The Business Auto Coverage form (CA 00 01) was developed by the Insurance Services Office (ISO) to provide businesses with coverage for auto-related exposures excluded by commercial general liability policies. The Business Auto Coverage form may be issued as part of a package policy that includes other coverages such as property, general liability, inland marine and crime. When not purchased as part of a package policy, the form is combined with a Declarations page, “Common Policy Conditions” form, and any necessary endorsements to create a complete stand-alone policy.

The 2006 version of the Business Auto Coverage form contains five sections:

Section I—Covered Autos

Section II—Liability Coverage

Section III—Physical Damage Coverage

Section IV—Business Auto Conditions

Section V—Definitions

Coverage under each of these sections is described below. Umbrella liability policies typically do not provide excess coverage for the auto physical damage exposure (except when liability for such exposure is assumed under contract). Therefore, only a brief discussion of physical damage coverage is included in the following text.

Section I—Covered Autos

The 2006 Business Auto Coverage form defines ten auto coverage categories which are designated by symbols “1” – “9” and “19”. Unless a symbol is noted on the Declarations page beside a particular coverage description, that coverage does not apply.

•    The broadest coverage is provided by the designation of symbol “1.” Coverage under symbol “1” applies to any auto, and includes autos owned, nonowned or hired by the insured. The word auto means a land motor vehicle, and includes nonowned trailers or semi-trailers designed for travel on public roads while attached to owned power units. Effective with the 2006 Business Auto Coverage form revision, the definition also includes land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where the vehicle is licensed or principally garaged. The auto definition specifically excepts mobile equipment. Coverage is automatically extended to any auto acquired after policy inception.

•    Symbol “2” designates coverage for owned autos only. Under this symbol, there is no coverage for hired, nonowned, or borrowed autos. Coverage is automatically extended to owned autos acquired after policy inception, and to the insured's liability as respects nonowned trailers attached to owned power units.

•    Symbol “3” designates coverage for owned private passenger autos only, and includes those autos which the named insured acquires after inception of the policy. Underwriters sometimes use this designation if they are concerned that the insured will acquire larger vehicles (such as trucks) and assume coverage is provided for the newly acquired vehicles.

•    Symbol “4” designates coverage for owned autos other than private passenger autos, and includes those autos acquired after policy inception. Coverage extends to liability as respects nonowned trailers while attached to owned power units.

•    Symbol “5” designates coverage for owned autos that are subject to no-fault insurance requirements in the state where the autos are licensed or principally garaged. Newly acquired autos subject to the same requirement are automatically covered.

•    Symbol “6” is used to designate owned autos subject to a compulsory uninsured motorists law in the state where the autos are licensed or principally garaged. Newly acquired autos subject to the same requirement are automatically covered.

•    Symbol “7” is used to designate coverage for specifically described autos (i.e. those autos scheduled on the policy). Coverage is extended to newly purchased autos if (1) the named insured already insures all owned vehicles or if the new purchase is a replacement auto and (2) the insured reports the new acquisition within 30 days. Coverage also extends to liability as respects nonowned trailers while attached to owned power units.

•    Symbol “8” designates coverage for hired autos only, and includes autos that are borrowed, rented, or leased by the insured. Coverage does not apply to autos the insured borrows, rents, hires, or leases from its employees, its partners, members of limited liability companies, or members of their households.

•    Symbol “9” is used to designate coverage for nonowned autos only, and provides the insured with liability coverage for employees' autos used for business purposes. Coverage is also provided for autos belonging to the insured's partners and members of their households when they are used in the insured's business or personal affairs.

•    Symbol “19” was added with the 2006 form revision and is used to designate mobile equipment that is subject to compulsory or financial responsibility or other motor vehicle where it is licensed or principally garaged. Newly acquired mobile equipment subject to the same requirement is automatically covered.

Underwriters are sometimes reluctant to use symbol “1” (any auto) and, instead, will use a combination of other symbols. They also may use symbol “7” (specifically described autos). Because symbol “7” requires the insured to schedule all vehicles to be covered on the policy, the underwriter can more closely monitor the insurer's exposure. Symbol “7” may also be used if only some of the insured's vehicles are to be covered under the business auto policy.

The use of symbol “1” is preferable from the standpoint of the insured. When symbol “1” is designated, the insured is automatically provided coverage for all newly acquired autos without having to notify the insurer of the acquisition. To obtain coverage for newly acquired autos under symbol “7,” however, the insured must notify the insurer of the acquisition within thirty days.

In addition to liability coverage for autos, the Business Auto Coverage form provides liability coverage for trailers with a load capacity of 2,000 pounds or less and designed for use primarily on public roads. Mobile equipment carried or towed by a covered auto is also covered under this section. Coverage for carried or towed mobile equipment is important because the policy form specifically excludes other coverage for the mobile equipment exposure.

The BAP also provides liability coverage for any nonowned auto used with permission of its owner as a temporary substitute vehicle when an owned covered auto is out of service.

Section II–Liability Coverage

Section II of the Business Auto Coverage form contains three parts: Part A. Coverage, Part B. Exclusions, and Part C. Limit of Insurance. Each of these parts is discussed in the following sections.

Part A. Coverage

The insurer promises to pay all sums the insured legally must pay as damages arising out of bodily injury or property damage covered by the policy. The injury or damage must be caused by an accident and result from the ownership, maintenance, or use of a covered auto.

The insurer also agrees to pay all sums the insured must legally pay as a “covered pollution cost or expense.” Covered pollution cost or expense is defined in the policy “Definitions” section to mean costs or expenses arising out of any request, claim or suit (governmental or otherwise) that demands the assessment, testing, monitoring or clean up of pollutants. However, such expense is covered only if bodily injury or property damage also results from the same accident.

Coverage for pollution cleanup costs is not intended to apply to situations where the insured is transporting pollutants and an accident results in the pollutants spilling from their containers onto the roadway. Rather, the coverage is intended to apply to spills or leaks of pollutants from parts of the auto designed to hold fuels, lubricants, or other fluids needed to operate the vehicle. If an auto transporting containers of pollutants is involved in an accident that results in both rupture of the auto's gas tank and the breakage of the containers, the Business Auto Coverage form will provide coverage for cleanup of the spilled gasoline.

Section I also affirms the insurer's right and duty to defend the insured against suits which seek damages or pollution costs or expenses covered by the policy. The insurer also has the right to investigate and settle any claim or suit it considers appropriate. However, the insurer's obligation to defend or settle ends as soon as the limit of insurance has been exhausted by the payment of judgments or settlements.

The named insured is protected for liability arising from the ownership, maintenance, or use of any covered auto. Anyone else is an insured while using an auto owned, hired, or borrowed by the insured with the named insured's permission, except the following:

1.  The owner or anyone else from whom the named insured hires or borrows a covered auto. The exception does not apply if the covered auto is a trailer connected to an owned covered auto.

     This exception can create a problem if the insured or an employee of the insured assumes the liability of the owner of an auto under contract. Such a situation often occurs when renting automobiles from car rental agencies. The policy definition of insured contract extends the insured's liability coverage to any of the insured's employees, but not to the owner of the covered auto (e.g., the car rental agency.) If the liability of the owner or lessor of an auto is to be assumed by the named insured under an insured contract, the Business Auto Coverage form must be endorsed to provide this additional coverage. Also, under the insured contract definition, liability coverage does not extend to property damage to the rented or leased vehicle.

2.  Employees of the named insured, if the covered auto is owned by the employee or a member of his or her household. Employee is defined in the policy to include a leased worker, but not a temporary worker.

Thus, if an employee's auto is used in the business of the employer, the employer is covered but the employee is not. The employee would have to rely on his or her own personal auto insurance for liability (and physical damage) coverage, unless the Business Auto Coverage form is modified specifically to provide liability coverage for the employee. This modification can be accomplished through purchase of an Employees As Insureds endorsement (CA 99 33).

If one employee borrows another employee's personal auto for company business purposes, both the employee who borrows the auto and the employer would be protected under the business auto policy. However, the employee whose auto was borrowed would have to look to his or her own personal auto policy for coverage. If an employee used the named insured's covered vehicle with the named insured's permission, however, that employee would have coverage under the business auto coverage form.

3.  Persons who use a covered auto while working in the business of selling, servicing, repairing, parking, or storing autos, unless that business is owned by the named insured. For example, parking lot attendants who park the named insured's auto or employees of a repair shop who might test drive the named insured's auto are not covered if they work for a business that is not owned by the named insured. This exposure is more properly insured through a garage liability policy.

4.  Anyone moving property to or from a covered auto unless that person is an employee or partner of the named insured, member of a limited liability company, the lessee or borrower of the covered auto, or an employee of one of these entities.

5.  The insured's partners (including members of limited liability companies) for use of covered autos owned by them or by their family members.

Also covered is anyone liable for the conduct of an insured, to the extent of that liability.

Under the supplementary payments coverage extension, the insurer agrees to pay all expenses it incurs in the investigation and defense of a claim or suit. These supplementary payments will be made in addition to the policy's limit of liability.

Supplementary payments include the cost of bail bonds (up to $2,000 for a covered accident) and the cost of bonds to release attachments in any suit the insurer defends. The insurer is not obligated to supply either of these bonds and the amount of the bonds is subject to the policy's limit of liability. Also included as supplementary payments are reasonable expenses incurred by the insured at the insurer's request (including actual loss of earnings of up to $250 a day), all costs taxed against the insured in suits defended by the insurer, and accrued post-judgment interest. The duty to pay post-judgment interest ends when the insurer has paid, offered to pay or has deposited in court that part of the judgment that falls within the policy's limit of liability.

Business auto liability coverage extends to covered autos while in a state other than the state in which the auto is licensed. In some states, the required minimum amount of liability insurance may be higher than the minimum amount required in the state where the vehicle is principally operated or garaged. In such instances, if the business auto coverage limits are less than the required limits in the other state, the policy limits are automatically increased to meet the higher coverage requirement. However, this extension does not apply as respects laws governing motor carriers of passengers or property.

In addition to different minimum limits of liability, some states may also have other or more stringent coverage requirements, such as no-fault protection or compulsory uninsured motorists coverage. The Business Auto Coverage form also provides these additional coverages where necessary. These increased limits and additional coverages are usually not subject to an additional premium.

The business auto policy states that the insurer will not pay anyone more than once for the same elements of loss because of the above-described supplementary payments or out-of-state coverage extensions.

Part B. Exclusions

Part B of the Liability Coverage section of the Business Auto Coverage form contains thirteen exclusions. Each of these exclusions is summarized in the following paragraphs:

Expected Or Intended Injury. Coverage is excluded for bodily injury or property damage expected or intended from the insured's standpoint.

Contractual Liability. Coverage is excluded for liability assumed by the insured under any contract or agreement that is not an insured contract, as that term is defined in the policy. For coverage to apply, bodily injury or property damage must occur after the execution of the insured contract.

The insured contract definition in the 2006 Business Auto Coverage form is similar to the insured contract definition under the ISO-CGL forms. However, to avoid a potential duplication of coverage, the ISO-CGL policies specifically exclude coverage for liability arising out of the operation, maintenance and use of any automobile.

If the contract qualifies as an insured contract, the Business Auto Coverage form provides liability coverage for autos rented or leased by the insured, including its employees' autos, except when the auto is loaned, leased or rented with a driver. Coverage is thus provided for the insured's employees who rent autos for business purposes. However, the physical damage exposure to rented, leased or borrowed autos is still not covered even if this exposure is assumed under contract. Coverage for physical damage to autos leased, hired, rented or borrowed without a driver is provided under the physical damage section of the coverage form only if symbol “8” is designated on the declarations page.

If any symbol other than “8” is used on the declarations, other methods must be used to cover physical damage to rented autos. One of these methods is to modify the definition of insured contract so that the liability for physical damage assumed under a rental agreement contract is covered. Another method is the creation of a new coverage symbol that applies to such contracts.

Still another alternative to modifying the insured contract definition wording is to endorse the policy to include the lessor of the auto (e.g., a car rental agency) as an additional insured. An endorsement available for this purpose is the “Additional Insured-Lessor” endorsement (CA 20 01). When this endorsement is attached to the policy, the leased auto described in the endorsement is considered to be an “owned auto.” The “Who Is An Insured” section of the Business Auto Coverage form is also amended to include the lessor of the vehicle as an additional insured and loss payee.

Endorsement CA 20 01 is designed for long-term auto leases, however, and is not suitable for insureds (or their employees) that frequently enter into short-term auto rental agreements for business purposes. Insureds (or employees) who have a frequent, short-term auto rental exposure should consider purchase of the loss-damage-waiver (LDW) or collision-damage-waiver (CDW), from the car rental company. It should be noted, however, that the protection under these waivers is sometimes conditional. For example, even if the waiver is purchased, the lessee may still be responsible to the rental agency if the vehicle is damaged by a collision or rollover that results from the lessee's negligent use of the auto. The lessee could end up paying the daily CDW charge and still be responsible for all damage to the vehicle.

Coverage under the Business Auto Coverage form extends to liability that the insured would have even in the absence of a contract (i.e., tort liability). For example, assume an insured (lessee) leases an auto and agrees to hold the lessor harmless for liability arising out of the lessee's negligence. Since the lessee would be liable for its own negligence even if there were no contractual assumption of liability, the Business Auto Coverage form provides coverage. Conversely, if the liability does not exist without a contract, and the liability is not assumed under an insured contract, there is no coverage under the policy for the assumed liability.

Workers' Compensation. Coverage is excluded for any obligation for which the insured or the insurer may be held liable under any workers' compensation, disability benefits, unemployment compensation or any similar law. Statutory workers' compensation coverage or other insurance is usually available to cover these exposures.

Employee Indemnification and Employers' Liability. Coverage is excluded for employment-related bodily injury to an employee (including a leased worker) of the insured. Resulting consequential bodily injury to the employee's spouse or other immediate family members is also excluded. Coverage is therefore precluded for claims alleging loss of affection or consortium by an injured employee's family member. The exclusion applies whether the insured may be liable as an employer or in any other capacity. Coverage is therefore precluded for cases involving “dual capacity” issues and “third-party-over” actions.

As an example of a “third-party-over” action, assume an employee is injured while driving a company car for work purposes. The employee may collect workers' compensation benefits and still sue the manufacturer of the vehicle based on faulty design. The manufacturer in turn might sue the employer for alleged negligence in failing to maintain (i.e. service) the vehicle properly.

The employers' liability exposure is specifically excluded under both the Business Auto Coverage form and the ISO-CGL policy forms. Coverage for this exposure is usually provided under the employers' liability portion of a workers' compensation and employers' liability policy. In jurisdictions where workers' compensation is available from state funds but does not include employers' liability coverage, employers' liability protection is usually available as “stop-gap” coverage as part of a general liability policy.

The employers' liability exclusion does not apply to any obligation to share damages with or repay another party who must pay damages because of injury or to domestic employees who are not entitled to workers' compensation benefits. The exclusion also does not apply to liability assumed by the insured under an insured contract.

Fellow Employee. Coverage is excluded for bodily injury to a fellow employee (or leased worker) of the insured that arises out of and in the course of the fellow employee's employment. While employees are covered as permissive users of covered autos, there is no coverage for claims or suits filed against them by fellow employees. This exclusion is intended to maintain workers' compensation as an “exclusive remedy” in the case of work-related bodily injury. Some insurers may delete the fellow employee exclusion by endorsement for an additional premium.

Care, Custody or Control. With the exception of liability assumed under a “sidetrack agreement,” the policy specifically excludes coverage for damage (including covered pollution cost or expense) to property owned, transported by or in the care, custody or control of the insured. Other forms of insurance, such as cargo liability or other inland marine insurance, best cover this exposure.

Handling of Property. The Business Auto Coverage form covers bodily injury or property damage resulting from the handling of property (e.g., loading and unloading of a covered auto.) However, coverage is precluded for losses that occur before the property is moved from the place where it is accepted by the insured for movement into or onto the covered auto. Coverage is also excluded once the property is moved from the covered auto to the place where it is finally delivered by the insured.

Movement of Property by Mechanical Device. There is no coverage for bodily injury or property damage that results from the movement of property by a mechanical device (other than a hand truck) unless the device is attached to a covered auto. For example, coverage would apply for injury or damage caused by a crane that was attached to the bed of an insured truck. However, if the loading or unloading equipment is not attached to a covered vehicle, there is no coverage under the policy. There is also no coverage if merchandise falls off a portable conveyor, for example, that is used to unload a truck.

Operations. This exclusion applies to bodily injury or property damage arising out of the operation of mobile equipment. For example, a crane, air compressor or generator mounted on an auto is considered part of the auto and is therefore covered under the business auto coverage form while in transit. When the equipment is actually being operated, however, such operation is normally covered by general liability insurance, not business auto coverage. If a truck hauling a crane were involved in an accident, the appropriate source of coverage would be a business auto policy. However, if bodily injury results from use of the crane, a general liability policy should provide coverage. Wording was added with the 2006 form revision to extend the exclusion to machinery or equipment that is on, attached to, or part of a land vehicle that would qualify as mobile equipment if it were not subject to a compulsory or financial responsibility law, or other insurance law where the vehicle is licensed or principally garaged. The added language simply clarifies that while the vehicles themselves might be covered by the business auto policy, the machinery and equipment is not. Coverage for the machinery and equipment is typically provided by a general liability policy.

Completed Operations. The policy does not cover bodily injury or property damage arising out of the named insured's work after that work has been completed or abandoned. The definition of work in the Business Auto Coverage form is the same as the definition of your work in the ISO-CGL forms.

The wording as respects when the insured's work is considered completed is identical to the wording found in part b. of the products/completed operations hazard definition in the ISO-CGL forms. Coverage for this completed-operations exposure is typically provided by a general liability policy.

Pollution. Coverage is excluded for bodily injury and property damage arising from the actual, alleged or threatened discharge of pollutants contained in property being transported, handled, or otherwise in transit by or on behalf of the insured. There is also no coverage pollutants stored, disposed of, treated or processed in or upon a covered auto. Pollutants is defined in “Section V—Definitions” of the policy.

The pollution exclusion applies before the pollutants are moved from the place where they are accepted by the insured for movement into or onto a covered auto, and after they are disposed of, delivered or abandoned by the insured. However, coverage is provided if the pollution results from an accident that occurs away from the insured's premises and if the pollution results from property containing the pollutants being damaged following the auto's upset, overturn or damage.

The exposure resulting from the transport of pollutants by the insured can be partially covered by the “pollution liability—broadened coverage for covered autos” endorsement (CA 99 48.) This endorsement limits application of the pollutants-in-transit exclusion to liability assumed under contract. The endorsement also provides coverage for the cost of cleaning up a covered transport-related pollution incident.

The Business Auto Coverage form covers the cleanup of any pollutants that are normally contained in a covered auto and are necessary for the auto's operation. Should a pollution spill result from the rupture of an auto's gasoline tank during an accident, for example, the business auto form would provide coverage for the bodily injury, property damage and cleanup expense resulting from the spill.

War. Coverage is excluded for bodily injury or property damage resulting from declared or undeclared war, or any act or condition incident to war. War includes civil war, insurrection, revolution and rebellion. War also includes action taken by a military force, including action taken to hinder or defend against an actual or expected attack.

Racing. Coverage is excluded while covered autos are used in any professional or organized racing, demolition or stunting activity. The practice and preparation for such activities is also excluded.

Part C. Limit of Insurance

The most the insurer will pay for all damages arising from any one accident, including covered pollution cost or expense, is the limit of insurance for liability coverage indicated in the policy Declarations. This limit applies regardless of the premium paid or number of covered autos, insureds, claims made or vehicles involved in an accident. All injury, damage and expense resulting from continuous or repeated exposure to similar conditions is considered as resulting from one accident.

The Business Auto Coverage form also provides that no one will receive duplicate payments for the same elements of loss under this policy and any medical payments, uninsured motorists or underinsured motorists endorsement that may also be attached to the policy.

Section III—Physical Damage Coverage

The physical damage coverage section of the Business Auto Coverage form contains four parts: Part A. Coverage, Part B. Exclusions, Part C. Limit of Liability and Part D. Deductible.

Coverage for physical damage is designated by use of the appropriate coverage symbol on the Declarations page. The symbols that may be used by the underwriter to designate physical damage coverage are “2,” “3,” “4”; “7” and “8.” When symbols “2,” “3” or “4” are designated, the insured has automatic physical damage coverage for any auto covered under those symbols and that is acquired during the policy period. No notification to the insurer is necessary for newly acquired autos.

If symbol “7” is designated, newly acquired autos are covered for physical damage for a maximum of 30 days. For coverage to continue for a longer period, the insured must notify the insurer within the 30 days after acquisition of the auto. If symbol “8” is designated, physical damage coverage applies automatically to all hired or borrowed autos. This coverage is primary and not excess of other insurance available to the insured. Underwriters rarely provide coverage under symbol “8” because it is virtually impossible to quantify (and properly charge for) the exposure.

In addition to the above symbols, the insurer may be willing to grant coverage under one or more additional coverage symbols. For example, if the insured wants to self-insure physical damage for owned vehicles that are more than ten years old, a new coverage symbol (such as “10”) may be used that limits the policy's physical damage coverage to vehicles of more recent vintage. When the additional coverage symbol is added to the declarations, the definition of that symbol is typically contained in an attached endorsement.

A. Coverage

The Business Auto Coverage form provides three types of physical damage coverage: (1) Comprehensive coverage, (2) Specified Causes of Loss coverage, and (3) Collision coverage. Each of these coverages is briefly described in the following paragraphs.

Comprehensive coverage provides coverage for loss to a covered auto from any cause that is not specifically excluded. Coverage is excluded if the loss results from the covered auto's overturn or collision with another object. Glass breakage and loss resulting from contact with birds, animals, falling objects or missiles is also covered.

Specified Causes of Loss coverage is an enumerated perils form of comprehensive coverage. Coverage is limited to loss caused by fire, lightning or explosion; windstorm, hail, theft; earthquake; flood; mischief or vandalism. Loss resulting from the sinking, burning, collision or derailment of any conveyance transporting a covered auto is also included as a covered peril.

Collision coverage provides coverage for loss caused by the covered auto's overturn or collision with another object.

An extension of coverage under this section provides up to $600 ($20 per day) for temporary transportation expenses incurred by the insured following the theft of a covered private passenger auto. Coverage begins 48 hours after the theft and continues regardless of the policy's expiration date. Costs associated with the towing of disabled covered autos are also covered, to the limit specified on the policy declarations.

Another coverage extension pays for loss of use of hired autos, providing the loss of use results from covered cause of loss. The amount payable is $20 per day, to a maximum of $600.

B. Exclusions

Coverage is excluded for physical damage losses caused by nuclear and war or military action hazards. Also excluded is damage resulting from the practice, preparation or conduct of any professional or organized racing, demolition or stunting activity. These exclusions apply whether or not any other cause contributes to the loss. Loss caused by or resulting from any of the following is also excluded from coverage, unless caused by other loss that is covered by the policy:

1.  Wear and tear, mechanical or electrical breakdown and freezing.

2.  Road damage to tires, including but not limited to blowouts and punctures.

3.  Loss to radar detectors and tape decks, discs or similar electronic devices unless they are solely designed for sound reproduction.

4.  Loss due to “diminution of value.” Diminution of value as defined in the policy, means the actual or perceived loss of value resulting from a direct, accidental loss.

Sound reproducing equipment that is permanently installed or is removable from a permanently installed housing is excepted from the exclusion, providing such equipment is powered by the auto's electrical system. Also excepted from the exclusion is other electronic equipment necessary for the normal operation of the auto or which is permanently installed in the dashboard or console normally used by the manufacturer for installation of a radio.

C. Limit Of Insurance

As respects any one accident, the insurer promises to pay the lesser of:

1.  The actual cash value of the damaged or stolen property at the time of loss, or

2.  The cost of repairing or replacing the damaged or stolen property with other property of like kind and quality.

D. Deductible

Auto Physical Damage coverage is usually subject to a deductible in an amount shown in the declarations. When a deductible applies, the amount the insurer is obligated to pay for any covered loss is reduced by the deductible amount. The deductible does not apply as respects Comprehensive losses caused by fire or lightning.

Section IV—Business Auto Conditions

The Business Auto Coverage form conditions are separated into two groups: “Loss Conditions” and “General Conditions.” These conditions are in addition to the “Common Policy Conditions” typically issued as part of a business package policy. Some of the business auto conditions apply solely to liability or to physical damage coverage. Other conditions apply to all coverages under the policy. Because umbrella policies typically only provide coverage excess of the underlying liability exposure, only the portion of those conditions which apply to liability coverages under the business auto form are discussed in the following paragraphs.

Loss Conditions

Duties In The Event Of Accident, Claim, Suit Or Loss. The insured must give the insurer prompt notice of the accident or loss. The notice must include how and where the accident or loss occurred, the insured's name and address and, to the extent possible, the names and addresses of any injured persons and witnesses.

Insureds may not assume any obligation, make any payment or incur any expense without the insurer's consent. Any obligations assumed without the insurer's consent will be at the insured's expense. The insured must also provide the insurer with copies of all demands, notices, summonses or legal papers received in connection with a claim or suit and must cooperate with the insurer in the investigation, settlement or defense of the claim or suit. Further, the insured must authorize the insurer to obtain medical records or other pertinent information and submit to examination by a physician of the insurer's choice as often as reasonably required, at the insurer's expense.

Legal Action Against Us. No one can bring any legal action against the insurer until all terms of the policy have been fully complied with. In addition, no one may bring legal action against the insurer unless and until the insured's negligence and obligation to pay have been determined by judgment after a trial.

Transfer Of Rights Of Recovery Against Others To Us. The rights of any person or organization to recover damages from another party to or for whom the insurer has made payment are transferred to the insurer. The insured must do everything necessary to secure the insurer's rights and do nothing after an accident or loss to impair them.

General Conditions

Bankruptcy. Bankruptcy nor insolvency of the insured or the insured's estate will relieve the insurer of its obligations under the policy.

Concealment, Misrepresentation or Fraud. Fraud, concealment or misrepresentation of a material fact by the insured concerning the policy, a covered auto, the insured's interest in the auto, or any claim voids coverage.

Liberalization. If the insurer revises the coverage form to provide more coverage without additional premium, the changes will automatically apply to the policy as of the day the revision is effective in the insured's state.

Other Insurance. Coverage provided under the policy applies on a primary basis with regard to owned autos. If liability is assumed under an insured contract, coverage applies on a primary basis, regardless of the ownership status of the auto.

However, coverage under the policy is excess over any other collectible insurance as respects nonowned autos and owned trailers connected to nonowned autos. If other insurance is available and provides coverage on the same primary or excess basis as the business auto coverage form, coverage applies on a pro rata basis.

Premium Audit. This condition provides that the estimated premium shown on the Declarations is based on the exposures the insured disclosed at policy inception. Final premiums will be calculated when the actual exposures are determined. Any additional or return premium will be payable by or refunded to the first named insured. The condition further specifies that if the policy is issued for a term of more than one year, premiums will be calculated annually based on the rates in effect at the beginning of each policy year.

Policy Period, Coverage Territory. The Business Auto Coverage form provides coverage for accidents and losses that take place during the policy period and within the coverage territory. The coverage territory includes the U.S., its territories and possessions, Puerto Rico and Canada. In addition, coverage for private passenger autos applies worldwide if the auto is leased, hired, rented or borrowed for a period of thirty days or less or if the insured's liability is determined in a suit filed in the coverage territory or by settlement to which the insurer agrees. Accidents and losses involving covered autos being transported between any of the locations within the coverage territory are also covered.

Two Or More Coverage Forms Or Policies Issued By Us. This condition applies when more than one policy is issued to the insured by the insurer (or an affiliated company), and both policies provide coverage for the loss. The aggregate maximum limit of insurance payable by the insurer under all of the coverage forms or policies is the highest applicable limit of insurance under any single form or policy. The only exception to this rule is when the other applicable insurance is specifically intended to apply as excess coverage (for example, an umbrella policy).

Section V—Definitions

Section V of the Business Auto Coverage form contains sixteen definitions. Each of these definitions are summarized below.

Accident. Accident means bodily injury or property damage resulting from continuous or repeated exposure to the same conditions.

Auto. Auto is a land motor vehicle, trailer or semi-trailer designed for travel on public roads. Auto does not include mobile equipment. The term land motor vehicle is generally interpreted as including motorcycles, motorhomes, pickup trucks, and similar vehicles. With the 2006 form revision, language was added to this definition to clarify that an auto is any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. This clarification is meant to emphasize the point that such vehicles are not to be covered for over-the-road exposures by the CGL form, but, rather, by the business auto policy. This revision may not have any great coverage impact on an umbrella policy that covers both general liability and auto liability exposures, but it does help clarify whether the general liability limits of insurance or the auto liability limits are the primary limits that are affected by a claim involving the motor vehicles described in the definition.

Covered Pollution Cost Or Expense. Covered pollution cost or expense includes costs or expenses arising out of any request, demand, order or statutory or regulatory requirement that the insured or others test for, monitor, clean up, remove, contain, treat, detoxify, neutralize, or in any way respond to or assess the effects of pollutants. The term pollutants is defined in the “Definitions” section of the policy. Also covered is any claim or suit by or on behalf of a governmental authority for damages resulting from the testing, cleanup or assessing the effects of pollutants.

However, covered pollution cost or expense does not include the cost of cleaning up pollutants on or being transported by a covered auto unless the pollution results from property containing the pollutants being damaged following the auto's upset, overturn or damage. An exception is made for pollutants that are normally contained in the covered auto, such as oil and gasoline needed for the auto's operation. For example, should a pollution spill result from the rupture of an auto's gasoline tank during an accident, coverage would be provided for cleanup expenses resulting from the spill.

Diminution in Value. This phrase means the actual or perceived loss in market value or resale value which results from a direct and accidental loss.

Employee. Leased workers are included within the definition of employee. However, temporary workers are specifically excluded from the employee definition. By including leased workers within the definition, the policy's fellow-employee exclusion also applies to those workers. Leased employees therefore cannot claim that they are entitled to coverage under the policy if injured by a co-employee.

Insured. Any person or organization qualifying as an insured in the “Who Is An Insured” section of the policy is covered by the policy. Coverage applies separately to each insured, subject to the Limits of Insurance under the policy.

Insured Contract. The definition of insured contract clarifies those types of contracts or agreements for which the policy provides coverage for the insured's assumed liability. Because there is no requirement that covered contracts or agreements be written, both oral and implied contracts are encompassed by the definition.

The types of contracts or agreements for which the policy specifically provides coverage are:

•    Premises leases;

•    Sidetrack agreements;

•    Easement or license agreements;

•    Ordinance-required obligations to indemnify a municipality;

•    Any other contract or agreement pertaining to the insured's business (including indemnification of a municipality in connection with work performed for the municipality) under which the insured assumes the tort liability of another party; and

•    Rental or lease agreements pertaining to the use of an auto by the insured or the insured's employees. However, coverage does not apply to that portion of such agreements that obligates the insured or its employees to pay for property damage to the auto.

There is no coverage for bodily injury or property damage to any person or organization arising out of construction or demolition operations within fifty feet of a railroad or that pertains to autos loaned, leased or rented by the insured or its employees with a driver. Also excepted from the definition is that portion of a contract or agreement which holds a common carrier harmless for the insured's use of a covered auto over a route or territory the common carrier is authorized to serve by public authority.

Loss. Loss is defined to mean direct and accidental loss or damage.

Mobile Equipment. The definition of mobile equipment clarifies those types of vehicles and equipment for which coverage is provided or excluded. Under the definition, coverage is provided for equipment such as bulldozers, forklifts and vehicles providing mobility to permanently mounted equipment such as loaders and diggers. Also considered covered mobile equipment are non-self-propelled vehicles designed to provide mobility for permanently attached equipment such as air compressors, cherry pickers and similar devices.

Similarly, self-propelled snow removal, road maintenance, cherry pickers and similar equipment are not considered mobile equipment and are covered as autos under the policy. By virtue of wording added with the 2006 BAP form revision, any other land vehicles that are subject to a compulsory financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged are not considered mobile equipment. For insurance purposes, these vehicles are considered autos, rather than mobile equipment and, as such are within the scope of coverage provided by the business auto policy. The new wording complements the revised auto definition and helps the insured to know just what mobile equipment is.

Pollutants. The term pollutants includes solids, liquids, gases and thermal irritants or contaminants.

Pollutants also include smoke, fumes, vapor, soot, chemicals, acids, alkalis, and waste. Waste includes materials that are to be reclaimed, recycled or reconditioned.

Property Damage. Property damage is defined to mean damage to or loss of use of tangible property.

Suit. The term suit is defined as a civil proceeding in which damages resulting in covered bodily injury, property damage or covered pollution cost or expense are alleged. Included within the definition is an arbitration or any other alternative dispute resolution proceeding in which the insured participates with the insurer's consent.

Temporary Worker. The term temporary worker means a person who is furnished to the insured as a substitute for a permanent employee (as that term is defined in the policy) and who is hired to meet seasonal or short-term workload conditions.

Trailer. The term trailer also includes a semitrailer.