currently contain the following exclusion [emphasis added]:

SECTION II – EXCLUSIONS A. "Motor Vehicle Liability"

1. Coverages E and F do not apply to any "motor vehicle liability" if, at the time and place of an "occurrence", the involved "motor vehicle":

a. Is registered for use on public roads or property;

b. Is not registered for use on public roads or property, but such registration is required by a law, or regulation issued by a government agency, for it to be used at the place of the "occurrence"; or

c. Is being:

(1) Operated in, or practicing for, any prearranged or organized race, speed contest or other competition;

(2) Rented to others;

(3) Used to carry persons or cargo for a charge; or

(4) Used for any "business" purpose except for a motorized golf cart while on a golfing facility.

If homeowners engage a lawn care service to mow their grass, this policy provision says that there is no liability or medical payments coverage because the riding mower is being used for a business purpose.

If a third party is injured in this situation, homeowners have no defense or indemnity coverage under their own HO policies, yet they would have coverage if they had been operating their own lawn mowers.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Unattached Motor Vehicle Equipment

The 2000 edition of the HO policies exclude the following under Property Not Covered [emphasis added]:

c. "Motor vehicles".

(1) This includes:

(a) Their accessories, equipment and parts; or

(b) Electronic apparatus and accessories designed to be operated solely by power from the electrical system of the "motor vehicle". Accessories include antennas, tapes, wires, records, discs or other media that can be used with any apparatus described above.

The exclusion of property described in (a) and (b) above applies only while such property is in or upon the "motor vehicle".

The 2011 edition of the HO policies changed that wording to this:

c. "Motor vehicles".

This includes a "motor vehicle's" equipment and parts. However, this Paragraph 4.c. does not apply to:

(1) Portable electronic equipment that:

(a) Reproduces, receives or transmits audio, visual or data signals; and

(b) Is designed so that it may be operated from a power source other than a "motor vehicle's" electrical system.

(2) "Motor vehicles" not required to be registered for use on public roads or property which are:

(a) Used solely to service a residence; or

(b) Designed to assist the handicapped;

The qualification that the exclusion applies only to motor vehicle parts, equipment and accessories “while such property is in or upon" the vehicle was removed in 2011, though we could not find any mention of this potentially significant reduction in coverage.

We are aware of adjusters denying claims under the PAP if vehicle equipment is not attached to the vehicle at the time of loss. For example:

(Just an FYI: This item remained on the TAC agenda for over a decade before we succeeded! Talk about persistence!)

JUNE 2022 ISO RESPONSE:

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Hobby Watercraft Issue

Homeowners forms define aircraft as follows:

Aircraft means any contrivance used or designed for flight, except model or hobby aircraft not used or designed to carry people or cargo;

No such exception is made for watercraft.

We request that the exception for model or hobby aircraft be extended to watercraft at the next general revision.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Vacancy And Renovations Issue

We have had two reports of vandalism claims denied for homes being remodeled based on the following exclusionary policy language in the HO-3:

Vandalism and malicious mischief, and any ensuing loss caused by any intentional and wrongful act committed during the vandalism or malicious mischief, if the dwelling has been vacant for more than sixty consecutive days immediately before the loss. A dwelling being constructed is not considered vacant;

In both cases, the basis for denial was that “being constructed" refers to new construction, not the remodeling or renovation of an existing building. We believe that the exposure presented by remodeling or renovation is no greater than that for new construction, and probably less.

We suggested that the following language be added to the exception at the end of the exclusion: “Construction includes remodeling and renovation."

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Watercraft Inconsistencies Issue

The watercraft horsepower limitations have not changed since the HO-76 program, which means it is hard to follow the logic in situations where an insured who rents a jet ski (inboard watercraft) has no coverage, but if s/he rents a power boat with two or even three 200 hp outboard engines, it is covered.

Another example of the inconsistency in how vehicles are treated is that you can rent or borrow an ATV and you're covered worldwide. If you rent a jet ski, you have no coverage; however, if you and a friend rent jet skis, swap with each other, then you do have coverage since you're borrowing that jet ski, not renting it. We believe that research would indicate that ATVs present a significantly greater exposure to loss than jet skis.

Another example: If you rent an inboard houseboat, there is no coverage. If you rent a houseboat with outboard motors, you do have coverage. If you're vacationing with someone else who rents an inboard houseboat, but you operate it the entire week, you're covered.

We suggested that the rental of jet skis is so common today that we believe the policy language should be revised to grant coverage just as coverage is provided for rented outboard watercraft. In addition, there are many inconsistencies in how watercraft are covered relative to the risk involved, so we would like to see ISO revisit the entire exclusion.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

Personal Auto

Food Delivery Limitations Within Definition of “Transportation Network Platform" (TNP)

The unendorsed PAP excludes public or livery conveyance, including when the insured is logged into a TNP. ISO created two (initially three) endorsements to alter this exclusion for insureds involved in ride sharing:

PP 23 41-Transportation Network Driver Coverage (No Passenger): Provides coverage until the passenger gets into the car.
PP 23 45-Limited Transportation Network Driver Coverage (No Passenger): Provides coverage until the driver accepts a ride.

With these endorsements, carriers can choose the point at which they desire the PAP's coverage to end. If they want coverage to end as soon as the insured turns on the app, the wording within the 2018 PAP specifically excludes coverage at that point. If the carrier is willing to give coverage until a ride is accepted, the PP 23 45 is used. If the carrier is willing to provide coverage up to the point that the rider gets into the car, the PP 23 45 is used. If the carrier is willing to provide coverage up to the point that the rider gets into the car, the PP 23 41 is attached.

Both broadening endorsements reference passengers in the exception to the exclusion, not property. Further, the definition of TNP specifically references “passengers."

Neither the form nor the endorsements mention or seem to consider services such as Uber Eats or other like food delivery service or any delivery service. But such activity still seems to qualify as public conveyance (making your vehicle available for public use by turning on the app) and livery conveyance (delivering persons or property for a fee).

Both broadening endorsements reference passengers in the exception to the exclusion, not property. Further, the definition of TNP specifically references “passengers."

We suggested developing endorsements similar to PP 23 41 and PP 23 45 specifically addressing the use of a transportation network app to contract for the carrying of property for a fee or include such wording in the current TNP endorsements.

JUNE 2022 ISO RESPONSE

We presented this topic of on-demand delivery services at our December 2020 ISO Personal Auto Panel. Based, in part, on input we received from the Panel, we:

Reinforced the "public or livery conveyance" exclusion to explicitly address participation as an on-demand delivery driver with the introduction of PP 43 33, Public Or Livery Conveyance Exclusion (Including Delivery Network Platform) Endorsement.
To coincide with PP 43 33, ISO developed optional coverage endorsement PP 43 34, Delivery Network Driver Coverage, which provides the option to purchase coverage for participation as a delivery network driver.
Introduced a corresponding rule and rating information for the optional coverage.

These enhancements to the ISO Personal Auto Program were part of a recent multistate revision that we began filing in March 2022.

Dockless Rental Scooters and Low-Speed Motorized Vehicles and Motorized Assisted Vehicles

Further, according to several sources, the rental agreements between the providers and the users provide no protection. In the case of rental scooters, the rental agreement makes the user responsible for protecting and indemnifying Lime and Bird if they are sued for the user's actions. However, this may change in the future.

(Note: Owned motorized low-speed vehicles is a separate topic not addressed in this recommendation.)

We suggested ISO create an endorsement for either or both the HO and PAP policy to extend coverage to non-owned low-speed vehicles.

JUNE 2022 ISO RESPONSE

This item was addressed as part of ISO's 2022 Homeowners Policy Program general revision.

PAP Liability Exclusion B.3.

An insured has joint custody of his 16-year-old son who lives part of the year with him and other times with his ex-wife. His son is driving his mother's car which is available for his regular use when he causes an at-fault accident that results in a death and two critical injuries. A lawsuit is filed against the son and both parents. The mother's 2005 ISO PAP has limits of $25/50/10. The father has a 2005 ISO PAP with limits of $250/500/100 plus a $1M following form umbrella.

The mother's PAP covers her and her son under Part A Insured category B.1. The father is also covered as an insured on the mother's PAP under category B.3. Needless to say, her minimum limits are grossly inadequate, so the focus is on the father and his PAP.

The father's PAP's insuring agreement considers him (“you") and his son (“family member") as insureds, but not the mother who doesn't qualify under any of the four categories of insureds under the father's policy. However, the father's PAP also has this liability exclusion:

B. We do not provide Liability Coverage for the ownership, maintenance or use of:

3. Any vehicle, other than "your covered auto", which is:

a. Owned by any "family member"; or

b. Furnished or available for the regular use of any "family member".

However, this Exclusion (B.3.) does not apply to you while you are maintaining or "occupying" any vehicle which is:

a. Owned by a "family member"; or

b. Furnished or available for the regular use of a "family member".

Since the mother's auto is furnished for the son's regular use, the son is not covered by his father's PAP. However, there is an exception for the father himself BUT only while he is maintaining or “occupying" a vehicle available for the regular use of a “family member." Since he was not maintaining or “occupying" the vehicle, HE has no coverage under his own policy nor his following form umbrella.

We suggested ISO revise the exception language of “However, this Exclusion (B.3.) does not apply to you while you are maintaining or 'occupying' any vehicle

a. Owned by a "family member"; or

b. Furnished or available for the regular use of a "family member

JUNE 2022 ISO RESPONSE

To address an insured's exposure with respect to a family member's use of a vehicle, ISO has developed an optional form PP 43 31, "Family Member Extended Non-owned Coverage – Vehicles Furnished Or Available For Regular Use", which generally provides extended non-owned Liability and Medical Payments coverage for vehicles furnished or available for the regular use of "family member(s)" named in the endorsement's schedule.

This optional form was part of the 2022 personal auto multistate revision, which we began filing in March 2022.

Commercial Auto

Volunteers as Insureds

Volunteers, like employees, may drive their personally owned vehicles on behalf and for the benefit of an organization to which they are volunteering their time and talent. This goes beyond social service organizations to include churches, schools, hospitals, etc.

The volunteer's PAP extends protection to both the vehicle owner/volunteer and the organization which may be held vicariously liable for the volunteer's actions. Insured status within the liability section of a PAP is extended in B.3. to include:

B. "Insured" as used in this Part means:

3. For "your covered auto", any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.

The business auto policy (BAP) excludes protection under Section II. A. Coverage 1. Who is an Insured for:

1. Who Is An Insured

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 "auto".

If PAP limits are insufficient, the organization responds on an excess basis for the organization, not the volunteer.

The “except" removes coverage for the owner of the vehicle and allows subrogation against the volunteer driver.

TAC suggested creating an endorsement similar to the CA 99 33 to apply to volunteers of non-social service organizations. Protection should still apply in excess of the PAP as with the CA 99 33. This may already be contemplated as part of CA 12-02.

JUNE 2022 ISO RESPONSE

A new Non-Ownership Liability Coverage For Volunteers endorsement, CA 05 24, was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

Subrogation Against Permissive Users

This issue was previously submitted as Personal Auto agenda item PP 08-01 in 2008 and we agreed in 2015 to drop it and resurrect it as a Commercial Auto agenda item in 2016.

The issue is that a consumer may test drive an auto they are considering buying or they may have a loaner vehicle while their own auto is being repaired or serviced. While operating the vehicle owned by the auto business, they have an at-fault accident that damages the vehicle. The auto business's insurer covers the damage then subrogates against the customer based on the subrogation provision in the policy.

We suggested ISO modify the Business Auto and Garage policies to reflect the “hold harmless" provision for physical damage that is in the Personal Auto policy regarding permissive users.

JUNE 2022 ISO RESPONSE

A new Waiver of Transfer of Rights of Recovery Against Others To Us (Waiver of Subrogation) – Automatic When Required by Written Contract or Agreement endorsement, CA 04 43, was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

Aggregate Deductible

Owners of vehicle fleets have no way within the ISO Business Auto program to cap their exposure for physical damage deductibles in the event many of those vehicles are damaged, for example, in a hailstorm or flood.

Our research suggests that auto dealer specialty carriers offer this routinely, subject to underwriting of course (examples will be provided at the meeting). A three-store TN auto dealership suffered over $1M in vehicle damage due to a hailstorm last year. $500 per auto deductibles are common with perhaps up to a $100K wind/hail/flood aggregate deductible. These deductibles are usually elected by risks with concentrated exposures like auto dealerships and local delivery services, as opposed to risks with geographically diverse exposures.

TAC suggested ISO develop an aggregate deductible for auto fleets.

JUNE 2022 ISO RESPONSE

The various ISO Commercial Auto Coverage Forms have been updated to generally address the application of a maximum deducible for all loss in any one event caused by either the perils of theft, mischief or vandalism, or all perils under Physical Damage Coverage. This revision was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

Acquired Leased Autos

An insured entered a long-term lease of an auto which was an addition to a CA 00 01 written on a Symbol 7 basis. The insured wrecked the car within 30 days of acquisition. The adjuster has denied the physical damage claim on the basis that the vehicle was leased and not owned, citing the provision entitled “Owned Autos You Acquire After The Policy Begins."

In addition, coverage for Symbol 7 acquired autos is conditioned by: “We already cover all "autos" that you own for that coverage, or it replaces an "auto" you previously owned that had that coverage." What if the insured only has leased autos and/or buys (not leases) a vehicle that replaces an auto the insured previously leased (but did not own) that was insured under Symbol 7.

Neither the CA 20 01 – Lessor - Additional Insured and Loss Payee nor the CA 99 16 – Hired Autos Specified As Covered Autos You Own endorsements help with acquired autos because they treat leased autos as owned autos only if they are scheduled on the policy.

TAC suggested ISO recognizes that many autos are leased today rather than purchased, especially corporate vehicles. We suggest expanding Symbol 7 acquired auto coverage to include autos leased under long- term written lease arrangements similar to the PAP language.

JUNE 2022 ISO RESPONSE

The described revision to the Owned Autos You Acquire After the Policy Period Begins provision in the Business Auto and Auto Dealers Coverage Forms was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

CA 99 34 Coverage Gap

The CA 99 34 12 93 – Social Services Agencies – Volunteers As Insureds endorsement adds the following as an insured to the BAP:

Anyone volunteering services to you is an “insured" while using a covered “auto" you don't own, hire or borrow to transport your clients or other persons in activities necessary to your business. Anyone else who furnishes that “auto" is also an “insured".

The title of this endorsement is similar to the CA 99 33 – Employees As Insureds endorsement, but coverage is more restrictive. Read, this form covers volunteers as insureds only while using an auto to transport other people. In other words, there appears to be no coverage if the volunteer is transporting only himself or herself. This leaves a coverage gap for operations like Meals on Wheels or any other social services visits that don't involve transporting passengers.

We do not believe that it is the historical intent of this endorsement to preclude coverage while a volunteer is only driving themselves on business for the agency. We believe the original intent was to provide coverage similar to that in the CA 99 33.

TAC suggested ISO delete the words “to transport your clients or other persons" from the endorsement.

JUNE 2022 ISO RESPONSE

A new Non-Ownership Liability Coverage For Volunteers endorsement CA 05 24 was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

Automatic Trailer Liability Coverage Issue

The business auto policy covers trailers with a load capacity of 2,000 pounds or less. The problem is there is no way to know the load capacity of a trailer. If a trailer needs to be tagged in many states it is done so by the gross vehicle weight of a trailer and not by load capacity. Even the smallest trailers might be able to haul one ton of material and you wouldn't know unless you did so and then see if the axle broke! Currently agents tend to do one of two things. They assume the trailer is automatically covered because of its size when in fact it may not be or two, they list every trailer to protect themselves which costs the consumer extra money on trailers that may not need to be listed.

TAC suggested the following: ISO intends to cover (without scheduling) the smaller trailers that are intended to haul a small amount of material or light cargo. It should consider going to length and number of axles rather than load capacity. If you were to go to a maximum of 12 to 14 feet and single axle you would in effect accomplish the same thing but with clarity as to when a trailer is automatically covered or if it needs to be scheduled.

JUNE 2022 ISO RESPONSE

The revision to address the updated categorization of trailers with a registered Gross Vehicle Weight Rating of 3,000 pounds or less was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

Partners And LLC Members As Insureds

Under the BAP, the following are NOT insureds for liability coverage while using their own autos, 1.b.:

(2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household.

(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.

Employees, however, can be insured using the CA 99 33 – Employees As Insured endorsement which modifies the policy as follows:

The following is added to Section II – Liability Coverage, Paragraph A.1. Who Is An Insured Provision:

Any "employee" of yours is an "insured" while using a covered "auto" you don't own, hire or borrow in your business or your personal affairs. (Oddly enough, this provision in the CA 99 33 does not remove the exclusionary provision 1.b.(2) in the BAP itself.)

The endorsement, however, does not delete provision 1.b.(5) under the Who Is An Insured section of the BAP. While a partner or LLC member might be considered an employee of the organization, the endorsement explicitly says an employee is an insured only while using an auto “you don't own." If the partner or LLC member is a named insured, then the endorsement will not work even if that person is otherwise considered an insured. In addition, “silent" partners might not be employees in any case.

TAC suggested ISO expand the CA 99 33 to expressly include partners and LLC members, at least as an option. (This was another agenda item that remained for well over a decade before the change occurred.)

JUNE 2022 ISO RESPONSE

A new Partners Or Members As Insureds endorsement, CA 05 25, was submitted in the 2020 Commercial Auto Multistate Forms filing, which became effective in most jurisdictions on 12/1/2020.

In Conclusion

As you can see, the TAC committee has contributed to many positive changes for both agents and consumers. Many of these changes take a decade or more to achieve, so persistence and yearly updates to ISO are imperative to achieve TAC's goals.

If you're interested in serving on the TAC in the future, please reach out to me and we'll keep you apprised of any committee openings.

Last Updated: February 17, 2023

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