1. Forms
2. CA
3. CA-99-61

What the Form Is

The CA 99 61, titled "Loss Payable Clause – Audio, Visual And Data Electronic Equipment Coverage Added Limits," is an endorsement to commercial auto insurance policies, including the Business Auto Coverage Form (CA 00 01), Garage Coverage Form (CA 00 05), Motor Carrier Coverage Form (CA 00 20), and Auto Dealers Coverage Form. Its primary function is to protect the financial interest of a loss payee (such as a lender or lessor) concerning specifically scheduled audio, visual, and data electronic equipment installed in a covered vehicle. This endorsement allows the insured to increase the coverage limits for this specialized equipment beyond any standard sub-limits provided in the base policy and ensures that any claim payments for damage to this equipment are made to both the named insured and the designated loss payee, as their interests may appear.

Classes of Business It Applies To

This endorsement is relevant for any business that operates vehicles equipped with valuable audio, visual, or data electronic equipment where a third party holds a financial interest in that equipment. Real-world examples include:

• Trucking and Logistics Companies: Businesses with fleets of trucks that have installed expensive GPS navigation systems, fleet management telematics, onboard computers, or specialized communication equipment that is financed or leased.
• Service and Delivery Businesses: Companies whose vehicles (vans, cars) are fitted with custom audio-visual setups for promotional purposes, or advanced data terminals for routing and job management, where a lender financed the equipment.
• Auto Dealerships: For vehicles on their lot or used in their operations that have upgraded electronic systems and are subject to financing arrangements where a loss payee for the equipment is required.
• Any Business with Financed/Leased Vehicles and Equipment: If a business finances or leases vehicles and the agreement specifically requires the lender/lessor to be named as a loss payee for high-value electronic equipment in addition to the vehicle itself.

Special Considerations

• Existence of a Loss Payee: This form is specifically used when there is a lienholder, lender, or lessor who has a documented financial interest in the scheduled electronic equipment itself, distinct from or in addition to the vehicle.
• Interaction with CA 99 60: The CA 99 61 endorsement is often used in conjunction with or as an alternative to the CA 99 60 (Audio, Visual And Data Electronic Equipment Coverage Added Limits). While CA 99 60 increases the limits for the insured, CA 99 61 specifically incorporates the loss payable provisions for that increased limit, ensuring the lender is also covered.
• Scheduled Limits: The limits for the equipment are scheduled on the endorsement and are typically in addition to or replace the often lower standard sub-limit (e.g., $1,000) found in the base auto policy for such equipment.
• Protection for Loss Payee: The endorsement protects the loss payee's interest even in certain situations involving acts of the named insured, such as conversion, secretion, or embezzlement. However, if the insurer pays the loss payee under such circumstances, it typically gains the loss payee's rights of recovery against other parties.
• Policy Deductible: The physical damage deductible applicable to the covered auto generally also applies to losses involving the scheduled electronic equipment.

Key Information for Agents and Underwriters

• Pricing: The premium for this endorsement will be influenced by the declared value and type of the scheduled electronic equipment, as well as the increased limit of coverage selected.
• Risk Assessment: Underwriters should carefully evaluate the type, value, and removability of the electronic equipment. High-value, easily stolen, or custom equipment may warrant higher scrutiny, potentially requiring specific anti-theft measures or higher deductibles.
• Addressing Coverage Gaps: Standard commercial auto policies often provide only a minimal sub-limit for electronic equipment (e.g., $1,000). This endorsement, along with CA 99 60, is crucial for businesses to adequately insure more valuable systems and to satisfy the requirements of lenders or lessors.
• Underwriting Guidelines:
  • Verify the legitimate financial interest of the proposed loss payee in the specific equipment being scheduled.
  • Ensure a clear description and accurate valuation of the equipment on the schedule.
  • Confirm that the requested limits are reasonable and align with the actual cash value or replacement cost of the equipment, as per policy terms.
  • Clarify how the policy deductible will apply to losses involving this equipment.
  • Distinguish when CA 99 61 is needed (due to a loss payee) versus when CA 99 60 might suffice (insured needs higher limits but no specific loss payee for the equipment).