Insurance Terms – Commercial Auto
DISCLAIMER -
The abbreviated outlines of coverage provided in this site are not intended to
express any legal opinion as to the nature of insurance coverage. The terms
shown on this site provide only the most basic and general description of some
common terms used by the insurance industry. Please read your policy for
specific details of your coverage. ONLY your policy provides coverage.
Liability Coverage
The liability coverage of the commercial auto policy provides protection
against legal liability arising out of the ownership, maintenance, or use of
any insured automobile. The insuring agreement agrees to pay damages for bodily
injury or property damage for which the insured is legally responsible because
of an automobile accident resulting from the ownership, maintenance, or use of
a covered auto. The insuring agreement also states that in addition to the
payment of damages for which the insured is legally liable for, the insurer
also agrees to defend the insured for all legal defense cost. The defense cost
is in addition to the policy limits.
Medical Payments Coverage
The insuring agreement states that the insurer will pay all reasonable and
necessary medical and funeral expenses incurred by an insured because of bodily
injury caused by an accident. The insured is the named insured, the insured's
employees and guests, and any other person occupying a covered auto. These
payments are made without regard to fault.
Uninsured/Underinsured Motorist Coverage
Uninsured Motorist
This insuring agreement pays for bodily injury to an insured who is injured by
an uninsured motorist, a hit-and-run driver, or a driver whose insurer becomes
insolvent. These benefits are paid under the named insured's policy.
Underinsured Motorist
This coverage is added to supplement the Uninsured Motorist Coverage, the
coverage applies only when the other driver has liability limits at the time of
an accident, but the liability limits carried may be insufficient to pay for
damages for which the driver is responsible. This is when the insured's
underinsured motorists’ coverage would apply and payment for the difference
could be made. The two coverages are mutually exclusive and do not overlap or
duplicate each other.
Any Automobile
Coverage is provided for any auto, including autos owned by the insured, autos
the named insured hires or borrows from others, and other non-owned autos used
in the insured's business.
Owned Auto
Coverage is provided for all autos owned by the named insured. The owned auto
symbol is used for liability insurance only.
Non-Owned Autos
Coverage is provided only for autos not owned, leased, hired, or borrowed by
the named insured. Coverage includes autos owned by the insured's employees or
members of their households, but only while used in the named insured's
business or personal affairs.
Hired Auto
Coverage is provided only for autos leased, hired, rented or borrowed for use
in the named insured's business.
Physical Damage Coverage
Collision Coverage
This coverage provides protection against loss or damage to a covered auto or a
non-owned auto resulting from the impact with another vehicle or object.
Collision losses are paid regardless of fault.
Comprehensive Coverage
Comprehensive coverage provides protection against loss or damage to a covered
auto resulting from loss other than a collision or upset. This coverage also
provides for supplemental payments for transportation expenses in the event of
total theft of a covered auto or a non-owned auto. Coverage begins forty-eight
hours after the theft.
Specified Cause of Loss
This provides coverage against loss from fire, lightning, or explosion; theft;
windstorm, hail, or earthquake; flood; mischief or vandalism; and sinking,
burning, collision or derailment of a conveyance transporting the covered auto.
Endorsements:
Rental Reimbursement
The business auto policy provides a coverage extension if an auto is insured
for comprehensive or specified cause of loss coverage which insures against
loss of use of a covered auto only if the auto is a private passenger type auto
and is stolen. The coverage extension pays up to a daily limit of $10 and a
maximum limit of $300. Payments begin forty-eight hours after the theft and
ends when the insured auto is returned or when the insurer has paid the insured
for the auto.
However, for broader coverage the insured can pay an additional premium for
rental reimbursement coverage. Rental reimbursement pays the cost of renting a
substitute auto for replacement of any covered auto that has suffered a covered
loss. The daily and maximum limit for this coverage varies among insurers.
Towing and Labor
When this coverage is added, the insurer pays for towing and labor costs each
time a covered auto or non-owned auto is disabled, up to a stated amount.
Personal Injury Protection
Personal Injury Protection (PIP) is an endorsement that adds no-fault benefits.
No-Fault means that in the event of an automobile accident, each party collects
from his or her own insurer regardless of fault. The PIP endorsement is only
available in certain states with No-Fault Laws. The endorsement applies only to
bodily injury and not to property damage. (The state of