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Question
QUESTION: Hello,
We have an insured that repairs trucks. The operations coverage is written under a general liability policy and auto policy with non-owned auto; form CA0001. The insured is requesting primary coverage when test driving a vehicle that could be involved in an at fault accident.
The Other Insurance Condition states that this coverage form is excess over any other collectible insurance. There is an exception for trailers that they are primary when connected to a covered auto you own.
The insured is located in North Carolina.
Do you have an idea on how to provide the primary coverage?
Thank you for your help.
Shirley

ANSWER: Hi Shirley,

None of the coverage you have in place currently provides physical damage coverage to the vehicles that your insured is test driving.  The CGL policy excludes PD to personal property of others in the Care, Custody, or Control of the insured.  The non-owned coverage triggered by Symbol 9 cannot be used to trigger physical damage.

The only way to provide coverage for the vehicles test driven by your insured on an excess or primary basis is to add CA 99 37 - Garagekeeper's Coverage.  You can add Comprehensive or Specified Causes of Loss and Collision to the policy and trigger it on either an excess or primary basis.  There is an additional charge for this endorsement.

I hope that helps a little.  Please let me know if you have any additional questions.



---------- FOLLOW-UP ----------

QUESTION: The non-owned liability coverage is on an excess basis for vehicles you do not own. Is there a way to make the auto liability primary coverage? If our employee was involved in an accident while test driving, it is not our intent for the customers insurance to pay for the loss.
Appreciate the additional information.
Thank you

Answer
Hi Shirley,

I'm going to assume that when you say liability as it relates to an accident caused by your insured, you're speaking of third-party BI and PD and not damage to the customer's auto.

Non-owned auto liability is always on an excess basis and there is no way to change that in the Business Auto Policy.  That said, every auto policy has an exclusion as it relates to a permissive user that is in the auto business.  Here is the wording out of the ISO PAP:
While employed or otherwise engaged in the "business" of:
  a.   Selling;
  b.   Repairing;
  c.   Servicing;
  d.   Storing; or
  e.   Parking;
vehicles designed for use mainly on public highways. This includes road testing and delivery.

There is similar wording the the BAP.  What the policy says is that the coverage does not extend to someone using your vehicle with permission if they are in the business and are test driving the vehicle.

While the BAP Other Insurance condition says that it is excess over other collectible insurance, excess over nothing become primary.  

I hope that helps explain how the BAP is actually primary in the case of your insured's policy.  Let me know if you have additional questions.

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Jay K. Williams, AAI, AIP, CIC, CRM

Expertise

I can answer questions relating to the following coverages: personal auto; homeowners; commercial auto; commercial liability; commercial property; business income and all other property and casualty coverages.

Experience

I have been in the insurance industry in Florida since 1979. I am currently the president of a Florida domestic insurance company subsidiary. I've taught continuing education classes in Florida and across the country. I am quite familiar with all coverages including Florida Condominium master policies and unit owner policies. I also specialize in agent professional liability. I have been a professional educator since 2001.

Organizations
I am a member of the Florida Associaion of Insurance Agents, the state affiliate of the Independent Insurance Agents and Brokers of America.

Education/Credentials
I currently carry the following professional designations: Accredited Advisor in Insurance (AAI) Associate in Insurance Production (AIP) Certified Insurance Counselor (CIC) Certified Risk Manager (CRM)

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