1. Forms
2. CA
3. CA-20-11

What the form is

Endorsement CA 20 11, titled "Leasing or Rental Concerns – Exclusion of Certain Leased Autos," is an endorsement used with commercial auto policies, such as the Business Auto Coverage Form or the Motor Carrier Coverage Form. Its primary function is to remove coverage for the named insured (the leasing or rental company) for liability and any applicable no-fault coverage claims arising from autos they lease or rent to others, specifically when the claim results from the actions or inactions of the lessee, the lessee's employees or agents, or anyone permitted by the lessee to operate the vehicle. Essentially, it shifts the responsibility for such incidents to the lessee's insurance or the lessee themselves.

Classes of business it applies to

This endorsement is specifically designed for businesses whose operations involve leasing or renting vehicles to others. Real-world examples include:

• Daily and short-term car rental agencies.
• Companies that provide long-term vehicle leases.
• Businesses offering rent-to-own vehicle options.
• Any commercial entity that regularly furnishes autos to third parties under lease or rental agreements.

Special considerations

There are several important points to consider when using or encountering this endorsement:

• Lessee's Responsibility: The core intent is to reinforce that the lessee is responsible for securing their own insurance to cover their operation of the leased/rented vehicle. Lease agreements should clearly outline these insurance obligations for the lessee.
• Scope of Exclusion: The exclusion typically applies to bodily injury, property damage liability, and any no-fault coverages. It generally does not impact the physical damage coverage (comprehensive or collision) for the leased auto itself, which may still be covered under the lessor's policy or be required of the lessee.
• State Laws and Minimum Coverage: State-specific insurance laws, particularly those concerning minimum liability coverage for rental vehicles or vicarious liability, can interact with this endorsement. In some situations, despite this exclusion, a lessor's policy might be required to respond, at least up to statutory minimum limits, if the lessee is uninsured or inadequately insured. The federal Graves Amendment also plays a role in limiting vicarious liability for rental companies but doesn't negate all insurance responsibilities.
• Clarity in Lease Agreements: It is crucial for leasing and rental companies to have robust lease agreements that clearly transfer the responsibility for insurance and liability to the lessee.

Key information for agents and underwriters

Insurance professionals should be mindful of the following when dealing with this endorsement:

• Risk Assessment: Underwriters should scrutinize the leasing/rental company's operational procedures, including how they verify lessee insurance and the contractual language in their lease agreements. Strong risk management practices by the insured can make this exclusion more effective.
• Potential Coverage Gaps: Agents should counsel insureds that while this endorsement excludes liability for the lessee's conduct, the lessor is not entirely without auto-related exposures. For example, the lessor could still be liable for negligent maintenance of a vehicle prior to leasing it.
• Pricing Implications: The application of this endorsement generally results in a lower premium for the leasing/rental company's commercial auto policy because it carves out a significant portion of the potential liability exposure.
• Interaction with Other Endorsements: This form is often part of a package of endorsements tailored for leasing and rental risks. For instance, it might be used alongside CA 20 09 (Leasing or Rental Concerns – Contingent Coverage) or CA 20 10 (Leasing or Rental Concerns – Conversion, Embezzlement or Secretion Coverage). A comprehensive review of all endorsements is necessary.
• Insured's Understanding: It's vital that the insured leasing/rental company understands that this endorsement does not eliminate their need for commercial auto liability insurance. It only modifies when their policy will respond concerning autos leased to others.