12 - 1Copyright 2008, The National Underwriter Company Business Automobile Insurance What is it? ...

12 - 1Copyright 2008, The National Underwriter Company

Business Automobile Insurance

What is it? Business automobile insurance

Covers losses due to property damage and liability May cover owned, nonowned, and hired autos

Liability protection Pays sums insured owes as damages to third party

because of property damage or bodily injury due to an auto accident

Insured owes duty to defend

Chapter 12Risk Management For Financial Planners


Physical damage protection Covers actual direct physical damage to the covered

auto

Business uses Available as monoline policy or in a multiline or package

policy May be used by sole proprietors, partnerships,

corporations, unincorporated associations, individuals, not-for-profits or government agencies




Advantages Allows businesses to comply with state financial

responsibility laws Financial institutions required that leased or financed

vehicles be insured Protects assets of business against third-party liability

claims Available to not-for-profit organizations Insurers will handle claims Cost of premiums may be lower than cost to defend or

settle lawsuit Premiums are deductible business expenses




Disadvantages Many exclusions and limitations apply Policy limits are finite; reserves must still be set asside

for uncovered losses Premiums must be paid even if no claims ever made Insured loses control of handling and defense of claims




Design Features ISO offers standard business auto coverage form Policy Structure

Declarations Form Endorsements Insured, mailing address, policy period Schedule of covered autos Premiums, limits, deductibles

Liability Coverage Insuring agreement Description of who is an insured Coverage extensions Exclusions Limit of insurance




Design Features (cont’d) Policy Structure (cont’d)

Physical damage coverage Coverage agreements

Comprehensive coverage Specified causes of loss Collision coverage

Coverage extension Exclusions Limit of Insurance Deductible Provision




Design Features (cont’d) Policy Structure (cont’d)

Conditions Loss conditions – procedure for getting appraisal if the

parties disagree on amount of loss General conditions Common policy conditions

Endorsements Auto medical payments coverage Uninsured/underinsured motorist coverage




Legal Aspects Fiscal responsibility and compulsory insurance laws

Financial responsibility laws Compulsory automobile liability insurance Unsatisfied judgment fund laws Laws requiring uninsured motorist coverage No-fault automobile laws



12 - 1Copyright 2008, The National Underwriter Company Business Automobile Insurance What is it? ...

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