Michael J. Carlson, Sr.,, Appellant,v.American International Group, Inc., et al., Respondents.BriefN.Y.October 18, 2017STATE OF NEW YORK COURT OF APPEALS MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of CLAUDIA D'AGOSTINO CARLSON, Deceased, and as Assignee of WILLIAM PORTER, Plaintiff-Appellant, vs. AMERICAN ALTERNATIVE INSURANCE CO., Defendant-Respondent, AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, And DHL EXPRESS (USA), INC., f/k/a DHL WORLDWIDE EXPRESS, INC., Defendants, MICHAEL J. CARLSON, SR., Individually and as Administrator of the Estate of CLAUDIA D'AGOSTINO CARLSON, and as Assignee of WILLIAM PORTER, Plaintiff-Appellant, vs. AMERICAN INTERNATIONAL GROUP, INC., AIG DOMESTIC CLAIMS, INC., AMERICAN ALTERNATIVE INSURANCE CO., NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, DHL EXPRESS (USA), INC., f/k/a DHL WORLDWIDE EXPRESS, INC., De fendants-Respondents. Niagara County Index No.: El 43033 / 2011 BRIEF OF AMICUS CURIAE NEW YORK STATE ACADEMY OF TRIAL LAWYERS Respectfully Submitted by: Counsel for Proposed Amicus Curiae OF COUNSEL: HANCOCK ESTABROOK, LLP Alan J. Pierce, Esq. 100 Madison St., Suite 1500 Syracuse, New York 13202 (315) 565-4500 NEW YORK STATE ACADEMY OF TRIAL LAWYERS Andrew Smiley, Esq., President 39 N Pearl St., #6 Albany, New York 12207 (518)364-4044 August 31, 2017 i{H3135385.1 > CORPORATE DISCLOSURE STATEMENT Proposed Amicus Curiae New York State Academy of Trial Lawyers (“the Academy”) hereby states, pursuant to Rule 500.1(f), that they have no parent corporations, subsidiaries or affiliates. I l {H3135385.1} TABLE OF CONTENTS Page iCORPORATE DISCLOSURE STATEMENT TABLE OF AUTHORITIES 11 INTERESTS OF THE AMICUS CURIAE, 1 .2PRELIMINARY STATEMENT. ARGUMENT POINT I: THE APPELLATE DIVISION’S HOLDING THAT AAIC’S POLICY WAS NOT “ISSUED OR DELIVERED IN THIS STATE” UNDER CPLR § 3420 BASED ON AN EXTREMELY NARROW READING OF THE STATUTE VIOLATES THE WELL-ESTABLISHED AND SIGNIFICANT NEW YORK PUBLIC POLICY UNDERLYING NEW YORK’S FINANCIAL RESPONSIBILITY LAWS .3 I POINT II: THE INSURERS HAVE NOT CONCLUSIVELY ESTABLISHED BY DOCUMENTARY EVIDENCE THAT THE TRUCK IN QUESTION IS NOT COVERED BY THEIR POLICIES’ “HIRED AUTO” COVERAGE PROVISION 12 21CONCLUSION {H3135385.1} TABLE OF AUTHORITIES Page CASES Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 NY3d 616 (2016) 1 American Ref— Fuel Co. of Hempsteadv. Employers Ins. Co. of Wausau, 265 AD2d 49 (2000) .8 Carlson v. American Int 7 Grp., Inc., 130 AD3d 1477 (2015), Iv denied 132 AD3d 1331 (2015), Iv granted 26 NY3d 918 (2016), reargument granted 29 NY3d 962 (2017) passim Carlson v. American Int’l Grp., Inc., 130 AD3d 1479 (2015), Iv denied 132 AD3d 1331 (2015), Iv granted 26 NY3d 918 (2016), reargument granted 29 NY3d 962 (2017) passim Coleman v. New Amsterdam Cas. Co., 247 NY 271 (1928) .6 Columbia Casualty Co. v. National Emergency Servs., Inc., 282 AD2d 346 (2001) .7 Connecticut Indem. Co. v. Hines, 40 AD3d 903 (2007) .5 Dairylea Co-op., Inc. v. Rossal, 64 NY2d 1 (1984) 15 Day v. One Beacon Ins., 21 NY3d 985 (2013) 2 Hanover Ins. Co. v. Connor, 232 AD2d 925 (1996) .5 Jonathan Neil & Assocs., Inc. v. Jones, 94 P.3d 1055 (Cal Sup Ct 2004), as modified (Oct. 20, 2004) 18 Lang v. Hanover, 3 NY3d 350 (2004) .6 Newcomb v. Middle Country Cent. Sch. Dist., 28 NY3d 455 (2016), reargument denied, 29 NY3d 963 (2017) .2 {H3135385.1} Pink v. Rome Youth Hockey Ass'n, Inc., 28 NY3d 994 (2016) 1 Preserver Ins. Co. v Ryba, 10NY3d635 (2008) passim Randazzo v. Cunningham, 56 AD2d 702 (1977), aff’d 43 NY2d 937 (1978) .4 Rosado v. Eveready Ins. Co., 34 NY2d 43 (1974) .6 STATUTES CPLR 3420 passim 2008 Sess. Law, ch. 388 passim I {H3135385.1} INTERESTS OF THE AMICUS CURIAE As stated on its website (https://trialacademy.org), the mission of the New York State Academy of Trial Lawyers is to maintain a strong commitment to protect, preserve and enhance the civil justice system. The Academy’s membership consists of plaintiff and defense attorneys, members of the judiciary, government employees, law professors, law clerks, law secretaries, paralegals and law students, each benefiting from the Academy’s comprehensive approach toward advancing our profession while embracing the core values of our legal system. The Academy's diverse membership base and strong grassroots network allow us to advocate on a wide array of legislative and political matters. To achieve its Mission, the Academy is an accredited provider in New York of Continuing Legal Education (CLE) programs, and provides same free to all of its members. In addition, the Academy provides members with Weekly Department Updates via email, which review, summarize and hyperlink the most important cases of relevance to our members from each of New York’s four Appellate Divisions each month. As attorneys, we believe it is our collective responsibility to work to protect, preserve and enhance the civil justice system. The Academy has been an amicus curiae in this Court and in other courts in New York. See, e.g., Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 27 NY3d 616 (2016); Pink v. Rome Youth Hockey Ass'n, Inc., 28 NY3d 994 (2016); 1{H3135385.1} Newcomb v. Middle Country Cent. Sch. Dist., 28 NY3d 455 (2016), reargument denied, 29 NY3d 963 (2017); Day v. One Beacon Ins., 21 NY3d 985 (2013). In addition to participating as an amicus curiae in litigation, the Academy employs full-time professional lobbyists who are available to its members and provide a strong presence in the state Legislature on a wide variety of issues impacting the civil justice system. PRELIMINARY STATEMENT The Academy submits this Brief on this appeal because of the presence of questions of law which are of critical importance to its Officers, Board, and members. Moreover, this Court requested amicus participation on this appeal in the following Notice to the Bar on April 4, 2017: Notice to the Bar - Amicus Curiae Participation On March 28, 2017, the Court of Appeals heard oral argument in Carlson v American International Group, Inc. By order dated April 4, 2017, the Court has directed the case to be reargued. The Court invites amicus curiae participation from those qualified and interested. The appeal involves an insurance action to collect an unpaid judgment arising from an underlying wrongful death action as a result of a motor vehicle accident. The Appellate Division (130 AD3d 1477 [2015]; 130 AD3d 1479 [2015]) held that American International Group, Inc. did not “issue or deliver” an insurance policy in New York, thus precluding plaintiff from bringing suit against AAIC under Insurance Law § 3420(A)(2). The appeal also presents the issue of whether defendant DHL Express (USA), Inc. hired the vehicle 2{H3135385.1} involved in the motor vehicle accident, thereby implicating DHL’s hired auto insurance coverage. Amicus motions must comply with section 500.23 of the Rules of the Court of Appeals. The Court’s Rules and access to the parties’ briefs and record material through the Court-PASS system is available on the Court’s website at: www.courts.state.ny.us/ctapps. We respectfully submit that this Amicus Curiae Brief by the Academy provides special assistance to this Court by offering the broad perspective and practical real-life experience of the Academy and its members on the legal issues raised in this case and on which this Court requested amicus participation. The accompanying Brief is the product of the collective experience and expertise of the members of the Academy and consequently satisfies the standard for granting leave to file a brief as amicus curiae pursuant to Rule 500.23(a)(4)(h) and (iii) of this Court. I 3{H3135385.1} ARGUMENT POINT I THE APPELLATE DIVISION’S HOLDING THAT AAIC’S POLICY WAS NOT “ISSUED OR DELIVERED IN THIS STATE” UNDER CPLR § 3420 BASED ON AN EXTREMELY NARROW READING OF THE STATUTE VIOLATES THE WELL-ESTABLISHED AND SIGNIFICANT NEW YORK PUBLIC POLICY UNDERLYING NEW YORK’S FINANCIAL RESPONSIBILITY LAWS As this Court’s Notice to the Bar noted, the Fourth Department held that AAIC’s policy was not “issued or delivered in this state” within the meaning of Ins. Law § 3420(a)(2), thus precluding Carlson from bringing suit against AAIC in New York. Carlson v. American Int’l Grp., Inc., 130 AD3d 1477 (2015), Iv denied 132 AD3d 1331 (2015), Iv granted 26 NY3d 918 (2016), reargument granted 29 NY3d 962 (2017). The Appellate Division’s holding must be reversed because the Fourth Department’s narrow reading of the direct action statute of § 3420(a) is not required by existing law and is directly inconsistent with- and devastating to- the well-established and significant public policy underlying New York’s financial responsibility laws for vehicle operators in New York. See, e.g., Randazzo v. Cunningham, 56 AD2d 702, 702 (1977), affd 43 NY2d 937 (1978) (“The exclusionary clause fails to require the existence of other insurance sufficient to 4{H3135385.1 > meet the minimum standards of coverage established by our financial responsibility laws and is therefore violative of this state’s public policy ***.) It is undisputed that the direct action statute in § 3420(a) is part of the well- established matrix of laws that make up New York’s financial responsibility laws. In fact, New York courts refer to Section 3420 as “the financial responsibility law.” Connecticut Indem. Co. v. Hines, 40 AD3d 903, 905 (2007) (“Since the savings clause provides for coverage up to the minimum amounts required by the financial responsibility law (see Insurance Law f 3420\f\\\} ) ***.) (emphasis supplied); Hanover Ins. Co. v. Connor, 232 AD2d 925, 927-928 (1996) (“the policy issued by plaintiff affords the minimum coverage prescribed by our financial responsibility laws (see, Vehicle and Traffic Law § 388[4]; Insurance Law § 3420[f][l] ***.). Therefore, section 3420(a) must be read broadly so as not to undermine the interests that the financial responsibility laws were intended to protect, i.e., ensuring that New York injured motorists - like the Carlson family - have access to insurance coverage. Here, the policies issued to DHL included specific endorsements intended to comply with New York’s financial responsibility laws. (R 568, 577-581, 646-649, 662, 782-785, 804-808, 846). Thus, both the primary policy and the “follow-form” excess policy that sits above it contemplated coverage for risks the insureds were creating in New York. 5{H3135385.1} Well-established and historical case law explains that New York’s financial responsibility laws were intended to protect third-parties from under/uninsured motorists so that an injured person is not left without the ability to recover following a motor vehicle accident. For example, in Lang v. Hanover, 3 NY3d 350 (2004), this Court noted that in 1917 the Legislature enacted the predecessor to section 3420 to remedy the inequity of the common law rule that “an injured person possessed no cause of action against the insurer of the tortfeasor” by creating a “statutory cause of action on behalf of injured parties directly against insurers.” Id. at 354-355, citing and quoting Coleman v New Amsterdam Cas. Co., 247 NY 271, 275 (1928) (Cardozo, CJ). Years earlier, this Court wrote that “Section 109 of the Insurance Law of 1909 (now section 167 [which is now section 34201) had as its purpose the protection of injured plaintiffs {Jackson v. Citizens Cas. Co., 277 NY 385, 390). This objective is furthered by article 6 of the Vehicle and Traffic Law, known as the ‘Motor Vehicle Financial Security Act.’ It is the public policy of New York to protect the innocent victims of traffic accidents (Vehicle and Traffic Law, sec 310, 370).” Rosado v. Eveready Ins. Co., 34 NY2d 43, 48 (1974). As noted in Rosado, in enacting Article 6 of the Vehicle and Traffic Law in 1959 New York’s Legislature declared in section 310 as follows: 310. Short title and declaration of purpose. 6{H3135385.1} (1) This article shall be known and may be cited as the “Motor Vehicle Financial Security Act.” (2) Declaration of purpose. The legislature is concerned over the rising toll of motor vehicle accidents and the suffering and loss thereby inflicted. The legislature determines that it is a matter of grave concern that motorists shall be financially able to respond in damages for their negligent acts, so that innocent victims of motor vehicle accidents may be recompensed for the injury and financial loss inflicted upon them. Here, the parties agreed in the Appellate Division that the critical language in Ins. Law § 3420(a)(2) whether AAIC’s policy was “issued or delivered in this state” is governed by this Court’s interpretation of the much more limited pre-2008 language “delivered or issued for delivery in this state” in Ins. Law § 3420(d) in Preserver Ins. Co. v Ryba, 10 NY3d 635 (2008). In Preserver, this Court held that “[a] policy is ‘issued for delivery’ in New York if it covers both insureds and risks located in this state.” Id. at 642. Logically, and for public policy reasons, this Court should now apply the Preserver standard - which interpreted the more restricted language of the pre- 2008 amendment to Section 3420(d) - to the language of Section 3420(a). Sound policy requires the holding that a policy is “issued or delivered” in New York, so as to render an insurer subject to direct suit here, if the policy “covers both insureds and risks located in this state.” Id. The “insureds-and-risks-located-in-this-state” test preceded Preserver. Indeed, Preserver cited and relied on Columbia Casualty Co. v. National 7{H3135385.1} Emergency Servs., Inc., 282 AD2d 346 (2001), and American Ref-Fuel Co. of Hempstead v. Employers Ins. Co. of Wausau, 265 AD2d 49, 53 (2000). Columbia Casualty stated and applied the same “insureds-and-risks-located-in-this-state” test to facts similar to those in the present case and explained: We reject [the insurer’s] claim that the timely disclaimer provision is inapplicable in this case merely because the policy in question was issued out of State and listed the address of the insured's corporate headquarters out of State. The policy expressly covers insureds and risks located in New York and must therefore be deemed issued for delivery in New York (see American Ref-Fuel Co. v Employers Ins. Co., 265 AD2d49, 53). Id. at 347 (emphasis supplied); see American Ref-Fuel, 265 AD2d at 53 (“the location of the insured and the risk to be insured are determinative”). It is undisputed in this case that DHL is “located in” New York with a substantial business presence, that it creates “risks” in New York, and has been engaged in substantial litigation over its activities in New York such that it falls clearly within this Court’s Preserver definition. See, e.g., State ex rel. Grupp v. DHL Express (USA), Inc., 19 NY3d 278 (2012), aff’g 83 AD3d 1450 (2011); Grewal v. DHL Exp. (USA), Inc., 149 AD3d 450 (2017); Avail Shipping, Inc. v. DHL Exp. (USA), Inc., 119 AD3d 433 (2014); Allan v. DHL Exp. (USA), Inc., 99 AD3d 828 (2012); 2470 Cadillac Resources, Inc. v. DHL Exp. (USA), Inc., 84 AD3d 697 (2011), Iv dismissed 18 NY3d 921 (2012), subsequent appeal 115 AD3d 582 (2014), subsequent appeal 129 AD3d 527 (2015); Kings Choice 8{H3135385.1} Neckwear, Inc. v. DHL Airways, Inc., 41 AD3d 117 (2007); Claim of Marigliano, 248 AD2d 782 (1998); Disla v. DHL Airways, Inc., 219 AD2d 612, Iv denied 87 NY2d 805 (1995). DHL has offices in New York City (several locations), Hicksville, Mount Vernon, Flushing, Springfield Gardens, Brooklyn, Hauppauge, Jamaica, and the Bronx among other locations in New York. Simply put, AAIC’s policy was “issued or delivered” to DHL in New York because AAIC “issued or delivered” coverage to an insured which is located and creates risks here. There is no public policy reason for exempting AAIC, and other similarly situated insurers, from having to answer directly in New York courts to the New York motor vehicle tort victims of their insureds who have a significant New York presence. AAIC knew DHL had a significant presence in New York and created substantial risks here. AAIC collected premiums to insure that risk. Under Section 3420(a), AAIC should be subject to suit here. Section 3420 was amended in 2008 to expand the rights of policyholders against insurance companies in New York. See 2008 Sess. Law, ch. 388 (S.8610) The purpose of the amendment was to: (1) amend CPLR 3001 to allow a claimant in a personal injury or wrongful death action to maintain a declaratory judgment action directly against the insurer of a defendant in the action where such insurer has disclaimed coverage on the grounds of late notice; and (2) to replace New I 9{H3135385.1} York’s outdated “no prejudice” rule for challenging an insurer’s claim of late notice of an accident with a “prejudice” standard. In addition, in order to make the statute uniform, the Legislature substituted the “issued or delivered in this state” language found in subsections (a), (e), and (f)(5) in subsection (d) in place of “delivered or issued for delivery in this state.” No substantive change in law was intended in these provisions and there is no mention of Preserver in the Bill Jacket. The amendment of Section 3420 was not intended to, and should not strip away, the protections afforded by the Preserver test. Preserver was correctly decided. The post-Preserver statutory amendment did not affect the Preserver standard which this Court applied to subdivision (d) of Section 3420. The Preserver test should now be applied to control when an insurer is subject to direct suit in New York under subdivision (a) of the same statute. Moreover, it is undisputed that the 2008 amendments were intended to expand coverage opportunities for New York policyholders and tort victims, both procedurally and substantively. Thus, it is incomprehensible how the Appellate Division could seize on one “cosmetic” change in the amendments to restrict and limit the rights of New York tort victims - like the Carlson family - to seek coverage from insurers when that right clearly existed before the 2008 amendments. 10{H3135385.1} The test adopted by the Appellate Division in this case should be rejected. To hold, as the Fourth Department did, that the analysis should be controlled simply by the mailing address to which the paper copy of the insurance policy was sent, would allow a superficial approach to eviscerate the public policy purpose of the statute. The Appellate Division approach should be shunned in favor of the Preserver standard, which accomplishes the statute’s public policy purpose. Finally, as the Appellant’s Brief correctly notes (at 88-89), the Fourth Department’s restrictive coverage decision will have at least two significant and detrimental public policy ramifications that conflict with New York’s financial responsibility laws, including section 3420(a): the decision deprives New York tort victims of the benefit of a direct1. action in any case where an insurance policy is issued by an out-of-state insurer and is delivered to an out-of-state office of its insured, regardless of whether the insured has significant business locations and operations in New York and creates substantial risks here. This ruling encourages insurers to avoid locating their own offices in New York (scaring business away from this State), and to always deliver their policies to an office of their insured located outside of the State; and in cases involving multiple insurers (like this case), if one of the2. insurers is able to avoid a section 3420 claim, the plaintiff or the insured will have to bring multiple actions in multiple jurisdictions to collect amounts the insurers 11{H3 1 35385. 1 } are obligated to pay. Requiring multiple lawsuits to recover for a single claim from the same risk the insured created in New York clearly undermines the goals of section 3420. Accordingly, the order granting AAIC’s CPLR 3211 motion to dismiss should be reversed. POINT II THE INSURERS HAVE NOT CONCLUSIVELY ESTABLISHED BY DOCUMENTARY EVIDENCE THAT THE TRUCK IN QUESTION IS NOT COVERED BY THEIR POLICIES’ “HIRED AUTO” COVERAGE PROVISION In this case the Appellate Division held that in order for the MVP vehicle driven by Porter to be deemed a vehicle “hired” by DHL, there must be a showing that DHL exercised control over the vehicle, and not general control over MVP *** There is a “distinction between hiring a company that provides transportation and hiring a truck” (Toops [v. Gulf Coast Mar. Inc.], 72 F3d [483,] 487 [1996]). Carlson v. American Int’l Grp., Inc., 130 AD3d 1479, 1480-1481 (2015), Iv denied 132 AD3d 1331 (2015), Iv granted 26 NY3d 918 (2016), reargument granted 29 NY3d 962 (2017). Unfortunately, the Appellate Division and the Insurers rely on the “general rule” applicable to “independent contractors,” rather than the actual facts of this case and the insurance industry standards for commercial auto insurance policies 12{H3135385.1} concerning “hired auto” coverage when a delivery company - like DHL - contracts with a local or regional trucking company - like MVP - to completely perform DHL’s services and DHL “hires” MVP’s fleet of vehicles rather than one vehicle at a time. The Academy completely agrees with Appellant’s argument regarding “hired auto” and hereby adopts it. Without unnecessarily repeating that argument, Appellant has made a compelling showing that the Insurers have not demonstrated conclusively by documentary evidence, as they must on a motion to dismiss, that the truck involved in the accident is not covered by their policies’ “hired auto” coverage provision. Carlson’s showing includes: The Insurers failure to produce the “cost-of-hire schedule” that is part1. of the insurance policy - and therefore not “extrinsic evidence” - and which the policy states is “ON FILE WITH THE COMPANY” (R526, 1812), which would show whether the MVP truck in question (or its entire fleet) was covered as a “hired auto”; Significant underwriting evidence that DHL and the Insurers intended2. that MVP’s fleet of trucks be insured as hired autos under DHL’s policies; 1 In addition to all of the emails, notes, and worksheets included in the Underwriting file that the Insurers did produce, this evidence includes: (1) that AIG Senior Vice President Robert Osborne required that “hired auto” coverage be written into DHL’s policy (R 1979); and (2) the admissions of AIG Underwriter Barry Flynn that contractors like MVP were to be covered under DHL’s policy. 13{H3135385.1} Because MVP only had $1 million in coverage, hired auto coverage3. under DHL’s primary and excess policies was required for compliance with Federal law requiring $5 million in coverage where, as here, MVP was transporting hazardous materials; The unrebutted expert affidavits of Carolyn Miller (R1947-1971,4. 2070-2079) that the MVP fleet of vehicles - including the one involved in the Carlson accident - were covered under the “hired auto” provisions of DHL’s policies because “there simply would be no need to assess the risks and underlying insurance coverage for the [MVP] vehicles if they were not covered as ‘hired autos’ under the insurance policies,” which the Insurers did here, and they collected substantial premiums from DHL for “hired auto” coverage; and Undisputed evidence that MVP and its trucks were strictly controlled5. by DHL. As noted above the Appellate Division and the Insurers have gotten sidelined by the use of the term “independent contractor” to describe MVP’s status vis-a-vis DHL. See Carlson, 130 AD3d at 1481 (court refers to MVP as an “independent contractor three times). This in turn has led both to rely on the (“[W]e have included the non-owned [thus “hired”] exposure of independents driving their own vehicle. In addition all independents are required to carry $1 million in limits which would increase the umbrella attachment point for such vehicle.” [R 1616-1617, 2008, 2013]). 14{H3135385.1} “general rule” applicable to truly “independent” contractors in the cases cited by both, including this Court’s decision in Dairylea Co-op., Inc. v. Rossal, 64 NY2d 1 (1984). The actual facts of this case - as reflected in Carlson’s Record proof discussed above - comports with the established insurance industry standards for commercial auto insurance policies concerning “hired auto” coverage when a delivery company - like DHL - contracts with a “ subhauler” - like MVP - to completely perform DHL’s services and DHL “hires” MVP’s fleet of vehicles rather than one vehicle at a time. Insurance industry applications for “hired and non-owned auto” coverage abound on the internet. Several are attached in the Appendix to this Brief for the | benefit of the Court and the parties, along with two articles that discuss and explain “hired auto” coverage in commercial auto policies.2 These applications and ! articles, widely available on the internet, are properly available for the Court’s ! consideration. See Hutter, Judicial Notice Of Website Information; Evidence, I New York Law Journal, June 2, 2016. They demonstrate quite clearly why Carlson asserts that the “cost-of-hire schedule” that is part of the Policies at issue here is critical and why the Insurers’ failure to produce it dooms their motions to dismiss on the “hired auto” issue. 2 Citations to “A_” refers to pages in the Appendix to this Brief. 15{H3135385.1} There are minor differences in the widely available applications, but all contain the same basic questions and criteria. Notably, the applications treat “subhaulers” differently from “independent contractors.” The hired auto applications have questions about “sub-haulers,” and for sub-haulers the applicant - like DHL here - must provide both (1) “cost of hire” information, and (2) the contractor agreements. Unlike “subhaulers,” cost of hire information is not requested for “independent contractors.” For example, the National Casualty Company “Hired and Non-Owned Automobile Supplemental Application” distinguishes between “independent contractors” (line 3) and “sub-haulers” (line 5) and, unlike independent contractors, “cost of hire” information is required for sub-haulers. (Al) The same is true for the ‘hired auto” applications of Surplus Insurance Brokers Agency (A5), General Star (A9), Global Hawk Insurance Company (A13 [lines 16-17]), Diamond State Group (A15), and Interstate Insurance Underwriters, LLC (A18 [line 2]). In fact, General Star’s application specifically has categories for the applicant to check off for “Couriers, Express messengers” and “Truckers and freight forwarders,” and inquires whether the applicant is “affiliated with any other Corporations for which HNOA [hired non-owned auto] Coverage is requested.” (A10, All) 16{H3 1 35385. 1 } The significance of these applications is reflected in the attached article and chapter. Thus, Chapter 4 of Verisk’s “Commercial Auto Overview,” which is entitled “How to Classify Non-Owned and Hired Automobiles,” states that “[qjuite often, businesses find it necessary to hire, borrow or lease vehicles, for use in their operations. These situations call for special handling by the underwriter, agent and auditor when determining premium charge. Two such situations are the treatment of 1) Non-Owned autos and 2) Hired Autos.” (A20, A22) It further provides: Hired Automobiles includes automobiles that are leased, hired, rented, or borrowed by the named insured, except if done so from any employee, partner, or members of their households. The policy includes Hired Auto information in the Schedule of Hired or Borrowed Covered Auto Coverage and Premium section of Item Four. Coverage can be on an excess or a primary basis. The schedule lists by state the estimated Cost of Hire, rates, and premium. Coverage is activated by Coverage Symbol 8 ***. (A20, 23) (emphasis supplied) Similarly, the Educational Bulletin/article entitled Hired and Non-Owned Auto Coverages (Marks and Bancroft May 31, 2007) explains that with respect to “hired auto” coverage “there is a cost of hire that often disguises itself as ‘Sub-i Contractor’ cost. The insured will have costs coded to subcontractor or vendor accounts that are actually hired auto exposures. These would be companies that haul material ***.” (A27) If MVP is a “sub-hauler” -as clearly appears to be the case here- this corroborates Carlson’s argument for why the underwriters were gathering cost of hire and contractor agreements when underwriting DHL’s coverage. It would also 17{H3135385.1} ratify that the Insurers’ non-disclosure of the cost-of-hire schedule is critical given the motion-to-dismiss posture of the case. On its face, “sub-hauler” as used in these applications and articles appears to be the perfect description of what MVP was in relation to DHL. The reference to “sub-hauler” in the hired auto applications, and the requirement that the insured provide the insured with both the “cost of hire” and the contract for each sub¬ hauler appears to join two arguments Carlson has made on this appeal: This case is different from those relied on by the Appellate Division1. and the Insurers where no coverage was found because in this case DHL is in the delivery business and hired MVP to do DHL’s job; and The Court needs to see - and the Insurers have not produced - the2. “cost of hire schedule” to determine if the MVP fleet of vehicles are covered as “hired autos” under DHL’s policy. In other words, without using the term “sub¬ hauler” Carlson has been arguing that because MVP was a sub-hauler it may be and likely is among the class covered by the cost of hire schedule. Thus, these articles and insurance industry-wide applications for “hired auto” coverage clearly support Carlson’s hired auto argument that this case. The term “sub-hauler” is not found frequently in cases on Westlaw, but there are numerous decisions from California that involve this term in the commercial auto industry. For example, Jonathan Neil & Assocs., Inc. v. Jones, 94 P.3d 1055, 1058 18I {H3135385.1} (Cal Sup Ct 2004), as modified (Oct. 20, 2004), involved different legal issues than in this case, but its discussion of “sub-haulers” under the California Automobile Assigned Risk Plan (“CAARP”) for defendant trucking company provides an excellent back drop to how DHL’s hired auto coverage in the Insurers’ policies in this case provide coverage for MVP’s vehicles, with the premium under DHL’s policy being “based on the cost of hiring the sub-hauler [MVP].” Id. at 1061. In Jonathan the trucking company participated in CAARP, a statutorily created program governed by the Insurance Commissioner designed to make automobile liability insurance available to those unable to obtain insurance through ordinary methods. After a premium billing dispute with the plaintiff, which was its serving agency (insurer), which was hired by CAARP, the trucking company defended the plaintiffs collection action and filed a cross-complaint against it alleging that it had retroactively and knowingly charged it a substantially higher premium than was actually owed. Id. at 1058. In addressing the legal issues, the California Supreme Court wrote the following explanation of the CAARP coverage: The CAARP is run according to rules promulgated by the DOI and contained in the California Automobile Assigned Risk Plan Manual of Rules and Rates. the manual (rule 23), which governs the premiums assessed to truckers for their use of independent truckers, or subhaulers. In general, insured truckers’ premiums are determined by the number of trucks they own and operate. But the California Public Utilities Commission (PUC), which at the time this controversy arose Of particular relevance is rule 23 ofI 19{H3135385.1} regulated truckers such as the Joneses, required these subhaulers to have their own PUC certificates of authority and their own liability insurance. The Joneses made extensive use of subhaulers, paving out over half their annual gross receipts to them. The testimony indicated that California was somewhat unique in issuing PUC certificates directly to subhaulers, with the attendant requirement that the subhauler have its own insurance. In other states, accordins to the testimony, only the primary trucking company had insurance and the hired carriers were covered under that insurance. In its original form, California’s rule 23 incorporated the generic, nationwide rule resulting in uncertainty concerning the way the rule applied in California. Rule 23 was rewritten by the DOI after a two-year period of study and consultation with the insurance industry. The revised rule, tailored to the California situation, specifically applied to exposure based on a Usubhaulins asreement involvins the haulins of soods on behalf of an insured trucker by a hired carrier The revised rule recognized that in some circumstances the primary trucker’s insurance [like DHL here] would be called upon only to provide excess coverage if a claim exceeded the limits of liability of the subhauler's insurance, thereby justifyins substantially lower premiums. The revised rule also modified the otherwise applicable premium. Although the premium was based on the cost of hirins the subhaulers, as had been the case under the original rule 23, the base multiplier was reduced from .0033 to 0011. The revised rule required that “the total cost of hirins” would be calculated on the basis that each subhauler's vehicle was hired for a minimum of $60,000 of work per year. Id. at 1059-1061 (emphasis supplied). In summary, because this is a motion to dismiss the burden was on the Insurers to conclusively establish that there is no “hired auto” coverage for the 20{H3135385.1} MVP truck at issue. Their simple failure to produce the “cost of hire schedule” part of the policy should end their motions. The discussion herein of the requirement for “cost of hire” information in the context of sub-haulers demonstrates that what Carlson is arguing here is correct. Insurance companies like the Insurers here market “hired auto” coverage for the exact scenario presented here and collect substantial premiums for this coverage. This Court should not allow insurance companies like National Union and AAIC to dodge the very risk they insured and received payment for when the risk bears fruit and an innocent tort victim is harmed. Carlson has, at a minimum, presented sufficient evidence to defeat the motions to dismiss on this basis. CONCLUSION For all of the foregoing reasons, we respectfully request that this Court issue an Order reversing the Order of the Appellate Division and granting summary judgment to Plaintiffs, together with such other and further relief as to the Court seems just and equitable. Respectfully Submitted by:Dated: August 31, 2017 New York State Academy of Trial Lawyers Andrew Smiley, President 39 N Pearl St., #6 Albany, New York 12207 (518)364-4044 21{H3135385.1} OF COUNSEL-. HANCOCK ESTABROOK, LLP AABy: Alan J. Pierqe, Esq. 100 Madison St., Suite 1500 Syracuse, New York 13202 (315) 565-4500 COUNSEL FOR AMICUS CURIAE 22{H3135385.1} APPENDIX {H3135385.1} 0 National Casualty Company Home Office: Madison, Wisconsin Adm. Office: 8877 North Gainey Center Drive Scottsdale, Arizona 85258 0 Scottsdale Indemnity Company Home Office: One Nationwide Plaza Columbus, Ohio 43215 Adm. Office: 8877 North Gainey Center Drive Scottsdale, Arizona 85258 0 Scottsdale Surplus Lines Insurance Company Adm. Office: 8877 North Gainey Center Drive Scottsdale, Arizona 85258 O Scottsdale Insurance Company Home Office: One Nationwide Plaza Columbus, Ohio 43215 Adm. Office: 8877 North Gainey Center Drive Scottsdale, Arizona 85258 i 1-800-423-7675 •Fax (480) 483-6752 HIRED AND NON-OWNED AUTOMOBILE SUPPLEMENTAL APPLICATION Name of Applicant: D/B/A: Street Address: Agent Name: Address: Agent No.:P.O. Mailing Address:*, PROPOSED EFFECTIVE DATE; From 12:01 A.M., Standard Time, at the address ot the Applicant. Phone.Number: ( )_ FEIN/Social Security/Soundex No.: Website: _ _ TO J PLEASE ANSWER ALL QUESTIONS— IF-THEY DO NOT APPLY, INDICATE "NOT APPLICABLE.” HIRED AUTO INFORMATION— Coverage Subject to Audit 1. Why is hired auto coverage being requested? 1. Do you lease, hire, rent or borrow any vehicles from others? . What is the average term of the lease?_;_ Is there a written agreement? Does it include a Hold Harmless agreement and/or Additional Insured clause? Provide a copy of the agreement. 3. Do you hire independent contractors? If yes, do you require certificates of insurance? Provide a copy of the contract. 4. If owner/operators are leased, will they be scheduled on your policy? If yes, provide a copy of the agreement you use. 5. Do you use sub-haulers? If yes, provide cost of hire Provide a copy of the contract. 6. Do you lease, hire, rent, or borrow any vehicles from others without drivers? Will they be scheduled on the policy? What is the average term of the lease? _ __ 7. What is your cost to lease, hire, rent or borrow vehicles? Page 1 of 4 □Yes □No .ÿYes □No □Yes ONo □Yes □No □Yes DNo □Yes □No .ÿ Yes □No $. .ÿ Yes □No •□Yes □No •ftlCA-APP-12 (1-13) With drivers: . Estimated cost of hired autos: This year: 8. Is Hired Auto Physical Damage coverage desired? If yes, average value of auto hired?_ 9. How many autos are hired on average within a twelve (12) month period? _ 10. How many hired autos are in the insured's possession at any one time? _ 11. What type of vehicles do you lease, hire, rent or borrow? Truck-Tractors % Pickup trucks or Vans 12. At any time will your employees, subcontractors, or owner/operators lease vehicles in your name?.... . If yes, explain: _____ __ ’ 13. Do you arrange or dispatch loads for others, not including your own hired truckers? Please explain: Are you named on the Bills of Lading? . Annual number of Truckers:__ 14. Do you have motor carrier brokerage authority? If yes, Is the brokerage authority hold under the same name and motor carrier number as your trucking operation? ... What is your motor carrier brokerage number?_,_____ Whose name appears on the Bill of Lading as the carrier? _,___ What is your brokerage revenue for the most recent twelve (12) months?_; Estimated next twelve (12) months? __ :_ 15. Do you understand that wc may audit your records for Hired auto exposure, which might result in an additional premium? Without drivers: I Last year: □Yes □No %__% Trailers Private Passenger Cars% .%Heavy & Extra Trucks □Yes □No i □Yes □No .ÿ Yes □No Loads: □Yes PNo UYes □No □Yes □No NON-OWNED AUTO INFORMATION— Coverage Subject to Audit 16. Why is lion-ownership liability coverage being requested?_ 17. What types of non-owned autos will be used in your business?_ Total number of non-owned autos used: How will they be used?__ 18. How often are non-owned autos used in your business? □Daily □Weekly □Monthly □Other: _; _ Estimate the number of hours per month: __ Estimated annual mileage for use of all non-owned autos: ■_ 19. Do any employees use their autos in your business? If yes, what limit of liability insurance are they required to maintain?_ Do you require evidence of insurance? 20. Will you use non-owned autos other than those owned by employees? If yes, describe the relationship: _ 21. Total number of employees: □Yes □No □Yes □No □Yes □No Total number of officers and partners: frlPage 2 of 4CA-APP-12 (1-13) 22. tf a social service operation, indicate the total number of volunteers furnishing autos in your operation: . Maximum number of volunteers at any one time:.. . How will they use their vehicles? __ __’_ □Yes □No23. Are volunteers required to have their own insurance? Minimum limits required:_'_ 24. Do you obtain motor vehicle records for all employees and volunteers? 25. Do you understand that we may audit your records for Non-Owned auto exposure, which might result in an additional premium? FRAUD WARNING: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. (Not applicable to Nebraska, Oregon or Vermont). NOTICE TO ALABAMA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or who knowingly presents false information in an application for insurance is guilty of a crime and may be subject to restitution fines or confinement in prison, or any combination thereof. NOTICE TO COLORADO APPLICANTS: It is unlawful to knowingly provide false, incomplete, or misleading facts or in¬ formation to an Insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include Imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with regard to a settlement or award pay¬ able from insurance proceeds shall be reported to the Colorado Division of insurance within the Department of Regulatory Agencies. WARNING TO DISTRICT OF COLUMBIA APPLICANTS: It is a crime to provide false or misleading Information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant. NOTICE TO FLORIDA APPLICANTS: Any person who knowingly and with intent to injure, defraud, or deceive any in¬ surer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. APPLICABLE IN HAWAII (AUTOMOBILE): For your protection, Hawaii law requires you to be informed that presenting a fraudulent claim for payment of a loss or benefit is a crime punishable by fines or imprisonment, or both. NOTICE TO LOUISIANA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be sub¬ ject to fines and confinement in prison. NOTICE TO MAINE APPLICANTS: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits, NOTICE TO MARYLAND APPLICANTS: Any person who knowingly or willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly or willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. NOTICE TO MINNESOTA APPLICANTS: A person who files a claim with intent to defraud or helps commit a fraud against an insurer is guilty of a crime. □Yes □No □Yes □No 0Page 3 of 4CA-APP-12 (1-13) NOTICE TO OHIO APPLICANTS: Any person who knowingly and with intent to defraud any insurance company files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. NOTICE TO OKLAHOMA APPLICANTS: Any person who knowingly, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading informa¬ tion is guilty of a felony. NOTICE TO RHODE ISLAND APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. FRAUD WARNING (APPLICABLE IN TENNESSEE, VIRGINIA AND WASHINGTON): It is a crime to knowingly provide false, incomplete, or misleading information to an insurance company for the purpose of defrauding the company. Penal¬ ties include imprisonment, fines, and denial of insurance benefits. NEW YORK AUTOMOBILE FRAUD WARNING: Any person who knowingly and with intent to defraud any insurance company or other person files an application for commercial insurance or a statement of claim for any commercial or per¬ sonal insurance benefits containing any materially false information, or conceals for the purpose of misleading, informa¬ tion concerning any fact material thereto, and any person who, in connection with such application or claim, knowingly makes or knowingly assists, abets, solicits or conspires with another to make a false report of the theft, destruction, dam¬ age or conversion of any motor vehicle to a law enforcement agency, the department of motor vehicles or an insurance company, commits a fraudulent insurance act, which is a crime, and shall also be subject to a civil penalty not to exceed five thousand dollars and the value of the subject motor vehicle or stated claim for each violation. \ APPLICANTS NAME AND TITLE: DATE:APPLICANT'S SIGNATURE:: 1(Must be signed by an active owner, partner or executive officer) 5 DATE: 1. PRODUCER'S SIGNATURE: AGENT LICENSE NUMBER:AGENT NAME: (Applicable to Florida Agents Only) Note to General Agent: If hired auto coverage is provided, notify the Premium Finance Company of the audit required. | Page 4 of 4CA-APP-12 (1-13) i i i http://www.surplusins.com/pdfs/SIC hirednonowned.ndf Surplus Insurance Brokers Agency Inc. Fax 800-578-7758 * www.surplusins.com Emailquotes: submit@surplusins.com P O Box 749, South Bend IN 46624-0749 ! I HIRED AND NON-OWNED AUTOMOBILE SUPPLEMENTAL APPLICATION I Agent Name:Name of Applicant: D/B/A: Street Address: Address: Agent No.:P.O. Mailing Address: PROPOSED EFFECTIVE DATE: From_ 12:01 AM., Standard Time, at the address of the Applicant. PhoneNumber: (_)_ FEIN/Social Security/Soundex No.: Website: _ To PLEASE ANSWER ALL QUESTIONS— IF THEY DO NOT APPLY, INDICATE “NOT APPLICABLE." HIRED AUTO INFORMATION— Coverage Subject to Audit 1. Why is hired auto coverage being requested?__ 2. Do you lease, hire, rent or borrow any vehicles from others? . What is the average term of the lease?__ _ Is there a written agreement?. Does it include a Hold Harmless agreement and/or Additional Insured clause? t provide a copy of IIiu agreement. 3. Do you hire independent contractors? . If yes, do you require certificates of insurance? Provide a copy of the contract. 4. If owner/operators are leased, will they be scheduled on your policy? If yes, provide a copy of the agreement you use. 5. Do you use sub-haulers?. If yes, providecost of hire . . Provide a copy of the contract. 6. Do you lease, hire, rent, or borrow any vehicles from others without drivers? Will they be scheduled on the policy? ... What is the average term of the lease? _ 7. What is your cost to lease, hire, rent or borrow vehicles? Withdrivers: . Estimated cost of hired autos: This year: 8. Is Hired Auto Physical Damage coverage desired?. If yes, average value of auto hired?_ 9. How many autos are hired on average within a twelve (12) month period? □Yes □No i □ Yes□No □Yes □No □Yes □No □Yes DNO I .ÿ Yes□No □Yes □No .ÿ YesQ No □ YesQ No ! I Without drivers: Lastyear:. □Yes □No Page 1 of 4CA-APP-12 (11-07) 10. How many hired autos are in the insured’s possession at any one time? _ 11. What type of vehicles do you lease, hire, rent or borrow? Truck-Tractors. % Pickup trucks or Vans. 12. At any time will your employees, subcontractors, or owner/operators lease vehicles in your name? If yes, explain:_______ 13. Do you arrange or dispatch loads for others, not including your own hired truckers? Please explain: Are you named on the Bills of Lading? Annual number of Truckers:__ 14. Do you have motor carrier brokerage authority?. If yes, is the brokerage authority held under the same name and motor carrier number as your trucking operation? What is your motor carrier brokerage number? Whose name appears on the Bill of Lading as the carrier?__ What is your brokerage revenue for the most recent twelve (12) months? -_ Estimated next twelve (12) months?_' _ ' 15. Do you understand that we may audit your records for Hired auto exposure, which might result in an additionalpremium?.,.. . . %_% Trailers. Private Passenger Cars. %.%Heavy & Extra Trucks [ □Yes □No □ Yes □No \ O YesQ No i .Loads: □Yes □No □ Yes□No □Yes ONo NON-OWNED AUTO INFORMATION— Coverage Subject to Audit 16. Why is non-ownership liability coverage being requested? _ 17, What types of non-owned autos will be used in your business?_ Total number of non-owned autos used: How will they be used?_;_;_ 18. How often are nori-owned autos used in your business? □Daily □ Weekly □Monthly Q Other: _ :_ Estimate the number of hours per month:_: Estimated annual mileage for use of all non-owned autos:_ 19. Do any employees use their autos in your business? If yes, what limit of liability insurance are they required to maintain? . Do you require evidence of insurance? 20. Will you use non-owned autos other than those owned by employees?. If yes, describe the relationship:_:_ 21. Total number of employees:. 22. If a social service operation, indicate the total number of volunteers furnishing autos in your operation: : . _ Maximum number of volunteers at any one time: _ How will they use their vehicles?_ ______ „ÿ Yes□No ! □Yes □No .ÿ Yes □No Total number of officers and partners: !□Yes □No23. Are volunteers required to have their own insurance? Minimum limits required:_. _ Page 2 of 4CA-APP-12 (1-13) □Yes □No24. Do you obtain motor vehicle records for all employees and volunteers? 25. Do you understand that we may audit your records for Non-Owned auto exposure, which might result in an additionalpremium? FRAUD WARNING; Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. (Not applicable to Nebraska, Oregon or Vermont). NOTICE TO ALABAMA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or who knowingly presents false information in an application for insurance is guilty of a crime and may be subject to restitution fines or confinement in prison, or any combination thereof. NOTICE TO COLORADO APPLICANTS: It is unlawful to knowingly provide false, incomplete, or misleading facts or in¬ formation to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with' regard to a settlement or award pay¬ able from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory Agencies. WARNING TO DISTRICT OF COLUMBIA APPLICANTS: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant. NOTICE TO FLORIDA APPLICANTS: Any person who knowingly and with intent to Injure, defraud, or deceive any in¬ surer files a statement of claim or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree. APPLICABLE IN HAWAII (AUTOMOBILE): For your protection, Hawaii law requires you to be informed that presenting a fraudulent claim for payment of a loss or benefit is a crime punishable by fines or imprisonment, or both. NOTICE TO LOUISIANA APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be sub¬ ject to fines and confinement in prison. NOTICE TO MAINE APPLICANTS: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits. i □Yes QNo 1 ( i ■i t NOTICE TO MARYLAND APPLICANTS: Any person who knowingly or willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly or willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. NOTICE TO MINNESOTA APPLICANTS: A person who files a claim with intent to defraud or helps commit a fraud against an insurer is guilty of a crime. i 1 ; Page 3 of 4CA-APP-12 (1-13) i j NOTICE TO OHIO APPLICANTS: Any person who knowingly and with intent to defraud any insurance company files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. NOTICE TO OKLAHOMA APPLICANTS: Any person who knowingly, and with intent to injure, defraud or deceive any insurer, makes any claim for the proceeds of an insurance policy containing any false, incomplete or misleading infor¬ mation is guilty of a felony, NOTICE TO RHODE ISLAND APPLICANTS: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison. FRAUD WARNING {APPLICABLE IN TENNESSEE, VIRGINIA AND WASHINGTON): It is a crime to knowingly provide false, incomplete, or misleading information to an insurance company for the purpose of defrauding the company. Penal¬ ties include imprisonment, fines, and denial of insurance benefits. NEW YORK AUTOMOBILE FRAUD WARNING: Any person who knowingly and with intent to defraud any insurance company or other person files an application for commercial insurance or a statement of claim for any commercial or per¬ sonal insurance benefits containing any materially false information, or conceals for the purpose of misleading, infor¬ mation concerning any fact material thereto, and any person who, in connection with such application or claim, knowingly makes or knowingly assists, abets, solicits or conspires with another to make a false report of the theft, destruction, dam¬ age or conversion of any motor vehicle to a law enforcement agency, the department of motor vehicles or an insurance company, commits a fraudulent insurance act, which is a crime, and shall also be subject to a civil penalty not to exceed five thousand dollars and the value of the subject motor vehicle or stated claim for each violation. i f APPLICANT'S NAME AND TITLE: DATE:APPLICANT’S SIGNATURE:, |(Must be signed by an active owner, partner or executive officer) DATE:PRODUCER'SSIGNATURE:. t AGENT LICENSE NUMBER:AGENT NAME:. {Applicable to Florida Agents Only) Note to General Agent: If hired auto coverage is provided, notify the Premium Finance Company of the audit required. ? i \ i i i Page 4 of 4CA-APP-12 (1-13) i | |_ Reset Form 11- -Print.Fhr.m: https://www.generalstar.com/assets/pdfs/Division-Property/Applications/General Star - (3Qf)QfcilStdi Hired & NonOwned Application - 05-2011.pdf m HIRED AND NON-OWNED SUPPLEMENTAL APPLICATION APPLICANT INFORMATION NAME: MAILING ADDRESS: PROPOSED EFF DATE: FROM: WEBSITE: TO: FORM OF BUSINESS: □INDIVIDUAL □PARTNERSHIP □JOINT VENTURE□ CORPORATION □SUBCHAPTER "S" CORPORATION □LIMITED CORPORATION □NOT FOR PROFIT ORG □OTHER YEARS IN BUSINESS GENERAL INFORMATION I . Coverage Desired: Hired and Non Owned: □ Non Owned Only□ 2. Why is Hired and/or Non-Owned Auto Coverage being requested? 3. Are there any Hired or Non-Owned exposures in the states of Louisiana, Illinois, Arizona □Yes DNO 4. Number of employees, volunteers, executive officers and partners? I-! Yes □ No5. Has Applicant ever had any Hired or Mon-Owned Auto losses? □Yes □No6. Does Applicant have a commercial auto policy □Yes □ No .7. Does Applicant own any autos? 8. Please describe all businesses and operations for which Applicant is engaged: 1 it 9. Is the Applicant involved in any of the following businesses? Fast Food Restaurants Florist WarehousesPizza Parlors □ □ □□ Churches/Religious OrganizationsSales Professionals CaterersContracting Risk □ □□ □ Conducting /planning Special Events Medical Equipment Supply stores_ Real Estate agents Schools□ □□ □ Page 1 of 3Hired & Non-Owned 8-09 Applications I GeneralStar HIRED AND NON-OWNED SUPPLEMENTAL APPLICATION 1 Truckers and freight forwarders Visiting nurses or home health aids Couriers, Express messengers £] Consultants □□ □ nNot ApplicableNON-OWNED AUTO ) .Describe Non-Owned Autos usage (include who is using hired autos; how they are being used; and approximate mileage driven for each)? NON-OWNED AUTO cont’d. □Yes □No2. Do employees lease autos on the Applicant’s behalf? □Yes □No 4, Does the Applicant require employees to have their own insurance at a minimum .□ Yes □No of at least $300,000 per person "bodily injury", $300,000 per accident "bodily injury", $100,000 per accident “property damage”; or $300,000 "bodily Injury" and "properly damage" combined single limit? 3. Does the Applicant require proof of insurance from employees? 5. Will the Applicant use Non Owned Autos other than those owned by employees? □Yes D No 6. Does Applicant have written guidelines of what is an acceptable driving record? □Yes □No 7. What type of Non-Owned autos will be used in (tie Applicant's business (e.g. private passenger, van, other than private passenger or van)? I r 8. How many times per week are Non Owned Autos used in theApplicant's business? 9. Total number of Non Owned Autos used in the Applicant's business? 10. What is the estimated annual mileage for use of all Non Owned Autos? 11. What is the maximum distance which a Non Owned Auto may be driven from the Applicant’s premises? (radius of operation) i ApplicationsPage 2 of 3Hired & Non-Owned 8-09 (\\D > GeneralStar HIRED AND NON-OWNED SUPPLEMENTAL APPLICATION □Not ApplicableHIRED AUTO 1. Describe Hired Autos usage (include who is using hired autos; how they are being used; and approximate mileage driven for each)? ; 2. Number of Hired Autos per year? 3. Does the Applicant lease, hire, or rent any auto other than a passenger type auto? □Yes □No 4. What is the average term of the lease (days)? S. Approximate maximum distance (in miles) in which a Hired Auto may be driven from the rental premise? : 6. Does the Applicant own or control any subsidiary or is affiliated with any other Corporations for which HNOA Coverage is requested? 7. At any time will tho Applicant subcontract their work? DYes □No □Yes □No The applicant agrees, represents and warrants that the statements and information contained in the application for insurance, including all statements, information and documents accompanying or relating to the application are accurate and complete and no facts have been suppressed, omitted or misstated. Any failure to fully disclose the information requested in the application for insurance, whether by omission or suppression, or any misrepresentation in the statements and information contained in the application for Insurance, including all statements, information and documents accompanying or relating to the application, renders coverage for any claim(s) null and void and entitles us to rescind the policy from its inception. fc Signature of Applicant*: Title: Producer Code:. Date:Agency: *Signing this application does not bind the applicant or the company to complete the insurance. I Page 3 of 3 (Ml ApplicationsHired & Non-Owned 8-09 GLOBAL HAWK INSURANCE COMPANY (RRG) DRIVER / SUB-HAULER SUPPLEMENT FORM (Named Insured/DBA)1 Check all practices used by your company: (Give full explanation of each question- Use separate sheet, if necessary) 1. MVR check □ Road Test □ Drug Test □ Reference Check□ Physical exam□Written application □ Employment Verification□ ts for hiring drivers:2. Describe acceptability requiremen er /,Operators? Yes Ef" No Q, ?% of Revenues _ 77~~pT~ 3. Use Own A-/Y§SL] NO Number / Tÿa ,.v Motor Vehicjÿ Reports ©ÿemployed drivers,pulled-and IOV owed? Yes [ | if Yes; how'often?. { (X /4. Use teamv.drivers? ms X y No5. Are .ÿ / attn lolicies. r a V,0 Name - Insurance:Carrier ‘ No□ (provide cert for each) Insurance Certificate Attached Yes □ No□ Yes □ No fl ■ ■. Yes □ Noh • (B 1. 2. SSsPi3. wnar(oDerators',(sdtvhaulers) be scheduled on vour policy? Yes l.J No□ ulers below: 'ÿ j- Agreement Attached'1’ ■YSs□ No□ Yes□ MW Yes□ If yes, answer questions a-e 21. Will o Please listm * /./jf sub- ' /• zz # jf" w 'J D'Sÿfl'.uqpysubcontractors? Yes'P> No□ c| J|..Iÿh<|lre Wir subcontractpVs? c. What limit of Auto Liability.’afe Subcontractors required to carry? 0 2I m ctors{required to provide Certificates of Insurance? Yes□ No [ ] L-.. bcontr d. Whapjob duties are performed by thesubcontractprs?ÿ e. What is your cost to use subcontractors? j_\ owner/operato)s lease vehicles on your’behalf? Yes□ No□ ' \ 7ftease agreement attacned.. Vfes 0 No□ ' Yes Q NOD \ 23. At anytime will your employees, subcontract If yes, Please’list below v • Name \ Type of Vehicle ors, or \1. \2. X3. businesses. Yes□ No□ Insurance Certificate Attached Yes□ No□ Yes□ No□ Yes□ No□ 24. Do any employees', subcontractors or sub-haulers use their v If yes, Please list below, s Name Insurance Carrier your yLimit of Liability S __ Ins. 1. $Y2. 3. 25. Do you understand that we may audit your records? Yes□ No□ 26. Do any of your family members use the vehicles? Yes□ No□ If yes, Please list below: RelationshipName 1. 2. 3. 27. Do you allow passengers to ride in your vehicles? Yes□ No□ 28. Are you familiar with the U.S. Department of Transportation driver requirements? Yes Q No□ (Vl2>Page 2 of 3GHI-5 29. (i) Do you maintain driver activity files? Yes□ No□ (ii) Do you review current MVRs on all drivers prior to hiring? Yes□ No□ (iii) Is there a formal driver hiring procedure? Yes□ No□ (iv) Drug Screening? Yes□ No□ If you have a formal driver hiring/training program, provide a copy with this application.(v) 30. Are all drivers employees? Yes□ No□ If No, explain:_ If Yes, list below Name Length of Employment Years/Months /1. 2. 3. Is there a formal safetyÿtogram? Yes□ No□ If yes, provide detail ... ' , 31. s or a copy: /mntenance‘program:details|fÿ32. Provide MHEk S /v. rpe tp'screen andi'eportÿll potential operators immediately upon hiring before giving them a loaiSpy.ifes33. 'e Lj.:'N mlsM 1 <*/ft \'I \ 1 / % j \ •-x/ (date)(signature) k* v • ;;/ s X. % Page 3 of 3GHI-5 <$> DiamondState C ROUP* SUPPLEMENTAL APPLICATION FOR: HIRED AND NON-OWNED AUTOMOBLE COVERAGE (Required if the Applicant has selected either Symbol 8 or Symbol 9 on Acord Application 137) Please complete SECTION I and SECTION IV, and SECTION II (if applying for Hired Auto Coverage) and SECTION, III (if applying for Non-owned Auto coverage SECTION \ - GENERAL INFORMATION Name of Applicant: Check here□ if the Applicant is applying for Hired Auto Coverage (symbol 8). Check here□ if the Applicant is applying for Non-owned Auto Coverage (symbol 9) FEIN: SECTION II - HIRED AUTO COVERAGE 1. Why is Hired Auto coverage being requested? Yes□ No □Do you lease, hire, rent or borrow any vehicles from others?2 a. What Is the average term of the lease?b. Is there a written agreement? Yes□ No □ If yes, Attach agreement and answer 2d.c. Does the agreement have a “Hold Harmless” or Additional Insured clause in favor of the Applicant? Yes□ No Qd. Last Years CostEstimate Cost for Coming Year What is your cost to lease, hire, rent or borrow vehicles? $$With Drivers With Driverse. Without Drivers Without Drivers $$ How many autos are hired on average within a twelve (12) month period?f. How many hired autos are in the insured's possession at any one time?g- Yes□ No □ If Yes, answer 3.b&c3 a. Do you hire independent contractors? Do you require Certificates of Insurance? Yes□ No □b. Is there a written agreement? Yes□ No □ If yes, attach agreement If owner operators are leased will they be scheduled on your policy? Yes□ No□ Do you use sub-haulers? Yes□ No□ If yes, attach Agreement and what is the cost of hire? Do you lease, hire, rent, or borrow any vehicles from others without drivers? Yes□ No Q If yes, answer 6b-c Will they be scheduled on the policy? Yes□ No Q c. 4. 5. 6a. b. What is the average term of the lease?c. Do you need Hired Auto Physical Damage coverage? Yes □ No□ If yes, average value of Hired Auto7. $ % i Pick-up trucks or vans % i Private Passenger cars % ! Other %Truck-Tractors What type of vehicles do you lease, hire, rent or borrow? %8. Trailers %Heavy & Extra Heavy Trucks Will your employees, subcontractors, or owner/operators lease vehicles in your name? Yes□ No□ If Yes, Explain_____9. Ji Jv\5 Page 1 of 2HNOA Supplemental Application (2011 03) DiamondState Do you arrange / dispatch loads for others, i.e. not your own hired truckers? Yes□ No O If yes, answer 10.b10a. Are you named on the Bills of Lading? Yes□ No□b. Annual number of Truckers? Loads? Do you have motor carrier brokerage authority? Yes□ No□ If yes, answer 11.b -11a. Name that appears on the BOL as the carrier?b. What is your motor carrier brokerage number? Estimate for next 12 months: $What is your brokerage revenue for:: Last 12 months: $c. SECTION III - NON-OWNED AUTO COVERAGE 1. Why is non-ownership liability coverage being requested? Truck-Tractors Pick-up trucks or vansWhat types of non-owned autos will be used in your business? Check all that apply: 2. Private Passenger carsTrailers OtherHeavy & Extra Heavy Trucks Non-owned autos used: Daily Weekly Monthly | Estimated Annual Non-owned mileage What are your total number of: Employees Do any employees use their autos in your business? Yes□ No Q If yets, answei 5.b What liability limits to you require they carry? $ Do you use non-owned autos other than those owned by employees? Yes Q No 0 If yes, Describe 3. Officers and Partners4. §a, Do you require Evidence of Insurance? Yes□ No□b. 6. Do you use volunteers? Yes [] No□ If yes, how many? What liability limits to you require they carry? $ Do you require Evidence of Insurance? Yes□ No□ Do you obtain motor vehicle records for all employees and volunteers? Yes□ No□ and answer 7.b.7a. b. 8. SECTION IV- SIGNATURE(S) BY SIGNING THIS SUPPLEMENTAL APPLICATION BELOW, THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE STATEMENTS MADE AND INFORMATION PROVIDED IN THIS SUPPLEMENTAL APPLICATION ARE TRUE, COMPLETE AND ACCURATE, AND THAT NO MATERIAL OR RELEVANT FACT HAS BEEN SUPPRESSED, MISSTATED, MISREPRESENTED OR CONCEALED AS OF THE DATE SUCH STATEMENTS AND INFORMATION ARE SUBMITTED TO THE COMPANY. THE COMPLETION, SIGNING OR SUBMISSION OF THIS SUPPLEMENTAL APPLICATION DOES NOT BIND COVERAGE. Applicant’s Name Applicants Title Applicant Signature Date L Attachments: HNOA Supplemental Application (2011 03) Page 2 of 2 DiamondState C.ROU 1’* Independent Contractor (or sub-hauler) Agreements attached? □Hired Auto Written Agreements attached? □ An Page 2 of 2HNOA Supplemental Application (2011 03) ** **I'A ★ Group ** * * ./Interstate INSUR UNDEF tANCE RWRITERS, ULCSUPPLEMENTAL APPLICATION FOR: HIRED AND NON-OWNED AUTOMOBLE COVERAGE (Required if the Applicant has selected either Symbol 8 or Symbol 9 on Acord Application 137) Please complete SECTION I and SECTION IV, and SECTION II (if applying for Hired Auto Coverage) and SECTION III (if applying for Non-owned Auto coverage SECTION I - GENERAL INFORMATION FEIN: Check here Q if the Applicant is applying for Hired Auto Coverage (symbol 8). Check here□ if the Applicant is applying for Non-owned Auto Coverage (symbol 9) Do you have any owned autos? Yes□ No □ If Yes, prohibited and must be covered under a Commercial Auto policy. Name of Applicant: SECTION II - HIRED AUTO COVERAGE 1 a. Why is Hired Auto coverage being requested? Is coverage required by contract? Yes□ No □ (Provide a copy of the contract)b. Yes□ No □Do you lease, hire, rent or borrow any vehicles from others?2 a. b. What is the average term of the lease? Is there a written agreement? Yes□ NO □ If yes, Attach agreement and answer 2d.c. Does the agreement have a “Hold Harmless” or Additional Insured clause in favor of the Applicant? Yes□ No□d. Estimate Cost for Coming Year Last Years Cost What is your cost to lease, hire, rent or borrow vehicles? $$ With DriversWith Driverse. $Without Drivers $ Without Drivers f. How many autos are hired on average within a twelve (12) month period? How many hired autos are in the insured's possession at any one time?g- Yes□ No □ If Yes, answer 3.b&c3 a. Do you hire independent contractors? Do you require Certificates of Insurance? Yes□ No □b. Is there a written agreement? Yes□ No □ If yes, attach agreementc. If owner operators are leased will they be scheduled on your policy? Yes Q No□4. Do you use sub-haulers? Yes□ No□ If yes, attach Agreement and what is the cost of hire? Do you lease, hire, rent, or borrow any vehicles from others without drivers? Yes□ No□ If yes, answer 6b-c 5. 6a. Will they be scheduled on the policy? Yes□ No□b. What is the average term of the lease? Do you need Hired Auto Physicaldamage coverage? Yes □ No□ If yes, average value of Hired Auto c. 7. $ %jÿck-up trucks or vans % Private Passenger cars % Other Truck-Tractors TrailersWhat type of vehicles do youlease, hire, rent or borrow? %8. % _____ Heavy & Extra Heavy Trucks Will your employees, subcontractors, or owner/operators lease vehicles in your name? Yes Q No□ If Yes, Explain9. Page 1 of 2 PA01-456 (10/2014) Do you arrange / dispatch loads for others, i.e. not your own hired truckers? Yes□ No□ If yes, answer 10.b Are you named on the Bills of Lading? Yes Q No Q | Annual number of Truckers? Do you have motor carrier brokerage authority? Yes Q No Q If yes, answer 11.b - 10a. Loads?b. 11a. Name that appears on the BOL as the carrier?b. What is your motor carrier brokerage number? T Estimate for next 12 months: $What is your brokerage revenue for:: Last 12 months: $c. SECTION III - NON-OWNED AUTO COVERAGE Why is non-ownership liability coverage being requested? Is coverage required by contract? Yes□ No □ (Provide a copy of the contract) Truck-Tractors Trailersÿ ____ Heavy & Extra Heavy Trucks 1 a. b. Pick-up trucks or vansWhat types of non-owned autos will be used in your business? Check all that apply: Private Passenger cars2. Other Daily Weekly Monthly Estimated Annual Non-owned mileageNon-owned autos used:3. Officers and Partners4. What are your total number of: Employees Do any employees use their autos in your business? Yes Q No Q If yes, answer 5.b What liability limits to you require they carry? $ Do you use non-owned autos other than those owned by employees? Yes Q No Q 5a. Do you require Evidence of Insurance? Yes□ No□ If yes, Describe b. 6. Do you use volunteers? Yes□ No Q. If yes, how many? and answer 7.b.7a. Do you require Evidence of Insurance? Yes O No QWhat liability limits to you require they carry? $b. Do you obtain motor vehicle records for all employees and volunteers? Yes Q No Q8. SECTION IV- SIGNATURE(S) BY SIGNING THIS SUPPLEMENTAL APPLICATION BELOW, THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE STATEMENTS MADE AND INFORMATION PROVIDED IN THIS SUPPLEMENTAL APPLICATION ARE TRUE, COMPLETE AND ACCURATE, AND THAT NO MATERIAL OR RELEVANT FACT HAS BEEN SUPPRESSED, MISSTATED, MISREPRESENTED OR CONCEALED AS OF THE DATE SUCH STATEMENTS AND INFORMATION ARE SUBMITTED TO THE COMPANY. THE COMPLETION, SIGNING OR SUBMISSION OF THIS SUPPLEMENTAL APPLICATION DOES NOT BIND COVERAGE. Applicant’s Name Applicant Signature Applicants Title | Date Attachments: Hired Auto Written Agreements attached? Q Independent Contractor (or sub-hauler) Agreements attached? Q mPage 2 of 2PA01-456 (10/2014) How to Classify Non-Owned & Hired Autos |Commercial Auto Technical Achievement ... Page 1 of 2 ISO Blog J ISO j Careers jc « ISO HOME PAGE Chapter 4 | How to Classify Non-Owned and Hired Automobiles Technical Achievement Program Educational Objectives Upon completion of this section, you should be able to: 1. Define the terms “Non-Owned“ and “Hired Autos.“ 2. Determine the premium base for Non-Owned and Hired Autos. Commercial Auto Overview 1. Introduction to Commercial Automobile INTRODUCTION2. Business Auto Coverage Form 3, Public Automobiles Quite often, businesses find it necessary to hire, borrow or lease vehicles, for use in their operations. These situations call for special handling by the underwriter, agent and auditor when determining premium charge. Two such situations are the treatment of 1) Non-Owned autos and 2) Hired Autos 4. Howto Classify Non-Owned & Hired Automobiles NON-OWNED AUTOS (RULE 89) 5. Truckers & Motor Carriers Coverage Forms 6. Introduction to the Garage Coverage Form Non-owned autos are autos which are not actually owned by the insured, but used in the insured's business in some capacity. A clerical employee u her own car to' make daily trips to the post office to pick up and deliver business related mail is conslrued from the carrier's point of view to be opera a non-owned auto. Even though the employee's own personal policy covering the auto would normally cover the employer as an additional inlerest, employer cannot be certain that such coverage is adequate in every circumstance. Commercial auto Coverage Symbol 9 on the Declarations extends liability coverage only to Non-Owned Autos. Note that, when Coverage Symbol 1 auto) appears on the Declarations, coverage is extended automatically for Non-Owned Autos. Coverage can be excess or on a primary basis. The non-owned autos premium is based on the total number of employees of the insured at all locations. For social service agency risks, the comp representative is to determine the total number of volunteers at all locations who regularly use their own autos to transport social service clients in connection with the agency's program. ;— AS?; Brochure MKttg! Premium Audit Advisoryfir*®?] Service (PAAS) Overview t Brochure PAAS Professional Development Catalog The company representative can review payroll records, quarterly unemployment tax reports. 1099's or any other documenl that will establish thenumber of employees. Non-owned coverage is not a large premium item; most policies provide this coverage at a minimum premium. The accuracy the policy estimate should be verified since the information sources will have been reviewed to complete other types of audits (workers' compensate general liability) or are readily available. In most cases this total will be an average of employees by week, month, or quarter since many employers h fluctuating staff levels. An example to illustrate follows: Month January February March AfSHl May June July August September October November December Total for policy period Average (345/12) Number of Employees 35 20 20 & 25 30 30 30 25 30 35 40 345 28.75 "book to top The average total number of employees in this example is 29. The average number of employees can also be determined by calculating the average based on the beginning and ending number of employees. Note: the method used for determining the average number of employees is based on specific company guidelines. The above are only suggestions; refer to your company for auditing procedures. There is a different premium charge based on the number of employees in five ranges: Class No. 6601 No. Employees 0-25 26-100 101-500 501-1000 More than 1000 6602 6603 6604 6604 HIRED AUTOS (RULE 90) Hired Automobiles includes automobiles that are leased, hired, rented, or borrowed by the named insured, except if done so from any employee, pai or members of their households. The policy includes Hired Auto information in the Schedule of Hired or Borrowed Covered Auto Coverage and Premium section of Item Four. Covera can be on an excess or a primary basis. The schedule lists by state the estimated Cost of Hire, rates, and premium. Coverage is activated by Covers Symbol 8 and can be used by ilself or with Coverage Symbols 2, 3, 4, 7, or 9 for liability or physical damage coverage. Physical damage is on a “refs company" basis. If physical damage is provided, it is excess unless the appropriate box in Item Four of the Business Auto Coverage Form Declaratic is checked. Once again coverage is automatic when Coverage Symbol One (any auto) is used. Excess vs. Primary Different rating instructions apply depending upon which party is responsible for the primary insurance. 1. If the insured is responsible for providing primary insurance on all autos hired, leased, loaned or furnished and if the length of the lease is six mom or more, classify these autos as if they are owned by the insured. In this siluation, the Additional Insured - Lessor Endorsement (CA 20 01) is avail and identifies the lessor (vehicle owner/leasing company) as an additional insured on the policy. The otherwise applicable liability rate (as if the au were owned) is increased by a factor stated in the manual. 2. An alternative endorsement, Hired Autos Specified as Covered Autos You Own (CA 99 16) includes hired autos that will be considered owned aul and the owners of such autos are covered as insureds under the policy for liability insurance with respect to that auto only. 3. If an employee leases their auto to the employer, the Employee As Lessor endorsement (CA 99 47) makes this leased auto an owned auto under t employer's auto coverage. The employee is then an insured. 4. If the lease is for a period less than six months, refer to your company for proper classification. http://www.verisk.com/insurance/products/premium-audit-advisory-service/technical-achie... 8/31/2017 How to Classify Non-Owned & Hired Autos |Commercial Auto Technical Achievement ... Page 2 of 2 Audit procedures for specified vehicles (determining the primary and secondary classifications) as discussed previously, apply when a Hired Auto is treated as an owned auto. It is essential to develop all the necessary information to correctly classify the vehicle in question. If the owner of the Hired Auto is responsible for primary insurance and our insured's coverage is excess, the exposure base is Cost of Hire. The Cost of Hire is defined as the total amount incurred for the hire of automobiles not including charges for services performed by Motor Carriers or property or passengers which are subject to compulsory insurance requirements of any Motor Carrier Law or regulation. The Cost of Hire should be obtained separately for each state where the insured is doing business; the rates apply per $100. Borrowed vehicles, which incur no Cost of Hire are covered at no charge. Rule 90 in the Commercial Lines Manual, Division One - Automobile provides the following in the definition of Cost of Hire: Inclusions & Total cost of all automobiles, trailers, semi-trailers, and service-utility trailers. ■ Vehicles driven by employees of the insured. K Vehicles operated by hired drivers with or without the insured's supervision. ■ Vehicles loaned to or borrowed by the insured. • Costs for unregulated owner-operators. Exclusions * Automobiles owned or registered in the name of an employee or agent of the named insured who receive an operating allowance for the use of such automobiles. ■ Common or contract Motor Carriers subject to compulsory insurance requirements of a public authority regulating Motor Carriers such as the Department of Transportation (formerly, this was the Interstate Commerce Commission (ICC)) or Public Utilities Commission (PUC). ■ Public automobiles (other than social service agencies), moving van associations and freight forwarding operations. ■ Charges for drivers when the vehicle is hired without a driver. ■ Vehicles hired, leased, loaned, furnished or borrowed for the named insured and for which the named insured is responsible for the primary insurance. Records When developing the exposure for Hired Auto coverage on the Cost of Hire basis, the auditor must review all expense journals, the general ledger and/or disbursement journal. Since the Cost of Hire is often listed under many different accounts, with a wide variety of titles, an in-depth investigation and analysis is necessary. Most policies provide Hired-Auto coverage at a minimum premium. The accuracy of the policy estimate should be verified since the information sources will have been reviewed to complete other types of audits (workers' compensation or general liability) or are readily available. The minimum charge for Hired Auto is separate from the amount charged for Non-Owned coverage and the advance premium is the earned premium unless there is a substantial change in exposures during the policy period. »back to top Additional Insured - Lessor This endorsement requires the company representative to treat a specified Hired Auto in the same manner as an owned auto. This endorsement is issued when the insured leases an auto from a leasing concern for a period of a year or more, and the leasing agreement requires the insured to provide primary insurance on that auto. With the attachment of this endorsement, the company representative should determine the actual Cost of Hire for the specified auto, as defined previously. Hired Autos Specified As Covered Autos You Own This endorsement requires the company representative to treat a specified Hired Auto in the same manner as an owned auto. The company representativeshould determine which autos are to be Included as covered and assign the appropriate rating factors. Employee As Lessor Endorsement When an wmpiuyuu luuuuu limit uulu lu HIM umf ilnyui, Ihltt ondomoment requires the leased auto to be handled like an owned auto, 'me employee then considered an insured. "hook to top ;• m © 2008, 2017 Verisk AnalyticsAll rights reserved. , Inc. USA: 1-800-888-4476 Global: + 800 48977489 http://www.verisk.com/insurance/products/premium-audit-advisory-service/technical-achie... 8/31/2017 Chapter 4 |How to Classify Non-Owned and Hired Automobiles Educational Objectives Upon completion of this section, you should be able to: 1. Define the terms "Non-Owned" and "Hired Autos." 2. Determine the premium base for Non-Owned and Hired Autos. INTRODUCTION Quite often, businesses find it necessary to hire, borrow or lease vehicles, for use in their operations. These situations call for special handling by the underwriter, agent and auditor when determining premium charge. Two such situations are the treatment of 1) Non-Owned autos and 2) Hired Autos. NON-OWNED AUTOS (RULE 89) . Non-owned autos are autos which are not actually owned by the insured, hut used in the insured's business in some capacity. A clerical employee using her own car to make daily trips to the post office to pick up and deliver business related mail is construed from the carrier's point of view to be operating a non-owned auto. Even though the employee's own personal policy covering the auto would normally cover the employer as an additional interest, the employer cannot be certain that such coverage is adequate in every circumstance. Commercial auto Coverage Symbol 9 on the Declarations extends liability coverage only to Non-Owned Autos. Note that, when Coverage Symbol 1 (any auto) appears on the Declarations, coverage is extended automatically for Noil-Owned Autos. Coverage ean be excess or on a primary basis. The non-owned autos premium is based on the total number of employees of the insured at all locations. For social service agency risks, the company representative is to determine the total number of volunteers at all locations who regularly use their own autos to transport social service clients in connection with the agency's program. The company representative can review payroll records, quarterly unemployment tax reports, 1099's or any other document that will establish the number of employees. Non-owned coverage is not a large premium item; most policies provide this coverage at a minimum premium. The accuracy of the policy estimate should be verified since the information sources will have been reviewed to complete other types of audits (workers' compensation or general liability) or are readily available. In most cases this total will be an average of employees by week, month, or quarter since many employers have fluctuating staff levels. An example to illustrate follows: Number of EmployeesMonth January February March April 35 20 !20 !25 May 25 |30 July August September October November December [Total for policy period [Average (345/12) [30 30 25 30 35 40 345 28.75 »back to top The average total number of employees in this example is 29. The average number of employees can also be determined by calculating the average based on the beginning and ending number of employees. Note: the method used for determining the average number of employees is based on specific company guidelines. The above arc only suggestions; refer to your company for auditing procedures. There is a different premium charge based on the number of employees in five ranges: Class No, No. Employees 0-25 26-100 101-500 6601 6602 6603 6604 501-1000 More than 1000 ,6604 HIRED AUTOS (RULE 90) • Hired Automobiles includes automobiles that are. leased, hired, rented, or borrowed by the named insured, except if done so from any employee, partner, or members of their households. The policy includes Hired Auto 'information in the Schedule of Hired or Borrowed Covered Auto Coverage and Premium section of Item Four. Coverage can be on an excess or a primary basis. The schedule lists by state the estimated Cost of Hire, rates, and premium. Coverage is activated by Coverage Symbol 8 and can be used by itself or with Coverage Symbols 2, 3, 4, 7, or 9 for liability or physical damage coverage. Physical damage is on a "refer-to-company" basis. If physical damage is provided, it is excess unless the appropriate box in Item Four of the Business Auto Coverage Form Declarations is checked. Once again coverage is automatic when Coverage Symbol One (any auto) is used. Excess vs. Primary Different rating instructions apply depending upon which party is responsible for the primary insurance. 1. If the insured is responsible for providing primary insurance on all autos hired, leased, loaned or furnished and if the length of the lease is six months or more, classify these autos as if they are owned by the insured. In this situation, the Additional Insured - Lessor #23 Endorsement (CA 20 01) is available and identifies the lessor (vehicle owner/leasing company) as an additional insured on the policy. The otherwise applicable liability rate (as if the auto were owned) is increased by a factor stated in the manual. 2. An alternative endorsement, Hired Autos Specified as Covered Autos You Own (CA 99 16) includes hired autos that will be considered owned autos and the owners of such autos are covered as insureds under the policy for liability insurance with respect to that auto only. 3. If an employee leases their auto to the employer, the Employee As Lessor endorsement (CA 99 47) makes this leased auto an owned auto under the employer's auto coverage. The employee is then an insured. 4. If the lease is for a period less than six months, refer to your company for proper classification. Audit procedures for specified vehicles (determining the primary and secondary classifications) as discussed previously, apply when a Hired Auto is treated as an owned auto. It is essential to develop all the necessary information to correctly classify the vehicle in question. If the owner of the.Hired Auto is responsible for primary insurance and our insured's coverage is excess, the exposure base is Cost of Hire. The Cost of Hire is defined as the total amount incurred for the hire of automobiles not including charges for services performed by Motor Carriers or property or passengers which are subject to compulsory insurance requirements of any Motor Carrier Law or reflation, The Cost of Hire should be obtained separately for each state where the insured is doing business; the rates apply per $100. Don-owed vehicles, which incur no Cost of Idire are covered at no charge. Rule 90 in die Commercial Lines Manual, Division One - Automobile provides the following in the definition of Cost of Hire: Inclusions o Total cost of all automobiles, trailers, semi-trailers, and service-utility trailers. o Vehicles driven by employees of the insured. o' Vehicles operated by hired drivers with or without the insured's supervision. o Vehicles loaned to or borrowed by the insured. o Costs for unregulated owner-operators. Exclusions o Automobiles owned or registered in the name of an employee or agent of the named insured who receive an operating allowance for the use of such automobiles. o Common or contract Motor Carriers subject to compulsory insurance requirements of a public authority regulating Motor Carriers such as the Department of Transportation (formerly, this was the Interstate Commerce Commission (ICC)) or Public Utilities Commission (PUC). o Public automobiles (other than social service agencies), moving van associations and freight forwarding operations. o Charges for drivers when the vehicle is hired without a driver. m o Vehicles hired, leased, loaned, furnished or borrowed for the named insured and for which the named insured is responsible for the primary insurance. Records When developing the exposure for Hired Auto coverage on the Cost of Hire basis, the auditor must review all expense journals, the general ledger and/or disbursement journal. Since the Cost of Hire is often listed under many different accounts, with a wide variety of titles, an in-depth investigation and analysis is necessary. Most policies provide Hired-Auto coverage at a minimum premium. The accuracy of the policy estimate should be verified since the information sources will have been reviewed to complete other types of audits (workers' compensation or general liability) or are readily available. The minimum charge for Hired Auto is separate from the amount charged for Non-Owned coverage and the advance premium is the earned premium unless there is a substantial change in exposures during the policy period. »back to top Additional Insured - Lessor This endorsement requires the company representative to treat a specified Hired Auto in the same manner as an owned auto. This endorsement is issued when the insured leases an auto from a leasing concern for a period of a year or more, and the leasing agreement requires the insured to provide primary insurance on that auto. With the attachment of this endorsement, the company representative should determine the actual Cost of Hire for the specified auto, as defined previously. Hired Autos Specified As Covered Autos You Own This endorsement requires the company representative to treat a specified Hired Auto in the same manner as an owned auto. The company representative should determine which autos are to be included as covered and assign the appropriate rating factors. Employee As Lessor Endorsement When an employee leases their auto to the employer, this endorsement requires the leased auto to be handled like an owned auto. The employee is then considered an insured. »back to top brs Hired and Non-Owned Auto Coverages James Marks, CPCU, APA, CIPA W. Myles Bancroft, APA, ALCM Coverages . It is easy to look at our personal Automobile policy and ask the question “What is important in writing this coverage” and find three answers: 1. What is the vehicle? 2. Where is the car garaged? 3. Who are the drivers? If we rent or borrow a car our private passenger auto insurance automatically covers us. If we let someone else drive our car, we have coverage. The coverages are automatic and we don’t even discuss them with our agent. But commercial auto is different. Every coverage is ala carte and must be endorsed and charged for. If we drove a company car and did not own a personal car, we would have to buy a policy to cover us if we rented or borrowed someone else’s car or we could have the corporate policy endorsed to include these coverages: 1. Use of Other Car 2. Hired Auto 3. Non-owned auto. The “Use of Other Auto” coverage allows the person named in the endorsement to drive a car other than one registered to the company. This coverage is underwritten on a driver by driver basis and is a flat charged coverage. The Hired Auto coverage extends liability coverage to a rental unit or a truck hired to haul something for thÿcompany. In either case coverage exists while the vehicle is being used in be half of the company. It doesn't cover a company car driver that rents a car to go on vacation. The Noil-Owned coverage extends coverage to a vehicle owned by company employee when driven for company business (i.e.; going to the bank, post office or supply store) While all three can and usually are added to the automobile policy, we see Hired andNon-owned added to General Liability or Package policies of those companies that don’t have a fleet but still need the coverage. When added to a liability policy the coverage is still auditable and should not be missed at audit. How to Audit the Coverages Use of Other Auto There is a flat charge associated with a specifically named driver and is not auditable. Non-Owned Auto Non-owned auto is typically based on the number of employees a company has. This is stated on the policy in the form of an array (i.e.: 1-25). Don’t count only the employees who regularly operate their vehicles on the behalf of the company- al] employees and officers should be included in the count. Educational Bulletin: 2007-5-01 Date: May 31, 2007 Page 1 of 2 Hired Auto Hired auto often poses a challenge since finding the true cost of hire in the insured’s books is often difficult, if not impossible. There are basically two costs we are looking for and each presents its unique challenge. The first cost is the amount spent on rental units (other than long term leases), used by employees on company business. These are the cars and trucks rented from companies like Hertz, Avis, Budget, Alamo, Enterprise and other rental companies. When employees travel on company business and rent a car, the rental will often show up on an expense report that is coded to a Travel & Entertainment account, without the rental costs being separately tracked. This means the auditor would have to go through all expense reports to develop this exposure. Since this is impractical, it is up to the auditor to determine the most effective way to audit the exposure, based on the advice of the insured. The auditor should always ask the insured two questions: 1. Do you rent cars or truck for short terms? If the answer is, yes. Explain that you need to know the amount of those rental and 2. How is the best way to find those costs? Also, there is a cost of hire that often disguises itself as “Sub-Contractor" cost. The insured will have costs coded to subcontractor or vendor accounts that are actually hired auto exposures. These would be companies that haul material o,r even act as taxis for employees (which is common among Amish-owned entities). Don’t be tempted to check the certificates of insurance and lump these in with your adequately insured subs class. This group should be separately classified as hired auto. Remember, just because the contracted hauler has a certificate of insurance, that doesn’t mean the policyholder is immune to liability. If an accident occurs when the vehicle is being operated on behalf of the Insured, liability follows. Also, there is no credit given for,mobile equipment (as there could be with Worker’s Comp). When auditing you should find the type of work performed by all subs, especially those with names like ABC Trucking, XYZ Hauling, Charlie’s Debris Removal and those that list an individual name like John Jones as these are often truckers. If the “subs” that do trucking for the insured have a certificate of insurance, it should be checked for Automobile Coverage. Remember that loading and unloading of a truck is covered by the Auto Policy not the Liability Policy. If the “sub” doesn’t have a Certificate we should inform the insured that an auto certificate is needed and list those ‘subs’ separately and make a note to the underwriter. While auditing these coverages can often be confusing, it is the auditor’s job to understand how they apply and what is needed to properly underwrite the risk. Educational Bulletin: 2007-5-01 Date: May 31, 2007 Page 2 of 2