1. Forms
2. CA
3. CA-99-16

Form CA 99 16: Hired Autos Specified As Covered Autos You Own

1. What the form is

The CA 99 16 endorsement, "Hired Autos Specified As Covered Autos You Own," modifies a commercial auto policy to treat specific hired, leased, or borrowed autos as if they are owned by the named insured for coverage purposes. This means that the auto listed in the endorsement's schedule will be considered a "covered auto you own" rather than a "covered auto you hire, borrow or lease." A key function of this endorsement is to extend insured status to the owner of the scheduled auto (the lessor) when the auto is rented or leased to the named insured and is being used by or for the named insured. Importantly, liability coverage provided for the scheduled auto becomes primary for the named insured, as if the auto were owned by them. The 10 01 edition of this form eliminated additional insured liability coverage for the owner/lessor of a covered auto for losses stemming from their own negligence. The 10 13 edition revised the endorsement to remove wording that limited coverage for the lessor solely to liability arising from the acts or omissions of the lessee or those acting on the lessee's behalf.

2. Classes of business it applies to

This endorsement is relevant for various businesses that lease or hire specific vehicles for an extended period and are contractually obligated to provide primary insurance for those vehicles. Examples include:

• Businesses with long-term vehicle leases: A construction company that leases a specific truck for a year and agrees to provide primary insurance on it. By using CA 99 16, the leased truck is treated as an owned auto, and the leasing company (owner) is added as an insured for liability arising from the construction company's use of the truck.
• Companies providing vehicles to executives: If a corporation leases a specific vehicle for an executive's use and wants to ensure that vehicle is treated as an owned auto on their policy, providing primary coverage and including the vehicle's owner as an insured. For instance, a company might lease a car for a key salesperson and use this endorsement to ensure proper coverage.
• Organizations renting specific equipment long-term: A business renting a specialized trailer for a multi-month project where the rental agreement requires them to insure it as if they owned it.

3. Special considerations

• Scheduled Autos Only: Coverage under this endorsement applies only to the specific autos described in the endorsement's schedule. It does not provide blanket coverage for all hired autos.
• Primary Coverage: A significant effect of this endorsement is that the liability coverage for the scheduled hired auto becomes primary for the named insured. This is a crucial point when negotiating lease agreements that require the lessee to provide primary insurance.
• No Automatic Coverage for Substitutes/Replacements: Unlike some other endorsements (e.g., CA 20 01), the CA 99 16 generally does not automatically extend coverage to substitute or replacement vehicles for the one scheduled. If a scheduled auto is replaced, the endorsement would need to be updated.
• Lessor as Insured: The endorsement specifically adds the owner of the hired/leased vehicle as an insured, but typically only for liability arising from the acts or omissions of the named insured or those operating the auto with their permission.
• Distinction from CA 20 01: While both CA 99 16 and CA 20 01 (Lessor - Additional Insured and Loss Payee) can designate leased autos as owned, there are differences. For example, CA 20 01 may include provisions for substitute or replacement autos and often includes loss payee provisions, which CA 99 16 does not. Some states may prefer or mandate the use of a state-specific endorsement like MM 20 26 in Massachusetts instead of CA 99 16 for certain situations.
• Physical Damage: This endorsement can also be used to treat the scheduled non-owned auto as a covered auto for physical damage coverages.

4. Key information for agents and underwriters

• Risk Assessment: Strict underwriting is necessary before attaching this endorsement. Underwriters should carefully review the lease agreement to understand the insurance obligations of the named insured. The condition, use, and drivers of the specified hired auto should be assessed similarly to owned vehicles.
• Pricing: When an auto is scheduled on CA 99 16 and the lease term is six months or more, it is typically rated as though owned by the insured lessee. If the policy is extended to cover the owner of the auto as an additional insured using this endorsement, a rating factor (e.g., 1.04 for liability) may be applied to the otherwise applicable liability rate.
• Coverage Gaps: Agents should ensure that scheduling an auto on CA 99 16 aligns with the insured's contractual obligations and doesn't create unintended coverage gaps. For instance, if the lessor requires loss payee status or coverage for replacement vehicles, CA 99 16 alone might be insufficient, and CA 20 01 or other endorsements might be more appropriate.
• Clarity of "Owned": The endorsement clarifies that the scheduled auto is considered "owned" and not "hired, borrowed, or leased" for the purposes of the coverage for which it is a covered auto. This is important for determining how coverage applies, especially concerning "other insurance" clauses.
• Proper Documentation: Ensure the scheduled auto is accurately described in the endorsement. The legal name of the owner/lessor should also be correctly identified.