1. Forms
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3. CA-00-25

Auto Dealers Coverage Form (CA 00 25)

The Auto Dealers Coverage Form (CA 00 25) is a specialized commercial auto insurance form designed by the Insurance Services Office (ISO) to address the unique and overlapping liability exposures faced by vehicle dealerships. It combines elements of general liability and automobile liability into a single, comprehensive policy. This form aims to eliminate potential coverage gaps and overlaps that could arise if a dealership were to carry separate general liability and auto policies. The core function of the CA 00 25 is to provide coverage for premises liability (e.g., a customer slipping and falling on the showroom floor), products liability (e.g., a defect in a sold vehicle causing an accident), automobile liability (e.g., accidents involving dealership-owned vehicles or during test drives), and physical damage to the dealership's owned vehicles. A key feature is the inclusion of garagekeepers coverage, which protects customers' vehicles while they are in the dealership's care, custody, or control for service, repair, storage, or safekeeping. The form utilizes a system of numerical symbols (typically 21 through 32) on the declarations page to designate which autos are covered and for which specific coverages.

Classes of Business

The CA 00 25 is specifically tailored for businesses engaged in selling, servicing, or storing automobiles. This includes a variety of dealership types:

• Franchised Auto Dealers: Businesses that sell new vehicles for specific manufacturers (e.g., a Ford or Toyota dealership). These dealerships often also sell used vehicles and have service and parts departments.
• Non-Franchised/Independent Auto Dealers: Dealerships primarily focused on selling used vehicles of various makes and models.
• Truck and Truck-Tractor Dealers: Businesses specializing in the sale of new or used commercial trucks and semi-tractors.
• Motorcycle Dealers: Dealerships selling new or used motorcycles.
• Recreational Vehicle (RV) Dealers: Businesses that sell motorhomes, campers, and travel trailers.
• Trailer Dealers: Dealerships focused on selling various types of trailers, including commercial or mobile home trailers.
• Businesses that combine sales with significant service, repair, or body shop operations also fall under the scope of this form.

For example, "Main Street Motors," a franchised dealer selling new sedans and SUVs, offering test drives, operating a service center, and maintaining an inventory of vehicles on their lot, would be a prime candidate for the CA 00 25. Similarly, "Pre-Owned Pros," an independent used car lot that also performs minor repairs, would benefit from this coverage form.

Special Considerations

There are several important factors to consider when utilizing the CA 00 25:

• Numerical Symbols are Key: The scope of coverage is heavily dependent on the numerical symbols entered on the declarations page next to each coverage part. For instance, Symbol 21 ("Any Auto") provides the broadest coverage, while other symbols restrict coverage to specific types of vehicles (e.g., Symbol 22 for "Owned Autos Only" or Symbol 23 for "Owned Private Passenger Autos Only"). Incorrect symbol usage can lead to significant coverage gaps.
• Garagekeepers Coverage Options: Garagekeepers coverage can be provided on different bases, such as legal liability (covers damage for which the insured is legally liable), direct primary (covers damage regardless of liability, up to policy limits), or direct excess (pays after the customer's own insurance). The choice depends on the dealership's risk appetite and customer service philosophy. The declarations will specify the chosen options and applicable deductibles.
• Acts, Errors, or Omissions Liability: This section of the form provides coverage for certain negligent acts, errors, or omissions in the course of auto dealer operations, such as mistakes in handling titles, odometers, or truth-in-lending disclosures. This is a critical coverage for dealerships.
• Coverage Territory: While generally covering accidents and losses within the United States, its territories and possessions, Puerto Rico, and Canada, there can be limitations, especially for products liability if a product is sold for use outside this territory.
• Exclusions: Like all insurance policies, the CA 00 25 contains various exclusions. Common exclusions might relate to pollution (though some pollution costs arising from covered auto accidents may be covered), contractual liability (unless it's an "insured contract" or liability would exist anyway), damage to the insured's own work or products due to defects, and certain types of property in the insured's care, custody, or control (other than what's covered by garagekeepers). Recent editions have also incorporated exclusions for events like data breaches and the use of unmanned aircraft (drones) unless specifically endorsed.
• Endorsements are Common: The base CA 00 25 can be, and often is, modified by various endorsements to broaden, restrict, or clarify coverage. Examples include endorsements for False Pretense Coverage (protecting against losses from trickery or schemes causing the dealer to part with a vehicle), Broad Form Products Coverage, or endorsements to provide higher limits for customers using loaner vehicles.

Real-world example: A dealership that frequently allows customers to test drive high-value vehicles should ensure their liability limits under Covered Autos Liability are adequate. If they also have a busy service department, choosing the right level of Garagekeepers coverage (e.g., direct primary to avoid disputes with customers over whose insurance pays first) is crucial. They should also be aware that if an employee uses their personal vehicle for dealership business and an accident occurs, coverage under the CA 00 25 might depend on the symbols used and specific policy language regarding non-owned autos.

Key Information for Agents and Underwriters

Agents and underwriters play a vital role in correctly placing and pricing coverage under the CA 00 25:

• Thorough Risk Assessment: Understanding the full scope of the dealership's operations is paramount. This includes the types of vehicles sold (new, used, high-value, commercial), the volume of sales and service, employee driving exposures (including demo and lot attendants), premises safety, and any ancillary operations like a body shop or parts department.
• Accurate Symbol Designation: Agents must work closely with the insured to select the correct covered auto designation symbols. Underwriters will scrutinize these symbols to ensure they align with the dealership's exposures and the insurer's appetite. Using Symbol 21 ("Any Auto") provides the broadest coverage but may be subject to stricter underwriting and higher premiums.
• Valuation of Inventory: For physical damage coverage on the dealership's inventory (often referred to as Dealers' Open Lot coverage), accurate and up-to-date valuation is essential. Underwriters will assess the total values at risk, security measures, and susceptibility to perils like theft, hail, or flood.
• Garagekeepers Exposure: The number of customer vehicles typically on premises, the types of services performed, and the average value of these vehicles are key underwriting considerations for garagekeepers coverage. The choice between legal liability, direct primary, or direct excess coverage will also impact pricing.
• Loss History Analysis: A detailed review of the dealership's loss history for all lines of coverage (auto liability, general liability, garagekeepers, physical damage) is critical. Frequency and severity of past claims will heavily influence underwriting decisions and pricing.
• Employee Classifications: Rating can be influenced by the number and classification of employees, particularly those who regularly operate vehicles (Class I employees) versus other employees (Class II).
• Coverage Gaps and Enhancements: Agents should identify potential coverage gaps and recommend appropriate endorsements. For example, False Pretense Coverage (CA 25 03) is often essential for dealerships. Underwriters will evaluate the need for such endorsements based on the specific risks presented.
• Pricing Considerations: Pricing will be based on a combination of factors including the dealership's size, location, sales volume, types of vehicles, loss experience, limits selected, deductibles, and the scope of coverages and endorsements chosen. Some insurers may offer package policies or bundling options that can affect overall cost.

Practical Insight: An underwriter reviewing an application for a large RV dealership located in a hail-prone area will pay close attention to the requested limits and deductibles for physical damage coverage on their inventory and will likely inquire about hail mitigation measures. An agent for a new, small used car dealer should emphasize the importance of Garagekeepers Liability and Acts, Errors, or Omissions coverage, even if the dealer is trying to minimize initial costs, as claims in these areas can be significant.