3THE ISSUES Road and visibility conditions Vehicle and agricultural equipment features (type and size, speed, machine or animal, lighting, marking, braking, tires, steering)Environmental conditions (time of day, weather)Victims (other vehicles, operators, riders)Age and experience of operators (seasoned, youthful and other unlicensed operators)Restrictions and exemptions from motor vehicle lawsTransportation of hazardous materialsInteraction with other vehiclesLess than 1% of the nation’s fatal traffic collisions involve agricultural equipment according to NHTSA, however…
4THE ISSUESRural / Urban Traffic Interface – the mixture of farm equipment with faster moving motor vehicles on public roadwaysFederal and State Regulations – bewildering array of state vehicle code regulations with different definitions and requirements for vehicles and driversHigher Speed Tractors – Increasing speed relates to maneuverability, steering, breaking and towingTransportation of Workers – in, on and behind vehicles
6FARM v. PERSONAL v. COMMERCIAL FLCFNo $Got Coverage?PAPLess $BACFMore $
7TO MAKE MATTERS WORSEIf you are using a CGL, you also have some coverage for some vehicles under the definition of “Mobile Equipment”!
8WHAT’S THE RIGHT ANSWER? Use a true Risk Management approach to match the clients’ needs to the coverage provided!
9SOUTH DAKOTA LAWThe following do not come within the definition of "motor carriers" or "commercial vehicles" when used in intrastate operations.A motor vehicle chassis registered in South Dakota on which is mounted a corn sheller, grain cleaner, feed grinder, grain and alfalfa feed mixing machine, haystack mover, sawmill, water well drilling equipment, power shovel, ditch digger, mobile crane which exceeds the maximum size or weight limits prescribed by chapter 32-22, drag line, posthole auger, and which is not used for demonstration or display purposes outside the limits of a municipality, or a truck tractor and trailer carrying permanently mounted hay grinding equipment.Any motor vehicle registered in South Dakota used for the transportation of liquid or solid livestock waste (including trailers and equipment used to load liquid or solid livestock waste) and any vehicle registered in South Dakota used for the application, distribution, spraying or transportation from retail business to user of dry, liquid or anhydrous ammonia fertilizers or agricultural chemicals.A motor vehicle registered in South Dakota owned by a farmer of this state and used by or for the farmer to transport property for his farming operation, to transport farm property from farm to farm or from a community or market to his farm or from his farm to a community or market, to transport livestock in a vehicle that is registered at 26,000 pounds or less and when hauling for no monetary compensation or to transport farm property when the vehicles are used as reimbursement in the ordinary exchange of farm work if the provisions of § are met.Except as provided in § , any motor vehicle, trailer, semitrailer, motor propelled or trailed vehicle chassis registered in South Dakota, which is used for highway construction or for the construction of stock water dugouts, dams, farm and ranch irrigation systems or other soil and water conservation projects on farms and ranches and used exclusively on the job site. Such equipment may be moved between job sites or from job site to a central location.Any motor vehicle used by an implement dealer to transport farm machinery to and from a county fair or the state fair.
10COVERAGE FOR FARM VEHICLES Coverage for “autos”Coverage for “mobile equipment”Coverage for farm vehicles other than “autos” and “mobile equipment”All autos are vehicles, but not all vehicles are autos!
11COVERAGE FOR VEHICLES UNDER FL 00 20 Liability for farm vehicles under the CGL coverage form is essentially identical for farming operations as for other commercial operationsUnder the Farm Liability Coverage Form, however, the effort to provide personal liability coverage along with the coverage on farming operations creates coverage features that have no counterparts in the CGL
12e. Aircraft, Motor Vehicle, Motorized Bicycle or Tricycle Exclusion "Bodily injury" or "property damage"(1) Arising out of ownership, maintenance, use or entrustment to others of any aircraft, "motor vehicle," motorized bicycle or tricycle owned or operated by or rented or loaned to any "insured." Use includes operation and "loading or unloading”; or(2) Giving rise to vicarious liability, whether or not imposed by law, for the actions of a child or minor involving any aircraft, “motor vehicle”, motorized bicycle or tricycle.
13e. Aircraft, Motor Vehicle, Motorized Bicycle or Tricycle Exclusion This exclusion applies even if the claims against any “insured” allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of other by that “insured”, if the “occurrence” that caused the “bodily injury” or “property damage” involved the ownership, maintenance, use, or entrustment to others of any aircraft, “motor vehicle”, motorized bicycle or tricycle that is owned or operated by or rented or loaned to any “insured”.
14e. Aircraft, Motor Vehicle, Motorized Bicycle or Tricycle Exclusion The exclusion then recites four exceptions, making the exclusion inapplicable to certain situations.Before turning to an examination of the four exceptions to the exclusion, let us examine more closely the specific types of vehicles that are excluded.
15e. Aircraft, Motor Vehicle, Motorized Bicycle or Tricycle Exclusion The exclusion cites three types of vehicles as being excluded”“motor vehicles”motorized bicycles andmotorized tricyclesThere is also a fourth typerecreational motor vehicles are also excluded under certain circumstances.
1616. "Motor Vehicle“ - Definition a. As used in this Coverage Form, the term “motor vehicle" means: (1) A motorized land vehicle, trailer or semitrailer: (a) Designed for travel on public roads, or (b) Used on public roads; unless it qualifies as "mobile equipment"; (2) Any machinery or equipment attached to a vehicle, trailer or semitrailer included in Paragraph (1) above;
1716. "Motor Vehicle“ - Definition A motorized golf cart, except a golf cart described in Paragraph b.(3) below, snowmobile or other motorized land vehicle owned by an "insured" and designed for recreational use off public roads, while off an "insured location";Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged.
1816. "Motor Vehicle“ - Definition (5) Any vehicle, including any attached machinery or equipment, while being towed by or carried on a vehicle included in Paragraph (1), (2) or (3) or (4) above.
1916. "Motor Vehicle“ - Definition b. However, "motor vehicle" does not mean:(1) "Mobile equipment";(2) A boat, camp trailer, home trailer or utility trailer unless it is being towed by or carried on a motorized land vehicle included in a.(1) above; or
2016. "Motor Vehicle“ - Definition A motorized golf cart owned by an “insured”, designed to carry up to 4 persons, not built or modified after manufacture to exceed a speed of 25 miles per hour on level ground, and that at the time of an “occurrence” is within the legal boundaries of:(a) A golfing facility…(b) A private residential community…
2115. “Mobile Equipment” Definition 15. "Mobile equipment" means the following, including any attached machinery or equipment:a. Bulldozers, forklifts and tractors designed for use principally off public roads;Other farm machinery designed for use:(1) Principally off public roads; and(2) As implements for cultivating or harvesting;
2215. “Mobile Equipment” Definition b. Vehicles while on premises you own or rent; c. Vehicles that travel on crawler treads, except that snowmobiles are "mobile equipment" only while on an "insured location" or any premises you own or rent. d. Vehicles, whether self-propelled or not, on which are permanently mounted: (1) Power cranes, shovels, loaders, diggers or drills; or (2) Road construction or resurfacing equipment such as graders, scrapers or rollers;
2315. “Mobile Equipment” Definition e. Vehicles not described in Paragraphs a., b., c. or d. above that are not self‑propelled and are maintained primarily to provide mobility to permanently attached equipment of the following types:(1) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment; or(2) Cherry pickers and similar devices used to raise or lower workers;
2415. “Mobile Equipment” Definition f. Vehicles not described in Paragraphs a., b., c. or d. above that are maintained primarily for purposes other than the transportation of persons or cargo. However, self-propelled vehicles with the following types of permanently attached equipment are not "mobile equipment" but will be considered "motor vehicles":
2515. “Mobile Equipment” Definition (1) Equipment designed primarily for:(a) Road maintenance, but not construction or resurfacing; or(b) Street cleaning;(2) Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and(3) Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting and well servicing equipment.
2615. “Mobile Equipment” Definition However, “mobile equipment” does not include any land vehicles that are subject to a compulsory or financial responsibility or other motor vehicle insurance law where they are licensed or principally garaged. Land vehicles subject to compulsory or financial responsibility law or other motor vehicle insurance law are considered “motor vehicles”.
27Exceptions to Motor Vehicle Exclusion This exclusion does not apply to: (a) An aircraft that causes "bodily injury" or. “property damage" to a "residence employee" who is not operating or maintaining it; (b) Parking a "motor vehicle" or motorized bicycle or tricycle on, or on the ways next to, premises you own or rent, provided the "motor vehicle" is not owned by, or rented or loaned to you or the "insured";
28Exceptions to Motor Vehicle Exclusion A "motor vehicle" not subject to motor vehicle registration(i) by reason of its exclusive use as a device for assisting the handicapped; or(ii) Designed for recreational use off public roads and not owned by any “insured”;
29Exceptions to Motor Vehicle Exclusion d. “Bodily injury” or “property damage” arising out of: (i) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of “mobile equipment” if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged; or (ii) The operation of any of the machinery or equipment listed in Paragraph f.(2) or f.(3) of the definition of "mobile equipment" (Section IV);
30CPL Form EXCLUDESOwned & Nonowned “motor vehicles” on and away from the premisesOwned RMVs off-premisesMotorized bicycles and tricycles on and off premisesCPL COVERSMobile equipment on and off-premisesOwned RMV while on premisesNonowned RMVs on and off premises.CGL Form ExcludesOwned & Nonowned Motor Vehicles on and away from the premisesCGL Form COVERSMobile equipment on and off-premisesOwned RMV on an off premisesNonowned RMVs on and off premises.
31FL 04 74 All-Terrain Vehicle Coverage Added to the farm program in the 1994 revision.Covers liability arising out of specifically scheduled all-terrain vehicles described in the schedule.Vehicles that may be scheduled include those that are owned or operated by or rented or loaned to the “insured.”Note that unlike many other forms of vehicle coverage, there is no coverage provided for non-owned vehicles, unless they are specifically scheduled.
32Personal Auto Policy (PAP) Business Auto Coverage Form (BACF) FARM AUTO INSURANCEPersonal Auto Policy (PAP)Business Auto Coverage Form (BACF)
33Significant Provisions for Farm Risks PERSONAL AUTO POLICYSignificant Provisions for Farm RisksNamed Insured – can only be an individual or a married coupleCoverage for the employer under an employee’s policyAbsence of Employers’ NonownershipPollution LiabilityTrailers
34PERSONS INSURED - PAP“Insured” as used in this Part means: 1. You or any “family member” for the ownership, maintenance or use of any auto or “trailer.” 2. Any person using “your covered auto.” 3. For “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.
35“Insured” as used in this part means: 4. For any auto or “trailer,” other than “your covered auto,” any person or organization but only with respect to legal responsibility for acts or omissions of you or any family member for whom coverage is afforded under this Part. This provision (B.4.) applies only if the person or organization does not own or hire the auto or “trailer.”
361998 CHANGEThe definition of “you” is expanded to include a spouse who ceases to be a resident of the household.Intended to eliminate short-term gaps in coverage arising from changes in relationships that existed under earlier forms.Coverage is provided for a spouse who leaves the residence for 90 days after changing residency or until he or she obtains a separate policy, or until the policy period ends, whichever comes first.
37EXAMPLESProvision 3An employer becomes legally liable for the negligence of the named insured or a family member while operating the owned automobile.Jones is operating his own auto in the course of his employment and his employer is sued.Coverage applies to both Jones and to the employer.Provision 4An employer becomes legally liable for the negligence of the named insured or a family member while operating a nonowned automobile that is covered under the policy.Jones is operating Smith’s auto in the course of his employment and his employer is sued.Coverage applies to both Jones and to the employer, but not to Smith.
38ABSENCE OF EMPLOYERS' NONOWNERSHIP The principal exposure that is not covered by the PAP is liability arising out of autos owned by employees--Employers Nonownership Auto liability coverage.If the farm employee carries adequate auto liability insurance, the employee's coverage will extend to cover the employer-farm owner.In farming operations with employees, the PAP leaves an uninsured exposure that should be written under the Business Auto Coverage form.
39POLLUTION AND CONTRACTUAL EXCLUSIONS It is significant that the PAP does not contain either a contractual liability exclusion or a pollution liability exclusion.Although liability arising out of pollution is not excluded, some courts have held that government-mandated pollution cleanup costs are not “property damage” within the meaning of the term as used in the CGL.The same interpretation would likely apply to wording of the PAP.
40TRAILERSThe PAP definition of "Trailer" includes a vehicle designed to be pulled by a private passenger auto or a pick-up or van:I. "Trailer" means a vehicle designed to be pulled by a:1. Private passenger auto; or2. Pickup or van.It also means a farm wagon or farm implement while towed by a vehicle listed in 1. or 2. above.
41TRAILERSThe definition of "trailer" includes a farm wagon or farm implement, but only while towed by a private passenger auto, a pickup or van.any type of farm wagon or equipment—owned or non-owned—is covered under the PAP as a covered auto, as long as it is being pulled by a vehicle of the type designated.PAP does not automatically cover trailers when used with a truck other than a pickup or van.
42BAC FORM - COVERED AUTOS 1 Any Auto2 Owned Autos Only3 Owned Private Passenger Autos Only4 Owned Autos Other Than PP Autos Only5 Owned Autos Subject to no-fault6 Owned Autos Subject to Compulsory UM Law7 Specifically Described Autos8 Hired Autos OnlyNonowned Autos Only19 Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only
43HIRED AND NONOWNED AUTOS 8 = HIRED "AUTOS" ONLY. Only those "autos" you lease, hire, rent or borrow. This does not include any "auto" you lease, hire, rent, or borrow from any of your employees or partners or members of their households. 9 = NONOWNED "AUTOS" ONLY. Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your employees or partners or members of their households but only while used in your business or your personal affairs.
44TRAILERS AND MOBILE EQUIPMENT The definition of "Covered Auto" is modified by provision C of Section I, designated Certain Trailers, Mobile Equipment, and Temporary Substitute Autos.Coverage is automatically provided without charge for mobile equipment while being carried or towed by a covered automobile.Coverage is also automatically provided without charge for trailers with a load capacity of 2,000 pounds or less.Temporary substitute means a covered “auto” is out of service because of its breakdown, repair, servicing, “loss” or destruction
45TRAILERS AND MOBILE EQUIPMENT Trailers in excess of 2,000 pounds that are owned by the insured must be declared and listed at the inception of the policy.Nonowned trailers in excess of this capacity are covered automatically while being pulled by an owned auto.When pulled by a hired or nonowned auto, they are covered under the same symbol as the power unit (1, 8, or 9).Coverage on hired or borrowed trailers extends to the owner of the trailer.
46BACF PERSONS INSUREDThe broad definition of persons insured provides coverage for virtually anyone using a covered auto.The problem that sometimes arises is that not all autos that an insured might use will fall within the definition of “Covered Auto.”
4711. Pollution ExclusionThe BAC form Liability insuring agreement begins with the traditional wording that states:We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."
4811. Pollution ExclusionThe BAC form then goes on to add a unique insuring agreement to pay for some pollution costs:We will also pay all sums an "insured" legally must pay as a "covered pollution cost or expense" to which this insurance applies, caused by an "accident" and resulting form the ownership, maintenance or use of covered "autos."However, we will only pay for the "covered pollution cost or expense" if there is either bodily injury" or "property damage" to which this insurance applies that is caused by the same "accident."
49POLLUTION EXCLUSION11. POLLUTION. "Bodily injury" or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants":a. That are, or that are contained in any property that is(1) Being transported or towed by, handled, or handled for movement into, onto or from, the covered "auto";(2) Otherwise in the course of transit by or on behalf of the "insured"; or(3) Being stored, disposed of, treated or processed in or upon the covered "auto";
50POLLUTION EXCLUSIONThe major exception to the exclusion—found only in the auto forms—states that the pollution exclusion does not apply to fuels, lubricants, fluids, exhaust gases or other similar pollutants that are needed for or result from the normal electrical, hydraulic or mechanical functioning of the covered auto or its parts if(1) The pollutants escape, seep, migrate, or are discharged, dispersed or released directly from an "auto" part designed by its manufacturer to hold, store, receive, or dispose of such "pollutants“; and
51POLLUTION EXCLUSIONThe “bodily injury”, “property damage” or “covered pollution cost or expense” does not arise out of the operation of any equipment listed in Paragraphs 6.b. and 6.c. of the definition of “mobile equipment”.6.b. Cherry pickers and similar devices mounted on automobile or truck chassis and used to raise or lower workers; and6.c. Air compressors, pumps and generators, including spraying, welding, building cleaning, geophysical exploration, lighting or well-servicing equipment.
52POLLUTION EXCLUSIONCoverage is provided for pollution arising, for example, from leakage of fuel, lubricants, or other pollutants required for the normal operation of the auto, such as leakage of gas, oil, or antifreeze from the vehicle.The exception to the exclusion provides coverage not only for bodily injury or property damage arising out of the described type losses, but "covered pollution cost or expense" as well.
53POLLUTION EXCLUSIONPollution that results from cargo being carried by the insured vehicle is not covered by the cleanup provision.Coverage for pollution cleanup costs arising out of cargo being transported by the insured vehicle may be added to the policy by endorsementPollution Liability-Broadened Coverage for Covered Autos—Business Auto and Truckers Coverage Form (CA 99 48).
54BROADENING ENDORSEMENTS Instances arise in which an individual does not own a personal auto, and in which the only coverage available to a person is under the BAC form.The BAC may be endorsed to provide coverage for the use of nonowned vehicles by the named insured or family members usingthe Individual Named Insured endorsement (CA 99 17) orthe Drive Other Car Coverage - Broadened Coverage for Named Individuals endorsement (CA 99 10).
55BROADENING ENDORSEMENTS One of the most frequently asked questions about the Business Auto Coverage Form is when and why do you usethe Individual Named Insured endorsement (CA 99 17) as opposed tothe Drive Other Car - Broadened Coverage for Named Individuals (CA 99 10) endorsement.The endorsements differ with respect to the situations in which they are used, the persons covered, and the scope of their coverage.
56BROADENING ENDORSEMENTS Both endorsements are intended for individuals such as a company officer or business owner who does not personally own or insure any private passenger vehicles, and provide coverage for the individual’s personal use of nonowned autos.If the individual in question has a Personal Auto Policy, there is no need for either endorsement; coverage for nonowned automobiles is provided under the PAP.
57INDIVIDUAL NAMED INSURED ENDORSEMENT Originally, the answer to the question of when to use the INI endorsement and when to use the Drive Other Car Coverage endorsement depended on the form of business ownership.The Individual Named Insured endorsement was used when the business in question was organized as a sole proprietorship.In this case, the Individual Named Insured endorsement is a mandatory endorsement for sole proprietors according to ISO rules.
58INDIVIDUAL NAMED INSURED ENDORSEMENT Some underwriters interpret CLM manual rules to permit the use of the Individual Named Insured endorsement on a corporate policy that includes an individual as a named insured.Other underwriters limit the use of the Individual Named Insured endorsement (CA 99 17) to policies issued only to an individual or husband and wife.
59INDIVIDUAL NAMED INSURED ENDORSEMENT Coverage under the INI endorsement essentially follows the coverage of the Personal Auto Policy.Coverage is provided for business and nonbusiness use of non-owned private passenger type vehicles, pickups and vans by the named insured and resident relatives.Coverage also applies to nonowned commercial vehicles as long as they are not being used for business (e.g., when used for personal purposes such as a U-Haul to move personal effects).
60INDIVIDUAL NAMED INSURED ENDORSEMENT Significantly, endorsement CA specifically exempts vehicles of the "private passenger type" from the pollution exclusion. Provision 2.c. states:c. The POLLUTION Exclusion and, if forming a part of the policy, the NUCLEAR ENERGY LIABILITY EXCLUSION (BROAD FORM), does not apply to any covered "auto" of the "private passenger type.“The term "private passenger type" auto includes any covered auto owned by the insured of the pick-up or van type not used for business other than farming.
61INDIVIDUAL NAMED INSURED ENDORSEMENT In addition, the fellow employee exclusion of the BAC form to which the INI endorsement is attached does not apply to coverage under the INI endorsement.Coverage is provided for physical damage if at least one private passenger type vehicle is covered for physical damage in the underlying Business Auto Coverage form.
62BROADENED DRIVE-OTHER-CAR COVERAGE Drive-other-car coverage may be added to the BAC form for specifically named individuals, using the Drive Other Car Coverage - Broadened Coverage for Named Individuals endorsement (CA 99 10).A premium applies for each person named, and that person and his or her spouse residing in the same household is covered for the use of nonowned autos.The only restrictions are that the nonowned auto may not be owned by the named individual or by a member of his or her household, and the auto may not be used in the auto business.
63BROADENED DRIVE-OTHER-CAR COVERAGE Drive Other Car Coverage - Broadened Coverage for Named Individuals (DOC) endorsement (CA 99 10) does not delete or modifythe pollution orfellow employee exclusions.
64BROADENED DRIVE-OTHER-CAR COVERAGE The DOC endorsement (CA 99 10) differs from the INI endorsement with respect to the nonowned automobiles that it covers.Like the PAP, the INI endorsement (CA 99 17) does not cover business use of nonowned autos other than private passenger autos.Neither does the INI endorsement cover use of a nonowned auto owned by, furnished, or available for the regular use of the named insured or any resident relative.
65BROADENED DRIVE-OTHER-CAR COVERAGE The DOC endorsement excludes vehiclesowned by the named individual or by any family member.It does not exclude vehicles furnished for the regular use of the named insured.Neither does it exclude non-owned trucks used in business
66Broadened Drive-Other-Car Coverage Coverage under the stand-alone PAP may be broadened to cover automobiles furnished for the regular use of the named insured by the Extended Liability endorsement (PP 0306) to the PAP.for named individuals, the DOC endorsement provides coverage that is as broad as the stand-alone PAP that has been endorsed with the Extended Liability endorsement to provide coverage on vehicles furnished for regular use.
67= CA 99 10 CA 99 17 PP 03 06 Business Auto Coverage Form Personal Auto Policy=
68SITUATION FOR BOTH CA 99 10 AND CA 9917 Farmer insured under BAC FormOwns a private passenger auto (CA 99 10)Wife employed by local school district as a nurse and is furnished a school district vehicleTeen-age son and daughterWants DOC coverage for all members of the family (CA 99 17)Wife wants coverage while operating school district car furnished for regular use (PP 03 06)
69And they say auto insurance is the easiest thing to understand! SUMMARYAnd they say auto insurance is the easiest thing to understand!