1. Forms
2. CA
3. CA-20-12

What the form is

Endorsement CA 20 12, titled LEASING OR RENTAL CONCERNS – RENT-IT-THERE/LEAVE-IT-HERE AUTOS, is an endorsement to the Business Auto Coverage Form (BAP) or Motor Carrier Coverage Form. Its primary function is to address liability coverage for vehicles that are rented from another entity by a customer (rentee) and then left in the care of the named insured (the leasing or rental concern). Specifically, the endorsement states that the named insured's liability insurance does not extend to cover the owner of such a 'rent-it-there/leave-it-here' auto, nor does it cover the original rentee of that vehicle, when the vehicle is not owned by the named insured. This prevents the named insured's policy from inadvertently providing primary coverage for autos they do not own and did not initially rent out.

Classes of business it applies to

This endorsement is specifically designed for businesses engaged in automobile leasing or rental operations. It is particularly relevant for rental companies that have arrangements allowing customers to drop off vehicles rented from other, often unaffiliated, rental agencies at their locations.

Real-world example: Imagine 'National Rentals' allows customers to rent a car in one city and drop it off at 'Local Wheels', an independent rental agency in another city, due to a network agreement. If a customer rents a car from National Rentals and leaves it at Local Wheels, and an incident occurs with that car while it's on Local Wheels' lot before National Rentals reclaims it, CA 20 12 on Local Wheels' policy would clarify that Local Wheels' liability coverage does not protect National Rentals (the owner) or the customer who rented it from National Rentals.

Special considerations

• The endorsement is critical for rental businesses involved in one-way rental programs or inter-company drop-off agreements.
• It clearly defines a 'rent-it-there/leave-it-here auto' as "an auto a rentee rents from someone other than you and leaves with you."
• This form helps to avoid disputes over which insurance policy is primary in the event of a loss involving such vehicles.
• It is important for the contractual agreements between the rental companies to clearly stipulate insurance responsibilities for these vehicles.

Key information for agents and underwriters

• Risk Assessment: Underwriters should assess the volume and management of 'rent-it-there/leave-it-here' vehicles. While this endorsement limits liability for the owner/rentee, the named insured still has a bailment exposure for these vehicles while in their temporary custody.
• Coverage Coordination: Agents should discuss how physical damage to these non-owned vehicles is covered while on the insured's premises (e.g., through garagekeepers coverage, if applicable, or based on contractual obligations with the vehicle owner).
• Pricing: By excluding liability for the owner and original rentee of these specific autos, the endorsement helps to more accurately define the scope of the named insured's liability coverage, which can impact premium calculations.
• Contractual Agreements: It's vital that the insured's agreements with other rental companies align with the provisions of this endorsement to prevent gaps or overlaps in coverage.