1. Forms
2. CA
3. CA-99-27

What the form is

Endorsement CA 99 27, titled SPLIT LIABILITY LIMITS, is designed to alter the way liability limits are applied under a commercial auto insurance policy. Instead of a single Combined Single Limit (CSL) that applies to all bodily injury and property damage arising from one accident, this endorsement specifies separate, distinct limits. Typically, these are structured as a limit for Bodily Injury per person, a higher limit for total Bodily Injury per accident, and a separate limit for Property Damage per accident.

Classes of business it applies to

This endorsement can be used for a wide range of businesses that have a commercial auto policy, such as the Business Auto Coverage Form (CA 00 01) or the Motor Carrier Coverage Form (CA 00 20). It is applicable when the insured or insurer prefers or is required to have split liability limits rather than a CSL. Examples include:

• Trucking Companies: May need to meet specific contractual requirements from shippers or brokers that mandate split liability limits.
• Businesses with Passenger Transport: Such as taxi services or non-emergency medical transport, where state regulations might specify minimum split limits for liability (e.g., mandatory for taxis in Virginia ).
• Companies desiring specific limit allocation: A business might perceive a different level of risk for bodily injury versus property damage and wish to allocate their limits accordingly. For instance, a contractor who frequently works near high-value property might want a robust property damage limit, while still maintaining adequate bodily injury coverage.

Special considerations

The primary impact of using CA 99 27 is the move from a flexible single pool of money (CSL) to a more structured set of sub-limits. Key considerations include:

• Adequacy of Limits: Each of the split limits (BI per person, BI per accident, PD per accident) must be carefully chosen to ensure they are sufficient for the insured's potential exposures. A low 'per person' bodily injury limit could be quickly exhausted in a serious injury claim, even if the 'per accident' limit is substantial.
• Contractual and Regulatory Compliance: Agents and insureds must verify that the selected split limits meet all applicable state financial responsibility laws, federal motor carrier requirements (if applicable), and any specific limits mandated by contracts with customers or other parties.
• Comparison to CSL: While a CSL offers more flexibility in how the total limit can be applied to a single loss (e.g., the entire CSL could cover a severe bodily injury claim), split limits can sometimes be more cost-effective or align better with specific risk management strategies.

Key information for agents and underwriters

• Pricing and Risk Assessment: The selection of split limits versus a CSL will influence the premium. Underwriters will assess the chosen limits against the insured's operational risks, geographic area of operation, vehicle types, and loss history. Higher limits or a history of severe claims will naturally lead to higher premiums.
• Coverage Clarity: Agents should clearly explain to insureds how split limits function, particularly the 'per person' bodily injury limitation, to avoid misunderstandings at the time of a claim.
• Underwriting Guidelines: Insurers will have their own underwriting guidelines regarding acceptable minimum and maximum split limits for different classes of business. They will also ensure that the use of this endorsement is consistent with the overall underwriting of the commercial auto policy.
• Alternative Forms: For garage operations, a similar endorsement, CA 99 38 Split Liability Limits – Garages, is used instead of CA 99 27.