And You Thought All Commercial Auto Policies Were The Same?
Time to take a few deep breaths before you read this Blog......
Most folks that buy commercial auto insurance look at the two most important items on the declarations page.
- How much premium?
- Are all of my vehicles listed on the policy, and do I have full coverage or liability on each unit?
After that, they tuck it away in the bottom of the file cabinet drawer and expect coverage to apply if they have a claim.
Now, wind the clock forward about six months from when the policy was purchased. It's a snowy winter day and one of your drivers just called and said he slid into a pole, damaged the power lines and then ran into a car with a few passengers in it.
You are a little angry because you just hired this guy a week ago and he's already had a claim. He was referred to you and had a great record, or so you thought. You then dig around in the personnel file and look for his record and licensing information. Thank goodness it's all in the file. Then reality sets in.....
Did I or didn't I call him into the insurance agency to get him added?
Then you remember hearing that, even though he may not be added, isn't there automatic coverage?
Maybe? Maybe not!
Take a look at the court case below that determined NO COVERAGE due to non notification to the carrier.
In the case of Telemundo Television Studios, LLC, Appellant, v. Aequicap Insurance Company the carrier had language in the policy that stated the following:
The Aequicap insurance policy had an endorsement that stated the following:
“No coverage will apply to any driver newly placed in service after this policy begins until you report that driver to us and we advise you in writing that he/she is acceptable to us and that he/she is covered under the policy. Coverage on any such driver newly placed in service will become effective as of the date and time we advise you that he/she is acceptable and that they are covered by the policy and not before…Only such drivers listed as of the [sic] date that this policy begins, on the schedule in the original application signed by you, and not otherwise excluded are covered as of the date this policy begins.”
Another endorsement on the policy stated the following:
“All additional drivers must be reported to the insurance company and approved prior to operation of any insured unit. A Motor Vehicle Report (MVR) will be ordered and reviewed and insured will be notified of the acceptability of additional drivers.”
Pretty clear language.
No payment. No payout. The insured was left on his own to cover the loss.
Moral of the story.....
Folks, I'm not saying all policies are designed this way, I'm just saying it's good to make sure you add a driver before your turn him/her loose with an 8,000 pound object in a snow storm.
Also, wouldn't you want to know, in advance, if the driver is going to potentially ruin your good track record of claims? Don't be hasty in throwing the keys at a new hire.
Our agency can check drivers for you in advance of hiring them.
Also, it's a good idea to have them bring their current record to the interview and check the court dockets for other problems that may hinder their ability to drive for you.
Drive safely!
Jeff Rosenkilde, Sr, CIC
Jeff Rosenkilde, Sr. CIC is a Certified Insurance Counselor with over thirty years of experience insuring small businesses in the Mid – Atlantic Area. His firm, Rosenkilde and Associates, insures over 4,000 policy holders and specializes in business insurance and risk transfer.