1. Forms
2. CA
3. CA-23-12

What the Form Is

The CA 23 12 Motor Carriers – Named Lessee as Insured endorsement is designed for use with the Business Auto Coverage Form (CA 00 01), Truckers Coverage Form (CA 00 12), or Motor Carrier Coverage Form (CA 00 20). Its primary purpose is to add a lessee, who has leased a covered auto from the named insured (lessor), as an insured on the named insured's policy for that specific leased auto. Crucially, this endorsement specifies that the liability coverage provided to the scheduled lessee is primary for the leased auto. It also amends the policy by deleting the contractual liability exclusion as it applies to the written lease agreement between the named insured and the lessee for that auto.

Classes of Business It Applies To

This endorsement is typically used in the trucking and transportation industries where leasing arrangements are common. Examples include:

• Motor carriers or trucking companies that lease their vehicles to other owner-operators or trucking businesses (lessees) and agree to provide primary insurance for the lessee on the lessor's policy.
• Businesses that regularly lease autos to others under agreements where the lessor (named insured) is responsible for providing primary insurance coverage for the lessee.

For instance, if 'ABC Trucking Co.' (the named insured) leases a truck to 'John Doe Trucking' (the lessee) and the lease agreement stipulates that ABC Trucking Co. will provide primary liability coverage for John Doe Trucking while using that specific truck, the CA 23 12 would be attached to ABC Trucking Co.'s policy, naming John Doe Trucking as an insured for that leased truck on a primary basis.

Special Considerations

• Written Lease Agreement: The endorsement requires a written lease agreement between the named insured (lessor) and the lessee. The terms of this lease, particularly regarding insurance obligations and hold-harmless clauses, are critical.
• Primary Coverage: It explicitly states that the coverage for the lessee is primary. This means the named insured's policy will respond first in the event of a covered claim involving the leased auto operated by the lessee.
• Hold Harmless Agreement: The endorsement often works in conjunction with a hold harmless agreement within the lease, where one party assumes the liability of another.
• Regulatory Filings: For motor carriers operating under federal or state regulations, ensuring insurance coverage aligns with filing requirements (e.g., MCS-90) is essential, though this endorsement itself doesn't replace such filings but rather clarifies insurable interests.
• Withdrawal in Specific Markets: It's important to note that in some specific markets, like the Massachusetts residual market as handled by Commonwealth Automobile Reinsurers (CAR), this endorsement (along with CA 23 08) has been recommended for withdrawal because the requirement for a written hold harmless agreement may not be applicable or standard in that particular market segment. This is a localized consideration and not a general ISO withdrawal.

Key Information for Agents and Underwriters

• Review Lease Agreements: Agents and underwriters must carefully review the lease agreement to understand the insurance obligations of each party and to ensure the endorsement is used appropriately. The agreement should clearly state who is responsible for providing primary insurance.
• Risk Assessment: Underwriting the lessee's operations and driving record may be necessary, as they are being added as an insured. The exposure of the leased auto under the lessee's control needs to be evaluated.
• Premium Implications: Providing primary coverage for a lessee can impact the premium. Rating methodologies may vary, and the cost of hire or other factors related to the lease might be considered. Rule 24.B.3 of some ISO rating manuals describes premium development when hold harmless agreements exist and endorsements like CA 23 12 are attached.
• Coverage Gaps: Ensure there are no unintended coverage gaps for either the lessor or the lessee. This endorsement clarifies the lessee's status but must fit within the overall insurance program of both parties.
• Alternative Endorsements: This endorsement is used when the lessor (named insured) is providing primary coverage for the lessee. If the situation is reversed, where the lessee is providing primary coverage for the lessor, a different endorsement (like CA 20 48 Lessors - Additional Insured and Loss Payee or similar) would be more appropriate on the lessee's policy. Endorsement CA 23 08 (Motor Carriers – Excess Coverage for The Named Insured And Named Lessors For Leased Autos) is an alternative when the lessee's insurance is primary and the lessor seeks excess protection.