FL Adjuster Claim Professional Exam: Business Auto Policy (BAP)
Liability Coverages
Fast Facts:
Covers bodily injury or property damage to others from ownership, maintenance, or use of a covered auto.
8/10 numerical symbols indicate autos with liability coverage. Symbol 1 (Any Auto) offers the broadest coverage.
3 types of liability coverage:
Damages for bodily injury, property damage, or pollution cleanup costs.
Defense costs (duty to defend).
Supplementary payments (e.g., $2,000 bail bonds, bond premiums, post-judgment interest, up to $250/day for loss of earnings).
Key Point: No medical payments or uninsured motorists coverage in BAP; available by endorsement.
Insuring Agreement
The insurer pays for claims or lawsuits against the insured for bodily injury, property damage, or pollution cleanup costs from a covered auto. Includes duty to defend and settle, ending when policy limit is reached.
Bodily Injury & Property Damage
Bodily Injury: Physical injury, sickness, disease, or death. Mental trauma is not covered.
Property Damage: Damage to tangible property and loss of use (e.g., repair costs and replacement vehicle).
Accident Definition: Same as CGL "occurrence," includes continuous or repeated exposure causing damage.
Covered Auto
Defined as land motor vehicles, trailers, or semitrailers designed for public roads, subject to motor vehicle insurance laws. Excludes mobile equipment. Symbol 1 (Any Auto) provides broadest liability coverage.
Insured Status
Named Insured: Covered for any auto per coverage symbols.
Permissive User: Covered when using a covered auto with permission, if not excluded.
Vicarious Liability: Covers those liable for named insured or permissive user’s actions.
Supplementary Payments
All expenses incurred by insured.
Up to $2,000 for bail bonds.
Bond costs up to policy limit.
Reasonable expenses (e.g., up to $250/day for loss of earnings).
Court costs and post-judgment interest.
Exclusions
Expected/intended injury or damage.
Contractual liability (except liability without a contract).
Workers compensation, employee indemnification, or fellow employee claims.
Property owned/transported by insured or in their care.
Pollution (except fuel/fluids from normal auto function).
War, racing, or mobile equipment operation.
Example: Greenfield Company’s truck spills diesel in a collision, poisoning a farm’s water. BAP covers the loss as diesel is necessary for auto operation and released from a designed part.
Comprehensive: All causes except collision/overturn (e.g., glass breakage, falling objects).
Specified Causes of Loss: Fire, theft, windstorm, flood, vandalism, etc. (no glass breakage).
Collision: Collision with another object or overturn.
Towing and Labor: Covers towing and labor at disablement site (private passenger autos only).
Transportation Expense: Up to $20/day ($600 total) for temporary transport after theft.
Limit of Insurance
Liability: Max payment per accident shown on declarations, no aggregate limit. Physical Damage: Lesser of actual cash value or repair/replacement cost. Deductibles apply (highest for collision).
Policy Conditions
Duties After Loss: Promptly notify insurer, provide details, cooperate, send legal papers.
Other Insurance: Primary for owned autos, excess for nonowned autos.
Subrogation: Insurer recovers from liable party after paying claim.
Coverage Territory: U.S., Puerto Rico, Canada; worldwide for short-term leased autos.
Selected Endorsements
Auto Medical Payments (CA 99 03): Covers medical expenses for insured and family in accidents.
Uninsured/Underinsured Motorists: Covers injuries from uninsured or underinsured drivers.
Lessor—Additional Insured (CA 20 01): Makes lessor an insured for leased autos.
Hired Autos (CA 99 16): Covers hired autos as owned autos.
Mobile Equipment (CA 20 24): Covers mobile equipment under BAP.
Individual Named Insured (CA 99 17): Covers individual’s private passenger auto.
Drive Other Car (CA 99 10): Covers personal use of borrowed autos.
Employees as Insureds (CA 99 33): Covers employees using personal autos for business.
Pollution Liability (CA 99 48, CA 99 55): Broadens pollution coverage for transported pollutants.
Test Your Knowledge!
Which coverage is available in an unendorsed PAP but only through endorsement in a BAP?
Medical payments
Test Your Knowledge!
How do comprehensive, specified causes of loss, and collision physical damage coverages differ in a BAP?
Comprehensive: Covers loss from any cause except collision/overturn (e.g., glass breakage, falling objects).
Specified Causes of Loss: Covers specific perils like fire, theft, windstorm, flood, vandalism (no glass breakage).
Collision: Covers loss from collision with another object or overturn.