1. Forms
2. CA
3. CA-05-25

What the form is

The CA 05 25, titled "Partners Or Members As Insureds," is an endorsement designed to be added to a commercial auto insurance policy, such as the Business Auto Coverage Form (CA 00 01) or the Auto Dealers Coverage Form (CA 00 25). Its core function is to extend liability coverage to individuals who are partners in a partnership or members of a limited liability company (LLC) when they are operating their personally owned vehicles for the business activities of the named insured (the partnership or LLC). Essentially, if a partner or LLC member uses their own car for company business and is involved in an accident, this endorsement helps classify them as an "insured" under the business's auto policy.

Classes of business it applies to

This endorsement is specifically applicable to businesses structured as partnerships or limited liability companies (LLCs). It is relevant in any scenario where partners or LLC members might use their personal vehicles to conduct company business.

• Real-world example: A partner in an architectural firm uses her personal car to visit a construction site for a client meeting. If she were to cause an accident during this trip, the CA 05 25 endorsement would provide her with insured status under the architectural firm's business auto policy.
• Real-world example: A member of an LLC that operates a catering business uses his own van to deliver an order to an event. This endorsement would ensure he is covered as an insured under the LLC's commercial auto policy while performing this business-related task.

Special considerations

• Addressing a Coverage Gap: This endorsement is vital because it closes a common coverage gap. Without it, while a partner's or member's personal auto policy (PAP) would likely offer primary coverage, the business auto policy (BAP) might not automatically extend coverage to the partner or member as an insured when they are driving their own vehicle (as distinct from a vehicle owned by the company).
• Nature of Coverage: The coverage provided by this endorsement often acts as excess coverage over the individual partner's or member's personal auto insurance. However, a key benefit is that it grants access to the potentially higher liability limits carried on the business auto policy.
• Newer Endorsement: The CA 05 25 is a relatively recent addition by the Insurance Services Office (ISO), introduced in November 2020, specifically to cater to this coverage need.
• Distinct from Employee Coverage: It's important to differentiate this endorsement from CA 99 33 "Employees as Insureds," which serves a similar purpose but is designed for employees using their personal vehicles for business, not partners or LLC members. Similarly, CA 05 24 "Non-Ownership Liability Coverage for Volunteers" addresses volunteers.

Key information for agents and underwriters

• Risk Evaluation: Underwriters should assess the extent and nature of personal vehicle usage by partners and LLC members for business operations. This includes considering the types of vehicles used, the driving histories of the individuals, typical travel distances, and the purpose of the vehicle use.
• Essential for Partnerships/LLCs: Insurance agents should proactively recommend this endorsement to all clients operating as partnerships or LLCs to mitigate potential errors and omissions (E&O) exposures stemming from this specific coverage gap.
• Pricing Considerations: The premium associated with this endorsement will be determined by the insurer's specific rating guidelines but should account for the increased exposure of covering non-owned vehicles used by these key individuals.
• Defining "Business Use": A clear understanding and definition of what activities constitute "business use" of a personal vehicle are crucial to ensure the coverage applies as intended by both the insurer and the insured.
• Policy Interaction: Agents need to clearly explain to clients how the CA 05 25 endorsement interacts with the personal auto policies of the partners or members, especially concerning the order of coverage (primary versus excess).
• Applicability to Auto Dealers: This endorsement is also available for use with the Auto Dealers Coverage Form (CA 00 25). Therefore, agents and underwriters who handle insurance for auto dealerships structured as partnerships or LLCs should also consider the necessity of this endorsement.