THE KING PIN AND BB LEGAL PROUDLY PRESENT - PDF document

1 THE KING PIN AND BB LEGAL PROUDLY PRESEN
THE KING PIN AND BB LEGAL PROUDLY PRESENT Make Sure Your Clients Have the Skill to Compete in the Nordic Combined Sport of Insurance and Business Law Motor Carrier Coverage Form The Insurance Services Office (ISO) develops forms and rates and deals with the states to approve them . Every state is different in their approval process . ISO forms are the standard for liability coverage for for - hire interstate motor carriers . The first coverage form was the

2 Truckers Coverage Form, and the term â€
Truckers Coverage Form, and the term “Pruckers” was for for - hire . Coverage for owner - operators though was based on authority . History of the Motor Carrier Coverage Form In anticipation of the termination of the Interstate Commerce Commission (ICC), ISO developed the Motor Carrier Coverage Form (MCCF) in 1993. The Uniform Carrier Registration for motor carriers was projected to be effective 1/1/98 (a motor carrier is anyone providing transporta

3 tion of property and people). The majo
tion of property and people). The major difference is that coverage for owner - operaPors was Nased in “wriPPen agreemenPs”B This has basically been unchanged until now. Proposed Changes to the ISO Form ISO is now working on proposed revisions to the MCCF to clear - up some language in the ambiguities and address trucking of the 2020 ’s . Current Policy Wording The lessor of a covered “auPo” that is not a “Prailer” or any “employee”,

4 agent or driver of the lessor while the
agent or driver of the lessor while the “auPo” is leased to you under a written agreement if the written agreement between the lessor and you do not require the lessor to hold you harmless and then only when the leased “auPo” is used in your business as a “moPor carrier” for hire . Sample Contract Language No indemnity back to MC HOLD HARMLESS AGREEMENT CONTRACTOR agrees that CARRIER is no way responsible to CONTRACTOR for any personal injury s

5 uffered by CONTRACTOR, or CONTRACTOR’S
uffered by CONTRACTOR, or CONTRACTOR’S employees, agents, or servants, or any damages to CONTRACTOR’S property or equipment which result from the performance by CONTRACTOR of this agreement . CONTRACTOR hereby releases CARRIER from any and all claims for damages, claims for compensation, or causes of action whatsoever arising from any such personal injury or property damage suffered by CONTRACTOR while in or upon CARRHER’S property or equipment, or whi

6 le performing services pursuant to this
le performing services pursuant to this contract on behalf of CARRIER . CONTRACTOR further expressly agrees, that if CONTRACTOR becomes liable to CARRIER, for damage or loss pursuant to this paragraph, or any other paragraph of this agreement, CARRIER may deduct from compensation due to CONTRACTOR, the amounts owing by CONTRACTOR to CARRIER, such deduction being expressly authorized by CONTRACTOR . Proposed New Language The lessor of a covered “auPo” tha

7 t is not a “Prailer” or any “emplo
t is not a “Prailer” or any “employee”, agent or driver of the lessor while the “auPo” is leased to you under a written agreement when the leased “auPo” is used in your business as a “moPor carrier” for hire . In the written agreement between the lessor and you do not require the lessor to hold you harmless . Coverage Analysis Granting of coverage is based on a trailer attached to a covered auto – Changing world with drop and hook, prop

8 osed change is “ used with a covered a
osed change is “ used with a covered auto ” . For owned trailers that are covered autos being used by another motor carrier, the problem is a permissive user of the covered auto qualifies as an insured . An insured’s trailer being used by another motor carrier creates the problem that when a crash occurs and a lawsuit cannot be settled within the limits of the insurance on the truck using the trailer, the owner of the Prailer’s policy must respond in

9 excess . Proposed change - “ who does
excess . Proposed change - “ who does not qualify as an insured – a motor carrier that is using a covered auto that is a trailer ” . Auto Liability Exposures for Brokers Sample Contract Language : Indemnity . (a) Broker shall indemnify and hold Shipper and its parents, subsidiaries and affiliates and the applicable consignee, and each of their respective officers, directors, employees and agents (collectively, the “HndemniPees”), harmless from and

10 against all claims, losses, damages, li
against all claims, losses, damages, liabilities, costs and expenses including, but not limited to, aPPorneys’ fees and all other costs of defense (collectively, the “Claims”), arising under Broker’s performance of this Agreement including, without limitation, injury to or death of any person or damage to any property, including cargo . The foregoing indemnity shall not apply to the extent SOipper’s negligence or other actionable fault is the caus

11 e of such Claim . Case Law Popal v. Rel
e of such Claim . Case Law Popal v. Reliable Cargo Delivery Inc., 2021 WL 1100097 (W.D. Tex. 2021) Additional Insured v. Loss Payee CARGO FORM Additional Insured v. Loss Payee HSSUE: MoPor carrier’s insurance carrier will noP issue Ioss Payee endorsemenP: Loss payee. The policy addresses the insured's exposure when someone's property that they have in their care, custody or control is damaged. The entity that would be paid for the damaged property i

12 s the owner so the owner of the property
s the owner so the owner of the property is the loss payee. We suggest that the agent/company add to the COI "if you are the owner of the property that is covered and is damaged, you are a loss payee" or other type wording. The broker can be a loss payee as well. The insurance provider should not add the broker unless the broker gets written permission from the owner/shipper to be added. If the broker is paid, the owner releases the insurance company fr

13 om liability. Additional Insured v. Los
om liability. Additional Insured v. Loss Payee The cargo coverage form is a liability policy so to "settle" a claim the damaged party must be paid. The broker is not the owner so they were not damaged and therefore should not be a loss payee – unless they paid the beneficial owner for th e loss . An additional insured party is different. A party that is liable for cargo because they take possession can be an additional insured . The cargo property co

14 verage form is misunderstood. It is a
verage form is misunderstood. It is a legal liability form that responds when the insured is legally liable for property in their CCC, but only if the damaged property is covered property and damage is caused be a covered cause of loss and not excluded (this is property type coverage). WORKERS COMPENSATION Sample Contract Issue : Shipper requires broker or its carrier to maintain : Worker's Compensation and Employer's Liability Insurance affording (a) p

15 rotection under the Worker's Compensatio
rotection under the Worker's Compensation Law of the state in which work is to be performed, or containing an all - states endorsement ; and (b) Employer's Liability protection subject to a limit of not less than $ 500 , 000 . WORKERS COMPENSATION Workers Compensation – What is an “all states endorsemenP” and when is it necessary? Is it not sufficient that the employer is covered where the work is being performed? Employer Liability Insurance – Is it

16 appropriate that SOipper’s ask for br
appropriate that SOipper’s ask for brokers and carriers to maintain ELI? Will ELI provide a defense to the Shipper? WORKERS COMPENSATION ELI/WC only provides coverage to the "employer . ” The shipper/broker is not the employer . T he only reason to require ELI is to save them from a WC audit . The misunderstanding is when a shipper requires the trucker to have WC provides coverage to them the broker/shipper . So yes it could save an audit but is not pro

17 tection from a suit brought by a worker
tection from a suit brought by a worker of the trucker . Commercial General Liability Insurance ENDORSEMENT V. COVERAGE FORM. There is a misunderstanding of what can be endorsed onto a CGL form v. what is already part of the coverage terms and conditions. Action Over Premises and operations Products and completed operations Protective liability for subcontractors Contractual Liability Commercial General Liability Insurance Commercial General Liability –

18 Does the standard ISO policy include â€
Does the standard ISO policy include “acPion over” claims? The standard ISO GL would provide coverage to their insured/motor carrier . The BCA would be an insured contract and would provide protection to the shipper/broker BUT most GL providers of "small" motor carriers add endorsements that take the coverage way . Action over would be a consideration in the agreement if the motor carrier holds the shipper/broker harmless for shippers/broker's negligenc

19 e . In all but four states, the contract
e . In all but four states, the contract would not be honored because of the state anti - indemnification laws . Commercial General Liability Insurance Products and completed operations Note : All GL's policies provide product and completed operations BUT in the trucker's classification there is not a separate limit . Note – underwriters add a product/completed exclusion endorsement to the policy . COI would show for limits 1 , 000 , 000 per occurrence 2 ,

20 000 , 000 in the aggregate and in in th
000 , 000 in the aggregate and in in the aggregate limit for product/completed operations either : NA/Excluded/included above . The coverage is not excluded, it would be a separate aggregate (lawyers, travel agency example) . Commercial General Liability Insurance Protective liability for subcontractors . Does the standard ISO include liability for subcontractors? How is this different than contractual liability coverage being requested by shippers? Auto Li

21 ability Exposures for Brokers The broker
ability Exposures for Brokers The broker assigns a load to a motor carrier . The motor carrier has a crash . The broker is named in a lawsuit . The suit is based on two premises : 1) Being held vicariously liable for the acts of the driver and the motor carrier hired by the broker to transport the load ; or 2) Direct negligence for adverse selection, negligent entrustment, or not properly screening the contracted motor carrier . For vicarious liability expos

22 ure, the broker qualifies as an insured
ure, the broker qualifies as an insured on the Auto Liability policy on the truck the broker hired to transport the load . If the case can be settled within the limits, the broker would be released . If the case cannot be settled within the limits of the coverage of the motor carrier that hauled the load, then the broker would have exposure above the limits on the motor carrier’s policy . For the Nroker’s own negligence, they would need their own coverag

23 e . Auto Liability Exposures for Brokers
e . Auto Liability Exposures for Brokers Contingent Auto Liability Contingent auto liability for a broker is simply non - owned auto coverage but is not readily available in the standard marketplace . Symbol 71 or 9 – Non - owned “AuPos” Only Only those “auPos” you do not own, lease, hire, rent or borrow that are used in connection with your business . This includes “privaPe passenger Pype” “auPos” owned by your “employees” or partners

24 (if you are a partnership), members (if
(if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs . General Liability Insurance General Liability Policy Exclusion Excludes only “auPos” owned, operated or rented or loaned to insured . For standard ISO policies, if the broker has non - owned auto coverage on their Auto Liability policy and/or a General Liability policy, they have no

25 n - owned auto coverage which equals con
n - owned auto coverage which equals contingent liability . However, the insurance carriers that insure brokers understand this and will typically add endorsements that remove or limit the coverage . Freight Broker Auto Liability or Contingent Auto Liability is available from transportation specialty markets . In addition to covering the exposure noted above - for negligent entrustment and vicarious liability - it protects the broker should the motor carrier

26 ’s insurance not respond due to cancel
’s insurance not respond due to cancellation or policy exclusion . Contingent liability coverage also provides much needed defense coverage in the event of a claim . There is no uniformity in these forms, and you need to make sure it covers what you expect . Shippers are requiring freight brokers to provide evidence of coverage and in many cases requesting to be added as an additional insured to these policies . Freight Broker Auto Liability / Broker Liabi

27 lity Coverage Coverage Analysis Cover
lity Coverage Coverage Analysis Coverage Analysis Coverage Analysis Business Owners Policy includes a “Hired Auto and Non - Owned Auto Liability” endorsement. • Will this form provide both indemnity and defense in the event the broker gets sued as a result of a CMV accident (where broker hired the motor carrier)? Gore v. State Farm Mut. Ins. Co. , 649 So. 2d 162, 165 (2d Cir. LA 1995). The Louisiana court noted that there is “scant jurisprude

28 nce” on this issue, but that all of it
nce” on this issue, but that all of it points in the same direction. The court interpreted an insurance provision identical to the one at issue. The court said: “We believe that the clear meaning of the policy definition of "hired autos" refers only to those vehicles which the insured has procured for his own use by agreement with the owner.” The court then analyzed the cases it was able to find on the issue. Coverage Analysis In Johnson v . Con

29 tinental Casualty Co . , 167 So . 114 (L
tinental Casualty Co . , 167 So . 114 (La . App . 2 d Cir . 1936 ), the plaintiff was hired by the parish to inspect 20 projects and was required to furnish his own transportation for which he was paid mileage at a rate of four cents per mile . The court found that the vehicle was not a hired or leased vehicle within the meaning of the insurance policy exclusion . The court reasoned that when a thing is leased or hired, the lessor has complete control of the

30 thing to use it as he sees fit , and th
thing to use it as he sees fit , and the four cents per mile was for the care, upkeep, expenses and deterioration of the car and could not be considered rent . Nor did the parish have any control over the car such that, for example, it could put another driver in it . Coverage Analysis In Chicago Insurance Company v . Farm Bureau Mutual Insurance Company of Arkansas, Inc . , 929 F . 2 d 372 ( 8 th Cir . 1991 ), the federal appellate court held that a truck

31 ing firm was an independent contractor w
ing firm was an independent contractor with respect to the insured which hired it to haul grain . Thus, the trucking firm's truck was not a "hired auto" for purposes of insurance coverage carried by the insured . In Schroeder v . Board of Supervisors of Louisiana State University, 591 So . 2 d 342 (La . 1992 ), the supreme court recognized that the prevailing meaning of the term "borrow" in the context of automobile lending requires that the borrower acquire

32 substantial possession, dominion, contr
substantial possession, dominion, control, or the right to direct the use of the vehicle, and not merely that the use of the vehicle by another person was for the benefit of a purported borrower . The court was interpreting an insurance policy provision that insured anyone else "while using with your permission a covered auto you own, hire or borrow . . . . " Schroeder, supra at 343 . Coverage Analysis In Chicago Insurance Company v . Farm Bureau Mutual In

33 surance Company of Arkansas, Inc . , 929
surance Company of Arkansas, Inc . , 929 F . 2 d 372 ( 8 th Cir . 1991 ), the federal appellate court held that a trucking firm was an independent contractor with respect to the insured which hired it to haul grain . Thus, the trucking firm's truck was not a "hired auto" for purposes of insurance coverage carried by the insured . In Schroeder v . Board of Supervisors of Louisiana State University, 591 So . 2 d 342 (La . 1992 ), the supreme court recognized t

34 hat the prevailing meaning of the term "
hat the prevailing meaning of the term "borrow" in the context of automobile lending requires that the borrower acquire substantial possession, dominion, control, or the right to direct the use of the vehicle, and not merely that the use of the vehicle by another person was for the benefit of a purported borrower . The court was interpreting an insurance policy provision that insured anyone else "while using with your permission a covered auto you own, hire

35 or borrow . . . . " Schroeder, supra at
or borrow . . . . " Schroeder, supra at 343 . Coverage Analysis Thus, the Louisiana court said: “It is clear from the cases cited that the key inquiry regarding whether a vehicle is leased, hired, rented or borrowed for purposes of the "hired auto" provision of the policy is whether the alleged lessee, hirer, renter or borrower exercised dominion, control or the right to direct the use of the vehicle .” Coverage Analysis It is not as clear with th

36 e “ non - owned auto ”, but the cour
e “ non - owned auto ”, but the courts have taken the position that the vehicle must be used in the insured’s business ( not that of a third party ) in order to fall under the coverage . See Gore v . State Farm Mut . Ins . Co . , 649 So . 2 d 162 , 166 ( 2 d Cir . LA 1995 ) ; Scottsdale Ins . Co . v . Transp . Leasing/Contract, Inc . , 671 N . W . 2 d 186 (Ct . App . Minn . 2003 ) (driver loaned from company 1 to company 2 and driving company 2 ’s ve

37 hicle at time of accident did not make c
hicle at time of accident did not make company 1 ’s insurer liable under non - owned auto provision because driver was not engaged in company 1 ’s business at the time of the accident) . Freight Auto Liability Coverage Form Freight Auto Liability Coverage Form Freight Auto Liability Coverage Form Freight Auto Liability Coverage Form The requirement of pollution liability coverage in GL would be dependent on the operation . If the motor carrier

38 is doing any loading/unloading of the ca
is doing any loading/unloading of the cargo of the shipper that could be a pollutant then the GL pollution coverage would provide coverage if something happened after the cargo is delivered . Another consideration is the standard ISO AL (MCCF) . The Motor Carrier Coverage Form excludes pollution damage caused by the motor carrier's cargo without an endorsement CA 9948 . The misunderstanding often seen is the GL pollution coverage would not provide coverage u

39 ntil the cargo is at its final destinati
ntil the cargo is at its final destination . If the AL does not have the endorsement that provides pollution coverage caused by cargo there are stand alone Pollutions policy that could address site (GL type exposures) pollution as well as while being transported . Pollution Liability Coverage Conclusion Brought to you by The King Pin and BB Legal Tommy Ruke tommy@mcief.org Blitch Westley Barrette, S.C. Bridgette M. Blitch bblitch@bwesq.com 407 - 618 - 4776