1. Forms
2. MP
3. MP-04-23

What the form is

MP 04 23 (edition date 01 83) is a schedule page designed for use with Special Multi-Peril (SMP) insurance policies. Its primary function is to add and define the terms for two specific types of automobile liability coverages: Non-Ownership Automobile Liability and Hired Automobile Liability. The schedule also serves to document the advance premium charged for these coverages. This form was part of an older insurance program and provided a way to tailor auto liability coverage for businesses within the SMP framework.

Classes of business it applies to

This form was relevant for a wide array of commercial entities insured under an SMP policy that had exposures arising from the use of vehicles not owned by the business. Examples include:

• Businesses whose employees, partners, or executives use their personal vehicles for company purposes (e.g., sales calls, errands, site visits). For instance, a consulting firm where consultants frequently drive their own cars to meet clients. This addresses the non-owned auto exposure.
• Companies that occasionally or regularly rent, lease, or borrow vehicles for business use (e.g., renting a van for a specific project, leasing cars for executives, or hiring a truck for deliveries). For example, a retail store renting a larger vehicle for a seasonal promotion. This addresses the hired auto exposure.

The Special Multi-Peril policy was a package policy, so this schedule could be attached to policies for various types of small to medium-sized businesses that did not own their own fleet but had incidental auto liability exposures.

Special considerations

• Historical Context: The Special Multi-Peril (SMP) program, and consequently this form, are largely outdated. They have been predominantly replaced by more modern policy programs like the Commercial Package Policy (CPP) and Businessowners Policy (BOP). These newer programs have their own methods for providing hired and non-owned auto liability coverage, often through a Commercial Auto Coverage Part or specific endorsements.
• Coverage Specificity: This schedule is specific to non-owned and hired auto liability. It does not provide coverage for automobiles owned by the named insured; owned auto coverage would require a separate commercial auto policy or a different endorsement within the SMP.
• Interaction with Other Insurance: Non-owned auto liability coverage provided through this schedule for an employer is typically excess over the primary auto insurance carried by the employee on their personal vehicle used for business purposes.
• Attachment to Policy: As a schedule, MP 04 23 would be attached to and form part of the broader SMP policy, supplementing its general liability provisions by adding these specific auto coverages.

Key information for agents and underwriters

• Risk Assessment: When this form was current, underwriters would have needed to evaluate the extent of the hired and non-owned auto exposure. For non-owned autos, this involved considering the number of employees using personal vehicles for business, the frequency and purpose of use, and potentially their driving records. For hired autos, factors included the frequency of hire, types of vehicles typically hired, purpose of use, and contractual agreements (e.g., rental agreements).
• Pricing: The "Advance Premium" for each coverage (Non-Ownership Liability, Hired Automobile Liability) would be determined based on the assessed exposure and the limits of liability provided. Rating methods could involve charges per employee (for non-owned) or based on the cost of hire (for hired autos), subject to the rating rules of the SMP program.
• Identifying Coverage Needs: Agents would use this schedule to ensure clients with SMP policies were adequately protected against liabilities arising from the use of autos they didn't own but were used for their business operations. This was crucial for businesses that didn't own vehicles but still had auto-related liability exposures from employees using their own cars or from renting vehicles.
• Understanding Limitations: It's important to recognize that this form provided liability coverage for bodily injury or property damage to third parties. Physical damage to the hired or non-owned autos themselves would typically require separate coverage considerations (e.g., hired auto physical damage coverage, or reliance on the vehicle owner's insurance).