(September 2013)

INTRODUCTION

In order to understand this endorsement, a few terms must be defined:

Bobtailing means driving only with the tractor (motorized portion) of a tractor/trailer combination vehicle.

Bobtail coverage is auto liability coverage that insures against losses involving tractors that operate without a trailer. This usually takes place after a trailer is delivered or when the operator travels to pick up a trailer.

Dead-heading is driving a vehicle without freight in the cargo area.

Dead-heading coverage is auto liability insurance coverage for exposures of operating a tractor/trailer combination vehicle with an empty trailer.

These examples are not a problem for normal trucking operations since owned tractors and trailers are always covered. In addition, hired tractors and trailers are covered during the period of hire. However these instances are a problem for independent truckers operating for hire under a trucking business' operating authority. Once the independent trucker completes the haul, the insurance coverage provided by the trucking business ends. Bobtailing and dead-heading are times when independent truckers operate outside the trucking business' insurance coverage and could be uninsured.

ADDITIONAL EXPOSURE TO INDEPENDENT TRUCKERS

Independent truckers may purchase a Motor Carrier Coverage Form and be covered at all times. However, this is expensive and duplicates or overlaps the trucking business' insurance coverage when the independent trucker works within the trucking business' operating authority.

Another option is for independent truckers to purchase a Business Auto Coverage Form, list all owned vehicles and attach CA 23 09–Motor Carriers (10 13 change)–Insurance For Non-Trucking Use. This endorsement restricts coverage to non-trucking activities by modifying the “Who Is an Insured” provision. It also adds an exclusion stating that insurance does not apply to covered autos being used to carry property in any business, or while used in the business of anyone the independent trucker rents the auto to.

This endorsement also restricts Who Is an Insured to not apply to anyone in the business of transporting property for hire that is responsible for the independent trucker’s conduct.

Note: The only vehicles restricted are those indicated on the endorsement schedule.

UNDERWRITING CONSIDERATIONS

Insurance companies evaluate independent trucker exposures carefully because of the complicated contractual obligations, the expense of the units, and the instability of bobtail and deadhead situations. Tractors are designed to carry heavy loads and operate with an unstable center of gravity with horsepower well exceeding what is needed when uncoupled from a trailer. A tractor pulling an empty trailer may have a more stable center of gravity but the lighter weight of the trailer adds instability because of how it responds to wind conditions on the road.

Insurance companies that specialize in insuring independent truckers normally write this coverage.

PREMIUM DETERMINATION

The premium charged for acceptable risks is determined based on each insurance company's individual manual rates or filings, even though Insurance Services Office (ISO) has rating procedures in the Commercial Auto Rules Section 24. B.

(April 2013)

SECTION IV–COMMERCIAL GENERAL LIABILITY CONDITIONS

1. Bankruptcy

Bankruptcy or insolvency of the insured or the insured’s estate does not relieve the insurance company of its obligations.

2. Duties In The Event of Occurrence, Offense, Claim, or Suit

The named insured has a number of duties to perform if there is a claim or demand for coverage:

a. The named insured must inform the insurance company of any occurrence or offense that may result in a claim as soon as practicable. This is different than as soon as possible. As a minimum, the notice should include information concerning how, when, and where the event took place and the names and addresses of all injured parties and any witnesses. It should also state the nature and location of any injury or damage as a result of the occurrence or offense.

b. Concerning claims made or suits brought, the named insured must immediately record the details of the claim or suit, the date it was received, and notify the insurance company quickly. This is in addition to being sure to provide the insurance company with timely written notice of the claim or suit.

c. Every insured involved in or with the claim must:

• Immediately send copies of demands, notices, summonses, and legal documents it receives in conjunction with the claim or suit to the insurance company
• Authorize and grant approval for the insurance company to obtain records and other needed information
• Cooperate with the insurance company as it investigates or settles the claim or defends against the suit
• When the insurance company requests, assist it to enforce any right against any person or organization that may be liable to the insured for injury or damage that this insurance covers

d. No insured may voluntarily make any payments, assume any obligations, or incur any expenses (other than first aid) without the insurance company's consent. If it does, it does so at its own cost or expense.

Related Court Case: Ten Year Delay of Claim Relieved Insurer of Defense and Indemnification of Housing Authority

3. Legal Action Against Us

Nobody has the right to join the insurance company in any way, bring it into a suit that claims damages from an insured, or sue it unless all of the coverage form’s terms and conditions are completely met and complied with.

The insurance company can be sued to recover on an agreed settlement or on a final judgment against the insured. However, its liability does not go beyond what is available in this coverage form's terms. That liability is also limited to this coverage form’s limit of insurance.

An agreed settlement is a settlement and release of liability that the insured, the insurance company, and the claimant or its legal representative signs.

4. Other Insurance (04 13 change)

The insurance company's obligations to pay are limited if other valid and collectible insurance is available that applies to the loss, as follows:

a. Primary Insurance

This insurance is primary except when paragraph b. Excess Insurance applies. When it is primary, the insurance company's obligations are not affected unless any other insurance that applies to the loss is also primary. In that case, this insurance shares with that insurance as outlined under Method of Sharing.

b. Excess Insurance

This insurance is excess over any other primary, excess, or contingent insurance or insurance provided on any other basis:

• That is Fire, Extended Coverage, Builder's Risk, Installation Risk, or similar coverage for the named insured's work
• That is Fire insurance for premises the named insured rents or occupies with the owner's permission
• That the named insured purchases to cover its liability as a tenant for property damage to premises it rents or temporarily occupies with the owner's permission
• If the loss arises out of maintaining or using aircraft, autos, or watercraft to the extent that is not subject to Exclusion G. Aircraft, Auto, or Watercraft under Section I, Coverage A–Bodily Injury and Property Damage

This insurance is also excess over any other primary insurance available to the named insured that covers liability for damages that arise out of premises, operations, products, and completed operations where the named insured was added as an additional insured. The 04 13 edition removes the words “by attachment of an endorsement” from the end of this sentence.

When this insurance is excess, the insurance company does not have a duty to defend the insured against any suit if the other insurance has that duty. However, the company will attempt to defend according to this coverage form’s provisions if no other carrier does. In that case, the insurance company is entitled to the insured's rights against the other carrier or carriers.

When this insurance is excess, it does not begin to pay until the loss exceeds the sum of all other such insurance that pays for the loss. This includes all deductible and self-insured amounts.

The insurance company shares any remaining loss with any other insurance that this Excess Insurance Condition does not include and that was not purchased specifically to apply in excess of this coverage form's limits of insurance.

c. Method of Sharing

This insurance permits contribution by equal shares if other coverage does. Each insurance company contributes equal amounts until it uses up its limit of insurance or the loss is paid, whichever occurs first.

If contribution is not by equal shares, it is by proportional limits. With this approach, each company's share is the ratio of its applicable limit of insurance to the total applicable limits of insurance by all insurance companies. Ratios are determined based on each carrier's limit as a percentage of the total applicable limits. The loss is then apportioned between the various policies.

5. Premium Audit

a. All premiums are calculated according to the insurance company's rules and rates.

b. The advance premium is only a deposit premium. At the end of each audit period, the insurance company determines the actual earned premium for the period and notifies the first named insured. The due date for the company to receive the premium billed is the due date on the billing notice. However, if the advance and audit premiums are more than the earned premium, the insurance company refunds the excess to the first named insured.

c. The first named insured is required to keep records and information the insurance company needs to calculate the premium and must send it copies of such records and information when requested to do so.

6. Representations

By accepting this coverage form as issued, the named insured agrees that the statements on the declarations are complete and accurate and are based on its representations. It further agrees that coverage the insurance company issues is based on those representations.

Note: This is very important because these statements allow the insurance company to use inaccurate statements in any application to void coverage.

7. Separation of Insureds

Other than the Limits of Insurance and any rights and duties that apply specifically to the first named insured, the insurance provided applies to each named insured as if it is the only named insured. It also applies separately to each insured against whom claim is made or suit is brought.

8. Transfer of Rights of Recovery Against Others to Us

Any rights the insured has against others to recover all or part of any payment the insurance company makes transfer to the insurance company. The insured must preserve those rights and not do anything after the loss occurs to impair them. The company can request that the insured bring suit or transfer those rights to it and help it enforce them.

Note: The insured can waive any and all rights of recovery prior to a loss. This condition applies only to rights that remain available at the time of loss.

Related Court Case: Insured's Waiver Affects Insurer's Subrogation Rights

9. When We Do Not Renew

If the insurance company decides to not renew, it mails or delivers written notice of the non-renewal to the first named insured on the declarations at least 30 days before the expiration date. Proof of mailing is sufficient proof of notice if the notice is mailed.

Note: State amendatory endorsements may supersede this paragraph.