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3. CA-99-54

Form CA 99 54: Covered Auto Designation Symbol

The CA 99 54 Covered Auto Designation Symbol endorsement is a crucial tool in commercial auto insurance. Its primary purpose is to allow for a more specific, customized definition of a "covered auto" than what is provided by the standard numerical symbols (e.g., Symbols 1-9, 19 for Business Auto Coverage Form, or Symbols 21-31 for Auto Dealers Coverage Form). By attaching this endorsement, the named insured and the insurer can create a manuscript, or custom, definition for what constitutes a covered auto under the policy. This is typically designated as Symbol 10 for the Business Auto Coverage Form or Symbol 32 for the Auto Dealers Coverage Form.

Classes of Business It Applies To

This endorsement is versatile and can be used across various classes of business within commercial auto, particularly when the standard symbols don't adequately address the insured's specific needs. Here are some real-world examples:

• Businesses with Unique Vehicle Types: A company might own specialized vehicles that don't neatly fit into standard auto categories. For instance, a business owning a high-value antique car used only for parades or promotional events might use CA 99 54 to specifically include or exclude this vehicle for certain coverages. For example, they might want liability coverage for all owned vehicles (Symbol 2) but use Symbol 10 via CA 99 54 to define physical damage coverage for "All Owned Autos except the 1959 Classic Rolls Royce," which is insured separately.
• Auto Dealers with Specific Inventory: An auto dealer might use this endorsement (Symbol 32) to precisely define coverage for vehicles held for sale, especially if they have unique situations like displaying a historic vehicle that isn't part of their regular sales inventory but still requires specific coverage while on their premises. It can also be used to define coverage for watercraft while ashore on the dealer's premises.
• Varying Coverage Needs for Different Autos: A business may want to apply different coverages or deductibles to different types or ages of owned autos. Symbol 10, through CA 99 54, allows for this granular level of customization.
• Situations Requiring Clarification: Sometimes, the standard symbols might be ambiguous for a particular situation. The CA 99 54 allows the insurer and insured to write a clear, concise description of what is covered, reducing potential disputes at the time of a claim.

Special Considerations

There are several important points to keep in mind when utilizing the CA 99 54 endorsement:

• Manuscript Clarity is Key: The effectiveness of this endorsement hinges on the clarity and precision of the manuscript language. Ambiguous wording can lead to coverage disputes. The description of covered autos must be entered in the space provided on the endorsement.
• Not a Substitute for Standard Symbols When Appropriate: This form is intended for situations where standard symbols are insufficient. If a standard symbol accurately reflects the desired coverage, it should be used.
• Agreement Between Insured and Insurer: The manuscript definition requires mutual agreement between the named insured and the insurer. Both parties must understand and accept the custom definition of "covered auto."
• Regulatory Aspects: While applicable in all states, specific state regulations or interpretations might influence how manuscript endorsements are viewed. For example, in Massachusetts, the CA 99 54 can be used with the Auto Dealers Coverage Form to provide coverage for autos used with a dealer or repair plate.
• Potential for Gaps if Not Drafted Carefully: If the manuscript language is too restrictive or poorly worded, it could inadvertently create coverage gaps. Conversely, overly broad language might extend coverage beyond what the insurer intends or what the premium reflects.
• Use with Specific Coverage Forms: Symbol 10 is generally associated with the Business Auto Coverage Form (CA 00 01) and the Business Auto Physical Damage Coverage Form (CA 00 10). Symbol 32 is used with the Auto Dealers Coverage Form (CA 00 25) and the Garage Coverage Form (CA 00 05). It can also be used with the Motor Carrier Coverage Form.

Key Information for Agents and Underwriters

Agents and underwriters should consider the following when dealing with the CA 99 54:

• Pricing and Risk Assessment: The premium impact of using CA 99 54 will depend entirely on the scope of coverage defined in the manuscript. If Symbol 10 or 32 is used to broaden coverage significantly, an additional premium may be warranted. Conversely, if it's used to restrict coverage (e.g., excluding a specific high-risk vehicle from certain coverages), it might affect the premium calculation accordingly. Underwriters must carefully assess the risk presented by the custom definition.
• Identifying Coverage Gaps: Agents should work closely with insureds to ensure the manuscript language accurately reflects their needs and doesn't create unintended gaps. For example, if an insured wants to exclude a specific vehicle from physical damage but not liability, the wording must be precise.
• Underwriting Guidelines: Insurers will have their own underwriting guidelines regarding the acceptability of manuscript endorsements. Some insurers may be more restrictive than others. Underwriters need to ensure the custom definition aligns with the company's risk appetite and reinsurance treaties.
• Clarity for Claims Handling: A well-drafted CA 99 54 can simplify claims handling by clearly defining what is covered. Conversely, a poorly drafted one can complicate it. The goal is to leave no room for misinterpretation.
• Consistency with Other Policy Terms: The manuscript language should be consistent with other terms and conditions of the policy to avoid internal contradictions.
• Examples of Use:
  • Excluding a specific, high-value vehicle from physical damage coverage because it's insured under a separate specialty policy.
  • Providing coverage for a unique type of vehicle that doesn't fit standard definitions but is integral to the insured's business operations.
  • Defining coverage for vehicles used with dealer or repair plates in specific jurisdictions.