Accident

Auto

Bodily injury

Covered pollution cost or expense

Diminution in value

Employee

Insured

Insured contract

Leased worker

Loss

Mobile equipment

Pollutants

Property damage

Suit

Temporary worker

Trailer

Named Insured

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 Throughout this policy, the words "you" and "your" refer to the Named Insured shown in the Declarations.

Analysis:

This definition is simple enough but it should be remembered for its special significance when used within the body of the auto form. For example, when an exclusion applies to "you", that means that only the named insured is affected by the exclusion. This is true also when an insuring agreement or a condition refers to "you" or "your"; only the named insured is the affected party.

 Insurer

 The words "we", "us", and "our" refer to the Company providing this insurance.

Analysis:

These words refer, of course, to the insurer, the insurance company. These terms and the ones discussed previously appear at the beginning of the auto coverage form as opposed to the rest of the defined terms that appear in section V.

 Accident

"Accident" includes continuous or repeated exposure to the same conditions resulting in "bodily injury" or "property damage".

Analysis:

This is not so much a definition as a statement of just what is included within the scope of an accident. What is significant is that the word "accident" instead of "occurrence" is used in the auto policy. "Occurrence" is the more encompassing of the two terms, but "accident" seems more appropriate for an auto insurance policy. In any case, "accident" is meant to convey the point that the auto policy is to be used for insuring against unforeseen and unplanned events. If this definition does not accomplish the task of specifying that the use of the word accident in the form includes the concept of unintended or unexpected injury or damage, there is an exclusion that does address this point. Exclusion 1 states that the insurance does not apply to injury or damage expected or intended from the standpoint of the insured.

 Auto

 "Auto" means a land motor vehicle, trailer, or semitrailer designed for travel on public roads; or 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. However, "auto" does not include "mobile equipment".

Analysis:

The definition of "auto" is quite broad, relating to any land motor vehicle, trailer, or semitrailer. So, mopeds and motorcycles, three-wheelers, motor homes, cars, trucks, and tractor-trailer combinations can all come under the term "auto."

The current version of the business auto policy complements the CGL form by noting that land vehicles that are subject to state financial responsibility laws are considered to be autos. This emphasizes the point that such vehicles are not to be covered for the over-the-road exposures by the CGL form, but by the business auto policy. This is in reaction to such states where uninsured motorists coverage is mandatory and courts were requiring general liability insurers to pay uninsured motorists claims by operators of mobile equipment who got involved in accidents while traveling on public roads. Such claims are to be covered under an auto policy and not the general liability policy.

The definition of "auto" does specifically exclude "mobile equipment." The significance is that "mobile equipment" does not qualify as a covered auto, and therefore must be insured through some other means. The liability exposure for mobile equipment is for the most part covered under the standard commercial general liability (CGL) form. However, one aspect of the liability exposure that is not covered under the CGL form is mobile equipment while being transported by an auto. This exposure is covered through paragraph C under section I of the BAP, provided the BAP includes liability coverage and the vehicle transporting the mobile equipment is a covered auto. Apart from that extension, the ISO business auto coverage form excludes liability for mobile equipment.

 Bodily Injury

 "Bodily injury" means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these.

Analysis

The definition of "bodily injury" is straightforward. It's important to note that it refers to physical injury and not mental distress. If a covered person has nightmares following an accident, those nightmares are not considered "bodily injury". However, if a person has such nightmares that they then begin experiencing physical symptoms, then those symptoms would be "bodily injury".

Covered Pollution Cost or Expense

 "Covered pollution cost or expense" means any cost or expense arising out of:

1.Any request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants"; or

2.Any claim or "suit" by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to or assessing the effects of "pollutants".

"Covered pollution cost or expense" does not include any cost or expense arising out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of "pollutants":

a. That are, or that are contained in any property that is:

(1)Being transported or towed by, handled, or handled for movement into, onto, or from the covered "auto";

(2)Otherwise in the course of transit by or on behalf of the "insured";

(3)Being stored, disposed of, treated, or processed in or upon the covered "auto";

b. Before the "pollutants" or any property in which the "pollutants" are contained are moved from the place where they are accepted by the "insured" for movement into or onto the covered "auto"; or

c. After the "pollutants" or any property in which the "pollutants" are contained are removed from the covered "auto" to the place where they are finally delivered, disposed of or abandoned by the "insured".

Paragraph a. above does not apply to fuels, lubricants, fluids, exhaust gases or other similar "pollutants" that are needed for or result from the normal electrical, hydraulic, or mechanical functioning of the covered "auto" or its parts, if:

(1) The "pollutants" escape, seep, migrate, or are discharged, dispersed, or released directly from an "auto" part designed by its manufacturer to hold, store, receive, or dispose of such "pollutants"; and

(2) The "bodily injury", "property damage", or "covered pollution cost or expense" does not arise out of the operation of any equipment listed in paragraphs 6.b. or 6.c. of the definition of "mobile equipment".

Paragraphs b. and c. above do not apply to "accidents" that occur away from premises owned by or rented to an "insured" with respect to "pollutants" not in or upon a covered "auto" if:

(1) The "pollutants" or any property in which the "pollutants" are contained are upset, overturned, or damaged as a result of the maintenance or use of a covered "auto"; and

(2) The discharge, dispersal, seepage, migration, release, or escape of the "pollutants" is caused directly by such upset, overturn, or damage.

Analysis:

This definition is relevant to an insuring agreement that appears under the liability coverage section of the business auto coverage form. The insurer agrees to pay all sums that an insured legally must pay as a "covered pollution cost or expense". The defining of this phrase puts some limits on the coverage afforded under the insuring agreement. That is, while the insuring agreement gives an insured coverage for pollution clean up costs, the definition of "covered pollution cost or expense" means that coverage is not extended to instances in which the insured is delivering fuel oil or carrying waste products in its covered autos and then has such pollutants spill out onto the highway after an accident. The definition limits the coverage to spills or leaks from an auto part designed by its manufacturer to hold fuels, lubricants, or fluids needed for the normal functioning of the covered auto; namely, such things as a gasoline tank or a radiator filled with antifreeze.

As an example, if an insured causes an accident while driving on the highway and the gasoline from the business auto's gas tank leaks onto the roadway or surrounding ground, the auto form will respond if the government demands that the insured clean up or pay for the clean up of that leaking gasoline. However, the auto form will not apply to any liability claims resulting from the cargo of that business auto being spilled over the road or surrounding property.

The definition also clarifies the point that the auto form will respond to an accidental leak or spillage of pollutants caused by the covered auto under certain circumstances. For example, if the insured's covered auto is on the property of a customer of the insured in order to pick up pollutants for delivery to their final destination and the auto backs into a tank containing the pollutants, spilling the pollutants onto the ground and into the soil, the insured's auto form will pay for the clean up costs. The vital requirements here are that the accident must occur away from premises owned by or rented to an insured, the pollutants can not be in or upon the covered auto, the pollutants are upset or overturned as a result of the maintenance or use of a covered auto, and the discharge or escape of the pollutants must be caused directly by that upset or overturn.

 Diminution in Value

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

Analysis:

This definition was added to the current business auto policy to combat the idea that physical damage coverage included diminution in value. The thinking in some quarters was that since, after an accident, the covered auto lost market value even if fully repaired, the BAP should insure this lost value so as to return the insured to the position he was in prior to the accident. However, calculating diminution in value is a subjective task since the exact lost value cannot be determined unless the car is sold. And, the insuring agreement for physical damage coverage does state that the insurer will pay for direct and accidental loss or damage, direct meaning actual physical damage done to the covered auto. So, loss, a defined term on the BAP, was not meant to apply to an indirect loss such as diminution in value.

Diminution in value is now specifically excluded under the physical damage coverage of the BAP and this definition simply explains the scope of the exclusion.

 Employee

 "Employee" includes a "leased worker". "Employee" does not include a "temporary worker".

Analysis:

This definition matches that found on the CGL form; see Commercial General Liability Definitions. It is meant to show that leased employees are to be considered the same as regular employees when it comes to coverages, exclusions, and conditions under the insurance policy.

 Insured

 "Insured" means any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage. Except with respect to the Limit of Insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or "suit" is brought.

Analysis:

The term "insured" refers to any person or organization who may qualify for coverage within the "who is insured" section of the applicable insurance provisions. For example, to see who is an insured for liability coverage under the auto form, the reader of the coverage form must look to that particular section of the form, and the same is true of medical payments coverage or uninsured motorists coverage.

The definition of "insured" includes the "severability" provision whereby the coverage afforded under the BAP applies separately to each insured who is seeking coverage or against whom a claim or suit is brought. Nevertheless, as is also stated within this definition, though two or more may qualify as insureds the limits as stated in the policy do remain as they are written.

 Insured Contract

 "Insured contract" means:

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1. A lease of premises;
2. A sidetrack agreement;
3. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad;
4. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;
5. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another to pay for "bodily injury" or "property damage" to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement;
6. That part of any contract or agreement entered into, as part of your business, pertaining to the rental or lease, by you or any of your employees, of any "auto". However, such contract or agreement shall not be considered an "insured contract" to the extent that it obligates you or any of your employees to pay for "property damage" to any "auto" rented or leased by you or any of your employees.

An "insured contract" does not include that part of any contract or agreement:

a. That indemnifies a railroad for "bodily injury" or "property damage" arising out of construction or demolition operations, within 50 feet of any railroad property and affecting any railroad bridge or trestle, tracks, roadbeds, tunnel, underpass, or crossing; or

b. That pertains to the loan, lease, or rental of an "auto" to you or any of your employees if the "auto" is loaned, leased, or rented with a driver; or

c. That holds a person or organization engaged in the business of transporting property by "auto" for hire harmless for your use of a covered "auto" over a route or territory that person or organization is authorized to serve by public authority.

Analysis:

This definition includes the usual components of an "insured contract", with the main one being the insured's assumption of the liability of another party under a hold harmless agreement. Note that the definition also encompasses the potential of liability arising from the use of a rented auto, but does not include an obligation to pay for actual damage to the rented car itself. Also, while the renting of an auto is included in the definition of an "insured contract", if a driver comes with the loan or lease or rental, that rental agreement is not an "insured contract". Endorsement CA 20 33 is an optional endorsement that provides the physical damage coverage that would otherwise be excluded under the business auto form for autos leased, hired, or rented with drivers.

 Leased Worker

 "Leased worker" means a person leased to you by a labor leasing firm under an agreement between you and the labor leasing firm, to perform duties related to the conduct of your business. "Leased worker" does not include a "temporary worker".

Analysis:

The definition here is the same as on the CGL form; see Commercial General Liability Definitions. Defining a leased worker simply complements the definition of "employee," as previously discussed.

 Loss

 "Loss" means direct and accidental loss or damage.

Analysis:

The important facet of this definition is the contrast it offers when compared to the definition of "property damage". A "loss" is the direct loss or damage and not indirect loss such as loss of use. "Property damage" includes loss of use, so it is clear that when the auto form uses the word "loss", the reference is just to direct loss. Note that the physical damage coverage section of the auto form speaks about "loss", while the liability coverage section refers to "property damage."

 Mobile Equipment

 "Mobile equipment" means any of the following types of land vehicles, including any attached machinery or equipment:

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1. Bulldozers, farm machinery, forklifts and other vehicles designed for use principally off public roads;
2. Vehicles maintained for use solely on or next to premises you own or rent;
3. Vehicles that travel on crawler treads;
4. Vehicles, whether self-propelled or not, maintained primarily to provide mobility to permanently mounted:

a. power cranes, shovels, loaders, diggers or drills; or

b. road construction or resurfacing equipment such as graders, scrapers or rollers;

5.  Vehicles not described in 1., 2., 3., or 4. above that are not self-propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:

a. air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or

b. cherry pickers and similar devices used to raise or lower workers;

6.  Vehicles not described in 1., 2., 3. or 4. above maintained primarily for purposes other than the transportation of persons or cargo. However, self-propelled vehicles with the following types of permanently attached equipment are not mobile equipment but will be considered autos:

a. equipment designed primarily for

(1)snow removal;

(2)road maintenance (but not construction or resurfacing); or

(3)street cleaning;

b.c herry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and

c. air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment.

However, "mobile equipment" does not include land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law are considered "autos".

Analysis:

The significance of this detailed definition is that the insurer wants to clearly delineate between an "auto" and "mobile equipment." The business auto coverage form is meant to apply to autos and not mobile equipment and this definition goes into great detail in order to help the insured and the insurer know just what mobile equipment is. And, again, the point is made that vehicles that are subject to state financial responsibility laws are not mobile equipment; they are considered to be autos for insurance coverage purposes.

 Pollutants

 "Pollutants" means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. Waste includes materials to be recycled, reconditioned, or reclaimed.

Analysis:

This is a very broad definition and could be seen as including just about anything from acid to zinc. It is the very broadness of the definition that has some insurers trying to apply the pollution exclusion in every instance when something gets spilled or leaked, and then, in response, some courts inquiring as to whether the substance in question fits the definition and is, thus, a proper subject for the pollution exclusion.

 Property Damage

 "Property damage" means damage to or loss of use of tangible property.

Analysis:

Property damage includes loss of use. So, if the insured is liable for damaging, for example, a taxi in an auto accident, then the auto form would cover not only the cost of the direct damage to the taxi, but also the amount of income lost by the taxi driver while the taxi is being repaired.

 Suit

 "Suit" means a civil proceeding in which:

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1. Damages because of "bodily injury" or "property damage"; or
2. A "covered pollution cost or expense",

to which this insurance applies, are alleged.

"Suit" includes:

1. An arbitration proceeding in which such damages or "covered pollution costs or expenses" are claimed and to which the "insured" must submit or does submit with our consent; or
2. Any other alternative dispute resolution proceeding in which such damages or "covered pollution costs or expenses" are claimed and to which the insured submits with our consent

Analysis:

The term "suit" is defined to include alternative dispute resolution proceedings, examples of which are arbitration and pretrial mediation. This definition does clarify the point that the insurer must defend the insured in arbitration proceedings, even though they might not otherwise be viewed as a "real" lawsuit.

 Temporary Worker

 "Temporary worker" means a person who is furnished to you to substitute for a permanent "employee" on leave or to meet seasonal or short-term workload conditions.

Analysis:

The auto policy makes clear with this definition and the definitions of "employee" and "leased worker" that a temporary worker is not considered an employee of the named insured. This means that if a temporary worker brought in to work for the named insured on a short-term basis due to, for example, regular full-time employees being on vacation, is injured due to the negligence of the named insured, the auto policy will respond to a claim against the named insured since the temp is not considered an employee.

Note that this definition has several parts that, in describing what a temporary worker is, create some implications. The temp has to be furnished to the named insured, implying that some outside entity has contracted with the named insured to furnish the temp, at least for the one instance that the temp is working for the named insured. The temp is furnished for certain work situations, implying again that there is no long-term relation to be established between the named insured and the temporary worker. A good example would be a florist who, at Easter or Mother's Day, needs temporary drivers to deliver the seasonal overload of flower orders. The temporary drivers will work for the insured for a week or two and that is it; no permanent employment is the goal of the insured or the temp.

 Trailer

 "Trailer" includes semitrailer.

Analysis:

This definition seems to be superfluous since the definition of "auto" includes trailers and semitrailers, but since the covered autos designation symbols delineate between "autos" and "trailers the named insured does not own", it may help clarify coverage should a dispute arise in this area.

Unmanned Aircraft

"Unmanned aircraft" means an aircraft that is not:

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1. Designed;
2. Manufactured; or
3. Modified after manufacture;

to be controlled directly by a person from within or on the aircraft.

Analysis:

This definition was added with the advent of drones in the airspace. Drones are different from radio-controlled aircraft in that they can be flown completely autonomously, can be used to assist firefighters and police, deliver packages, map property, monitor traffic, provide video documentation of areas where it is difficult for a human to physically access, and many other useful purposes, as well as be purely recreational.

Includes copyrighted material of Insurance Services Office, Inc., with its permission.