1. 12 - 1Copyright 2008, The National Underwriter Company Business Automobile Insurance  What is it?  Business automobile insurance  Covers losses due to property damage and liability  May cover owned, nonowned, and hired autos  Liability protection  Pays sums insured owes as damages to third party because of property damage or bodily injury due to an auto accident  Insured owes duty to defend Chapter 12 Risk Management For Financial Planners

2. 12 - 2Copyright 2008, The National Underwriter Company  Physical damage protection  Covers actual direct physical damage to the covered auto  Business uses  Available as monoline policy or in a multiline or package policy  May be used by sole proprietors, partnerships, corporations, unincorporated associations, individuals, not-for-profits or government agencies Chapter 12 Risk Management For Financial Planners Business Automobile Insurance

3. 12 - 3Copyright 2008, The National Underwriter Company  Advantages  Allows businesses to comply with state financial responsibility laws  Financial institutions required that leased or financed vehicles be insured  Protects assets of business against third-party liability claims  Available to not-for-profit organizations  Insurers will handle claims  Cost of premiums may be lower than cost to defend or settle lawsuit  Premiums are deductible business expenses Chapter 12 Risk Management For Financial Planners Business Automobile Insurance

4. 12 - 4Copyright 2008, The National Underwriter Company  Disadvantages  Many exclusions and limitations apply  Policy limits are finite; reserves must still be set asside for uncovered losses  Premiums must be paid even if no claims ever made  Insured loses control of handling and defense of claims Chapter 12 Risk Management For Financial Planners Business Automobile Insurance

5. 12 - 5Copyright 2008, The National Underwriter Company  Design Features  ISO offers standard business auto coverage form  Policy Structure  Declarations Form  Endorsements  Insured, mailing address, policy period  Schedule of covered autos  Premiums, limits, deductibles  Liability Coverage  Insuring agreement  Description of who is an insured  Coverage extensions  Exclusions  Limit of insurance Chapter 12 Risk Management For Financial Planners Business Automobile Insurance

6. 12 - 6Copyright 2008, The National Underwriter Company  Design Features (cont’d)  Policy Structure (cont’d)  Physical damage coverage  Coverage agreements  Comprehensive coverage  Specified causes of loss  Collision coverage  Coverage extension  Exclusions  Limit of Insurance  Deductible Provision Chapter 12 Risk Management For Financial Planners Business Automobile Insurance

7. 12 - 7Copyright 2008, The National Underwriter Company  Design Features (cont’d)  Policy Structure (cont’d)  Conditions  Loss conditions – procedure for getting appraisal if the parties disagree on amount of loss  General conditions  Common policy conditions  Endorsements  Auto medical payments coverage  Uninsured/underinsured motorist coverage Chapter 12 Risk Management For Financial Planners Business Automobile Insurance

8. 12 - 8Copyright 2008, The National Underwriter Company  Legal Aspects  Fiscal responsibility and compulsory insurance laws  Financial responsibility laws  Compulsory automobile liability insurance  Unsatisfied judgment fund laws  Laws requiring uninsured motorist coverage  No-fault automobile laws Chapter 12 Risk Management For Financial Planners Business Automobile Insurance