ISO has filed a new countrywide Personal Auto program in all jurisdictions except Hawaii, North Carolina, and Puerto Rico. The target effective date in most states is September 1, 2018. Some carriers may not adopt the change until later, but it is not uncommon for some carriers to adopt some or all of the changes prior to that date.
Almost a dozen changes are made to the policy itself, along with well over 40 endorsement changes, including over a dozen noneditorial changes. Understanding the impact of these changes prior to their adoption by carriers and in advance of 2018 renewals can give you a competitive advantage and reduce your E&O exposure.
Some of the policy changes involve incorporating exclusionary language for “car sharing” programs that currently exists in several endorsements. Another notable and DANGEROUS coverage reduction is that there is a restriction in time that insureds have for notice of the acquisition of replacement autos in order to continue liability, medical payments, and UM coverage. Being aware of these coverage restrictions is critical to minimizing your E&O exposure.
On the positive side, there are quite a few broadenings of coverage and new coverage endorsements. Being aware of these coverage improvements and options may give you a competitive advantage over other agents who are not aware of these sales opportunities.
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For example, a HUGE improvement is that the Named Nonowner endorsement can now be used to extend physical damage coverage to nonowned autos for individuals who do not themselves own an auto.
Another positive change, perhaps more of a clarification than a true broadening (although there are carriers and adjusters that might disagree) is that ISO is adding an express exception to the public or livery conveyance exclusion for the use of autos for “volunteer or charitable purposes.” To illustrate, the following is an “Ask an Expert” question that was submitted to the Big “I” Virtual University (VU) just three weeks ago:
We insure a non-profit organization that occasionally asks their employees to use their personal vehicles to provide rides for their clients to doctor's appointments, the grocery store, etc. They are all local rides. The client does NOT pay the employee for the ride; however, the employee receives a mileage reimbursement from the employer. We have advised the employer to have their employees check with their personal agents to make sure their PAP policy will respond in case of accident in this scenario.
We are receiving a wide variety of answers from the PAP carriers, from $100/month additional premium (I'm assuming to change from commute to business use) to the carrier wanting off of the risk, citing the 'livery' exclusion. We have liability for the employees’ vehicles covered by having non-owned liability as well as Employees as Insureds on the employer’s business auto policy.
I have researched your VU, and find that there is really no way for the employer to provide physical damage coverage for the employee's vehicles. I'm sure that our non-profit organization is not the only one having their employees do this type of driving activity. If the PAP carriers are excluding, or not wanting to write this exposure for the employees, how do we get this exposure covered?
We believe that a majority of courts only apply the public or livery conveyance exclusion to individuals who hold their autos out to the general public for hire, not to individuals working for a private employer where such service is provided to their customers, not the general public. For example, if you are a Big “I” member, you can access two articles on this:
However, case law varies by jurisdiction. In addition, many carriers use more restrictive language such as “transporting persons or property for a fee” or worse.
ISO now makes it clear, at least with regard to volunteer or charitable activities such as Meals-On-Wheels or transporting seniors to doctor appointments, that their new PAP clearly covers this exposure. This is not the case for many auto policies in the marketplace, again giving you a competitive advantage.
So, how can you find out what these changes are? On December 4, 2017, the legendary Chris Amrhein and I will be doing a 3-hour webinar that includes a detailed review of the new ISO Personal Auto program.
In addition, we are going to address a number of exposures, several of them potentially catastrophic, that are often overlooked, including rental cars, placing teenagers or other household residents on their own policies, kids who have autos or access to autos while away at college, street racing, when to drop physical damage coverage, etc.
We’ll also reveal almost two dozen differences between the ISO PAP and other auto policies in the marketplace, again giving you information that you can use for a competitive advantage.