Trailer interchange coverage exclusions

Trailer interchange coverage limit of insurance

Physical damage coverage insuring agreement

Physical damage coverage exclusions

Physical damage coverage limit of insurance

 Trailer Interchange Coverage Insuring Agreement

 This insuring agreement applies to all sums the named insured legally must pay as damages because of loss to trailers (or the equipment) that the named insured does not own. The clauses are detailed and analyzed in the discussion of the truckers form, CA 00 12 03 06. See, Truckers Coverage Form. The print version can be found in the Auto E.1 pages.

 Trailer Interchange Coverage Extensions

 The coverage extensions are similar to those found in the liability coverage section of the business auto form, and are basically supplementary payments that are in addition to the limits of insurance. For an analysis, see Business Auto Form—Liability Coverage. This article is in the Auto A.4 pages.

Note that coverage extension pertaining to bonds in CA 00 20 differs slightly from the coverage extension in the BAP. The BAP coverage extension mentions that the insurer will pay for the cost of bail bonds up to $2,000; CA 00 20 does not mention this. Also, the BAP speaks of the cost of bonds to release attachments in any lawsuit against the insured that the insurer defends. CA 00 20 declares that the insurer will pay for the cost of bonds to release attachments.

 Trailer Interchange Coverage Exclusions

 The exclusions that apply to the trailer interchange coverage are similar to those found in the physical damage coverage section of the business auto form. For an analysis of these exclusions, see Business Auto Form—Physical Damage Coverage This article can be found in the Auto A.5 pages.

 One thing to note here is that the exclusions include a statement that the insurer “will not pay for loss of use”. This exclusion simply reinforces the trailer interchange coverage insuring agreement that the coverage is for “loss” to a nonowned trailer, that is, a direct physical loss and not an indirect loss such as a loss of use claim. Also note that there is no exclusion for damage to any tapes, records, or any data electronic equipment as there is in the auto physical damage coverage section of the BAP.

 Trailer Interchange Coverage Limit of Insurance

 This information is similar to that found in the truckers form. See Truckers Coverage Form. This article is in the Auto E.1 pages.

 Physical Damage Coverage Insuring Agreement

 The insuring agreements in this section of the motor carrier coverage form are the same basically as those in the business auto form. The only difference is that the motor carrier form emphasizes the term “private passenger type auto” more than the business auto form. This is done in two ways. First, the towing insuring agreement is titled “Towing — Private Passenger Type Autos” on the motor carrier form; second, “private passenger type” is a defined term on the motor carrier form. A private passenger type auto means a private passenger or station wagon type auto and includes an auto of the pickup or van type if not used for business purposes.

 The coverage afforded by the physical damage insuring agreements is not changed by the way private passenger type autos are handled under the motor carrier form. For more information on physical damage coverage, see Business Auto Form—Physical Damage Coverage.

 Physical Damage Coverage Exclusions

 For an analysis of these exclusions, see Business Auto Form—Physical Damage Coverage. The physical damage exclusions on the motor carrier form are, for the most part, the same as those on the business auto form. There is one additional exclusion that appears on the motor carrier form; this is discussed below.

 2.We will not pay for “loss” to any of the following:

a.Any covered “auto” while in anyone else's possession under a written “trailer” interchange agreement. But this exclusion does not apply to a loss payee; however, if we pay the loss payee, you must reimburse us for our payment.

 Analysis

 By this exclusion, the insurer is telling the insured that it will not pay for loss to a covered auto that is in the possession of someone other than the named insured because the exposure is too great. Someone other than the named insured is a complete unknown to the insurer and while the insurer can conduct a loss control inspection of the named insured's premises and operations, it has no ability to do so with some unknown entity. However, there are two exceptions that affect this exclusion.

 First, the exclusion does not apply to a loss payee; the insurer will pay the loss payee for its insurable interest in the damaged or lost covered auto. Second, if symbol 70 is entered next to a physical damage coverage in item two of the declarations, the exclusion as it relates to a named insured's trailer in the possession of anyone else is not applicable.

 The insurer will pay for the loss to a trailer of the named insured's even while it is in the possession of another party because of the nature of the motor carrier business. It is common business practice for motor carriers to interchange trailers and if the insurer were to absolutely exclude coverage for such interchanges, that would leave a huge gap in the insurance protection package of the named insured and possibly hinder business growth and profit for the named insured. Besides, even though the party having actual possession of the trailer is an unknown to the insurer, the exposure has obviously been deemed a ratable one by insurers.

 Physical Damage Coverage Limit of Insurance

 This clause and the clause pertaining to the deductible applied to a loss are the same as the ones on the business auto form. For an analysis, see Business Auto Form—Physical Damage Coverage.