1. Forms
2. CA
3. CA-20-14

What the form is

The CA 20 14 Leasing Or Rental Concerns – Second Level Coverage endorsement is designed for businesses that lease or rent vehicles to others. Its primary function is to provide an additional layer of liability protection for the lessor (the vehicle owner/leasing company) above the primary insurance coverage carried by the lessee (the person or entity renting the vehicle). This endorsement comes into play when the lessee's auto liability policy is considered primary for both the lessee and the lessor, but the lessor desires a higher limit of coverage for its own protection. The CA 20 14 essentially bridges the gap between the limit provided by the lessee's policy and a higher limit specified in the endorsement's schedule.

Classes of business it applies to

This endorsement is specifically tailored for businesses involved in the leasing or rental of automobiles. Examples include:

• Car rental agencies: Companies that rent vehicles to the public for short periods.
• Equipment rental companies: Businesses that lease vehicles (e.g., trucks, vans) to other commercial entities.
• Long-term vehicle leasing companies: Firms that lease vehicles to individuals or businesses for extended durations (e.g., several months or years).

For instance, if a company leases a fleet of delivery vans to a local bakery, and the lease agreement requires the bakery to maintain primary auto liability insurance naming the leasing company as an additional insured, the leasing company might still opt for the CA 20 14 endorsement to secure higher liability limits for itself in case of a major accident involving one of the leased vans.

Special considerations

Several important points need to be considered when using the CA 20 14 endorsement:

• Primary Insurance Requirement: A fundamental prerequisite is that the lessee must have their own auto liability insurance policy that provides primary coverage for both the lessee and the lessor. The CA 20 14 is an excess coverage and will not respond unless the lessee's primary insurance is in place and has been exhausted.
• Lease Agreement Terms: The terms of the lease or rental agreement are crucial. These agreements often stipulate the insurance responsibilities of both the lessor and the lessee, including required minimum liability limits for the lessee's policy.
• Scheduled Limit: The CA 20 14 endorsement will have a schedule where the desired overall limit of liability for the lessor is specified. The endorsement pays the difference between this scheduled limit and the limit of the lessee's underlying primary insurance.
• State Variations and Availability: While widely used, there can be state-specific rules or even instances where such endorsements are withdrawn or modified. For example, there have been discussions about withdrawing this endorsement in Massachusetts. It's always essential to verify its applicability and terms in the relevant jurisdiction.

Key information for agents and underwriters

For insurance professionals, the CA 20 14 presents specific areas of focus:

• Verification of Lessee's Insurance: Agents and underwriters must diligently verify that the lessee maintains adequate primary auto liability insurance that correctly names the lessor as an additional insured and that the coverage is current.
• Risk Assessment: The underwriting process should involve assessing the risk profile of the lessor's operations, including the types of vehicles leased, the typical duration of leases/rentals, and the nature of the lessees' operations or usage.
• Pricing: The premium for this endorsement will depend on factors such as the limit of liability being provided, the nature and scope of the lessor's business, and the perceived risk associated with the lessees.
• Coverage Gaps: It's important to ensure there are no unintended coverage gaps between the lessee's primary policy and the excess coverage provided by the CA 20 14. The definition of who is an insured under both policies should be reviewed.
• Clarity in Documentation: The limits of liability and the specific terms of coverage under the CA 20 14 should be clearly documented in the policy and understood by the insured lessor.