(December 2022)
This endorsement is used with the Insurance Services Office (ISO) OP 00 01–Capital Assets Program Coverage Form (Output Policy). It can be used in place of the physical damage part of a traditional commercial automobile coverage form or policy for owned vehicles.
The endorsement schedule is used to list the vehicles covered. A description of each insured vehicle, its vehicle identification number, its limit of insurance, and the deductible that applies are entered in the spaces provided.
Note: Only vehicles listed and described are covered. There is no automatic coverage for newly acquired vehicles or replacement vehicles exchanged for one listed. Vehicles that are not listed are not covered.
Only vehicles listed and described on the endorsement schedule are covered. The insurance company pays for direct physical loss or damage to such vehicles caused by or that results from a covered cause of loss.
This section revises parts of A. Coverage 2. Property Not Covered in OP 00 01 that apply to land-based motorized vehicles.
First, the following items are removed from Property Not Covered:
o Manufactures, processes, or warehouses them.
o Holds them for sale, lease, rental, or loan but only those not described in d. above.
Second, the following item is added to Property Not Covered.
Vehicles that meet either of the following criteria are not covered:
Note: Vehicle is defined elsewhere in this endorsement.
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Example: Jerry’s Processing lists a 2019 Cadillac on its OP 04 03. Jerry turns in a claim for $15,000, but the claim is denied because the adjuster discovered that the person who drove the Cadillac at the time of the loss had rented it from Jerry. |
In the case of covered loss or damage to an insured vehicle, the insurance company pays only the part of the loss that exceeds the deductible amount for the specific vehicle listed on the endorsement schedule.
Note: If two or more covered vehicles are involved in the same loss event, only the highest deductible for the vehicles involved in the loss is applied.
In case of loss or damage, the insurance company pays the least of the following:
· The actual cash value of the loss or damage to the vehicle at the time of loss.
· The cost to repair or replace the damaged property with property of similar quality.
· The limit of insurance on the endorsement schedule for the vehicle or vehicles involved.
Vehicle is defined as a self-propelled machine that is used on land. It includes automobiles, motorcycles, motor trucks, motor homes, tractors, and similar vehicles. It does not include mobile equipment.
The physical damage provided in a traditional commercial auto coverage form is much broader and the most appropriate coverage for automobiles.
It was specifically designed to cover and respond to the exact needs of automobile owners. OP 04 03 simply extends a property-based coverage form with many exclusions.
Not every entity wants or necessarily needs the broadest and most comprehensive coverage. Many are not all that concerned about small losses but instead are more interested in finding ways to cover their large loss exposures economically and efficiently. Some may be willing to absorb the loss of one or two vehicles a year as long as its entire fleet is protected.
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Example: Washington County has 120 buses stored at two different garages. It has been accident-free for ten years and considers the premium charged for physical damage coverage on the buses to be unnecessary. However, the risk manager knows that the buses are parked together each night and the County is subject to a potentially catastrophic financial loss if a tornado or severe hailstorm strikes one of the garage locations. The County decides to add the buses to OP 00 01 with a $25,000 deductible. The rating for bus physical damage coverage is part of the overall rating structure for OP 00 01 and is much more reasonable than the rating under commercial auto physical damage coverage. |
Using this endorsement to provide the equivalent of auto physical damage coverage is not appropriate for most risks. This coverage is not as broad as that in the standard physical damage in the automobile coverage forms. The named insured must be informed of the differences in coverage in case a vehicle is totaled, and coverage does not apply. An additional recommendation is to add coverage for flood and earthquake if the reason for purchasing coverage under OP 00 01 is to provide coverage for larger risks with high deductibles primarily interested in having coverage for catastrophic events.