1. Forms
2. CA
3. CA-99-38

What the Form Is

The CA 99 38 "Split Liability Limits - Garages" endorsement is designed to alter the way liability limits are applied under the standard Garage Coverage Form (CA 00 05). Instead of a single limit of insurance that applies to both bodily injury and property damage arising from one accident, this endorsement separates the limits. It establishes distinct limits for: Bodily Injury Liability for each person, a total Bodily Injury Liability for each accident, and a separate limit for Property Damage Liability for each accident.

Classes of Business It Applies To

This endorsement is specifically used for businesses with garage operations that are insured under a Garage Coverage Form. Examples of such businesses include:

• Automobile dealerships (new and used)
• Auto repair and service shops
• Body shops
• Service stations
• Storage garages and public parking facilities
• Businesses that regularly take custody of customers' vehicles for service, repair, storage, or safekeeping.

For instance, an auto repair shop might opt for this endorsement to have more defined coverage buckets for different types of liability exposures, potentially aligning with specific contractual obligations or risk management strategies.

Special Considerations

The primary consideration for using the CA 99 38 is the preference or need for separate liability limits rather than a combined single limit (CSL). This might be driven by:

• Contractual Requirements: Some contracts may stipulate specific split limits for liability coverage.
• Risk Management: An insured might perceive their bodily injury exposure differently from their property damage exposure and desire tailored limits for each.
• Premium Impact: The premium for split limits may differ from that of a CSL, and the ISO Business Auto Rating Program provides the methodology for calculating any premium adjustments when this endorsement is added.
• State Requirements: While the Garage Coverage Form often provides a single limit, some state-specific requirements or preferences might favor split limits, although this endorsement itself is applied at the policy level.

It's important to understand that choosing split limits means that once a specific limit (e.g., per person bodily injury) is exhausted, there is no more coverage for that specific category of loss from that accident, even if other limits (e.g., property damage) have not been fully utilized. This contrasts with a CSL, where the entire single limit can be used for any combination of bodily injury and property damage from a single accident.

Key Information for Agents and Underwriters

For Agents:

• Clearly explain the difference between a single limit of liability and split limits to the insured. Ensure they understand how each limit applies (per person, per accident for BI; per accident for PD).
• Assess whether the standard single limit on the Garage Coverage Form or split limits via the CA 99 38 better address the insured's specific exposures and needs.
• Discuss scenarios where split limits might be beneficial or detrimental compared to a single limit.

For Underwriters:

• Evaluate the insured's operations to determine if split limits are appropriate for the risk profile.
• Ensure that the selected split limits provide adequate coverage for the potential severity of losses the garage operation might face.
• The premium calculation for this endorsement should follow the guidelines in the ISO Business Auto Rating Program.
• Consider the overall liability exposure of the garage. While this endorsement modifies the structure of the limits, the adequacy of the chosen limit amounts remains a critical underwriting consideration.