Commercial Vehicle
Program Overview
What Do We Write?
Farmers has elected to pursue three major groups
of vehicles that may contain acceptable risks.
They are:
– Vehicles used in the Select Industry Groups
– Vehicles Not in Select Industry Groups
– Selected Motor Carriers For-Hire
What Do We Write?
• Vehicles in our Select Industry groups usually
require the least amount of effort to solicit and
qualify. They are insured under the Commercial
Auto Coverage Part of the Commercial Package
Policy.
Farmers Will Accept Business in Each of
the Select Industry Groups
• Retail/Service
• Artisan Contractors
• Restaurants
• Habitational
• Commercial Real
• Wholesale/Distribution
Estate
• Automotive Trades
Non-Select Industry Risks
• Businesses not included in one of the Select
Industry groups may have vehicles eligible for our
monoline commercial policy. If they have
commercial vehicles and meet current
underwriting rules, the vehicles may be eligible for
a monoline Business Auto Policy. To be eligible,
however, all eligible vehicles must be insured on
the policy or within the Farmers Group.
Motor Carriers for Hire
• Operations consisting of fleets of 5 or more
trucks or truck tractors with trailers that are
engaged in hauling goods (including household
goods), materials or commodities of others forhire, as a common carrier or as a contract carrier ,
may be eligible on a monoline Commercial Auto
Policy. These operations are limited to use within
an air mile radius of 500 miles from the place of
garaging.
Motor Carriers for Hire
• Operations consisting of fewer than 5 power
units may be eligible if operating under a long
term, exclusive lease to another motor carrier
insured by the Farmers Insurance Group, or if
operations are confined to delivery of goods or
services from retail stores to customers within a
200 mile radius.
We Want More of These
• Panel Delivery
• Van Type
• Walk In
• Flat Rack Truck
• Pickup Truck
We Do Not Want These
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Farmers is not a market for :
Dump trucks
Flammable delivery trucks
Crane Services
Bus or Livery services
Submit for Approval Rules
• Risks which have had their insurance coverage
canceled or non-renewed within the past three
years. Submission must include information on
the reasons for cancellation or non-renewal.
Submit for Approval Rules
• Risks with drivers that exceed the standards of
the MVR evaluation program
• Sports Cars or High Performance Vehicles. A list
of these vehicles is found in the Personal Lines
Manual
Ineligible Equipment
• Wheeled or tracked equipment, whether used on
or off road, such as:
• Cranes
• Loaders
• Equipment used for:
– road construction
– geophysical exploration
Ineligible Equipment
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High capacity compressors
Generators
Pumps
Lighting equipment
Submit for Approval
• Trucks or vans hauling employees or workers as
passengers unless operations are also covered by
Workers’ Compensation Insurance.
Submit for Approval
• Trucks exceeding 45,000 lbs. GVW or Tractor trailers exceeding 45,000 lbs. GCW regardless of
radius of operation.
GVW- GCW Defined
• GVW denotes Gross Vehicle Weight which is
the maximum loaded weight for which the vehicle
is designed, as specified by the manufacturer.
GCW denotes Gross Combination Weight
which is the maximum loaded weight for the
combination of a truck-tractor and trailer or semi
trailer for which the truck tractor is designed, as
specified by the manufacturer
Submit for Approval
• Trucks exceeding 10,000 lbs. GVW operating
regularly or frequently in excess of 200 miles
radius from the garaging address.
• Passenger cars, vans, or pickups with an actual
cash value or purchase price exceeding $90,000.
• All Motor Carriers For-Hire
Mileage Radius Defined
• The Radius is measured on a straight line from
the street address of a vehicle’s principal garaging
to the farthest point of regular operations. Road
mileage from point A to point B may be 223
miles, but the distance on a straight line (Radius)
may only be 180 miles.
Acceptable Radius of
Operations
• All must be used within an air mile radius of 500
miles from their place of garaging. (Radius
Classes Local, Intermediate, and Extended
Intermediate)
Special Classes of Vehicles
• Passenger cars, station wagons and vans may
be placed on Commercial policies only when used
in the business of the named insured, and rated as
Commercial Auto “Private Passenger.”
• Pleasure use vehicles, including pickup trucks, not used in
business, even if owned and registered to a corporate
named insured, should be submitted to the appropriate
Personal Lines Company.
Special Classes of Vehicles
• Motor Homes not leased or rented to others and
used for business purposes may be written on
Business Auto or Truckers Coverage Forms,
subject to the passenger car, station wagon and
van rule. Submit all others to Personal Lines.
Special Classes of Vehicles
• Farm Trucks hauling produce from field to
warehouse or field to customer, if 10,000 lbs
GVW and under, may be submitted to Personal
Lines.
Special Classes of Vehicles
• Courtesy Vans are eligible only if:
• Owned by a business insured by Farmers in one
of the Selected Industry Groups and used to
transport the insured’s customers on a random
basis. All other commercial vehicles owned by
the insured must also be included on the policy.
• Extreme underwriting caution is exercised to
ascertain that exposures are controlled.
Motor Vehicle Record (MVR)
Program
• The following MVR Evaluation and MVR Point
Program must be applied to any drivers of
passenger cars or trucks written on a Business
Auto Policy in the Selected Industry Groups. It is
also used for motor carrier for-hire Truckers
Coverage and monoline commercial vehicles on
policies for eligible risks not included in the
Selected Industry Groups. State or other local
laws govern where applicable.
Acceptable Drivers
• All drivers who meet the standards of the MVR
Point Program are acceptable provided they have
the following qualifications:
• Minimum of 3 years experience operating the
type of equipment insured.
• Must be 23 years of age or older if driving overthe-road equipment of 45,000 lbs. GCW or more,
unless the youthful driver can demonstrate
completion of a certified Truck Driving School
and meet the 3 year experience qualification.
Acceptable Drivers
(Continued)

Must be at least 21 years of age or older when
driving equipment other than stated above.
• Commercial Drivers License (CDL), when
required by law
Unacceptable Drivers- Named
Driver Exclusion
• All risks with drivers who do not meet the
qualifications or the MVR Point Program to be
described in the following pages, are SFA. When
requested in states where permitted, and at the
underwriter’s discretion, the service center may
prepare a Driver Exclusion Endorsement
E1280A).
The MVR Point Program
• This program is established to determine
acceptable vehicle risks. It is based on driver
points assigned for negligent accidents and
violations, including those incurred during
personal use (in states where permitted).
The MVR Point Program Major Violations
• Drivers charged with any of the following Major
Violations within the last five years are
unacceptable and cannot be bound:
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Accident involving a fatality.
Driving with a suspended or revoked drivers license.
Failure to stop or report an accident.
Driving under the influence of liquor or drugs.
Homicide or assault from operation of a vehicle.
Reckless driving, speed contest or eluding an officer.
The MVR Point Program Minor Violations
• A Minor Violation is any moving traffic violation
other than a Major Violation listed above. Each
driver is assigned one (1) point for each Minor
Violation incurred during the past 3 years.
The MVR Point Program Negligent Accidents
• Negligent Accidents are vehicle accidents in
which the insured driver was at fault. All
accidents are considered at fault, except those
occurring under the following circumstances (at
the Underwriter’s discretion, a copy of the police
report may be requested):
The MVR Point Program Negligent Accidents
• No point will be charged if– Insured driver’s vehicle was struck while legally parked.
– Insured driver’s vehicle was struck by another vehicle
while legally stopped for traffic and the insured was not
convicted of a moving traffic violation.
– The person responsible for the accident reimbursed the
insured or the insured’s driver for the accident, or there
is a judgment against the responsible person
– The other party received a citation and the insured
driver did not.
– Collision with a bird or animal.
The MVR Point Program Assigning Points
• Assign two (2) points for each negligent accident
occurring during the past 3 years involving bodily
injury
• Assign two (2) points for each negligent accident
occurring during the past 3 years in which the
combined property damage for all parties
involved in the accident was more than $1,000,
and no bodily injury was reported.
The MVR Point Program Assigning Points
• Do not assign points for a negligent accident
involving less than $1,000 of combined property
damage when no bodily injury was reported.
However, if the driver is cited for a Minor
Violation in connection with such an accident,
charge one (1) point for the violation.
The MVR Point Program Equipment Citations
• Though not included in the point total, attention
should be paid to the number and severity of
equipment-related citations. Excessive citations
are an indication of an inadequate fleet
maintenance program. Of particular concern are
safety-related equipment citations which may
increase the likelihood of loss such as:
The MVR Point Program Equipment Citations
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Worn or defective brakes
Worn or defective tires
Cracked rims or frames
Defective lights
Over-weight loads
Unsafe or unsecured loads
The MVR Point Program Table
• The MVR Point Program Table found in the auto
business guide must be used for all risks with 10
or more drivers including the named insured.
The Program applies to all traffic violations and
accidents including those incurred during
personal use.
The MVR Point Program Table
• For those risks with fewer than 10 drivers, use the
MVR Point program Table as a guideline for
eligibility, but the underwriter can apply
discretionary underwriting judgement to
determine acceptability if the risk is submitted
with full information for approval (SFA).
Classification of Vehicles
• Commercial Vehicles are rated according to the
classification assigned. Because the rate depends
upon this classification, it is extremely important
to understand the classification process.
Classification of Vehicles
• Primary Classification is Based on Four Features
– Whether the vehicle(s) are part of a fleet
– The GVW (Gross Vehicle Weight) or GCW (Combined
Vehicle Weight)
– Nature of business use
– Mileage radius
Primary Classification
• The Primary Classification is obtained from the
Classification Codes and Rating Factors accessed
through help screens in the CLS rating sequence.
Secondary Classification
• A Secondary classification is obtained in the
same manner as the Primary classification and is
based on degree of hazard.
Vehicle Size/ Weight
• Light Truck. A light truck has a GVW of 10,000
pounds or less. A ½-ton or ¾-ton pickup would
be in this size class.
• Medium Truck. A medium truck has a GVW
of 10,001 lbs. to 20,000 lbs. Crawler type (runs
on treads instead of wheels) trucks are also in this
class. A 1-ton or 1½-ton vehicle would be in this
truck size class.
Vehicle Size/ Weight
• Heavy Truck. A heavy truck has a GVW of
20,001 lbs. To 45,000 lbs. A 2-ton or 3-ton
vehicle would be in the heavy truck size class.
• Extra-Heavy Truck. An extra-heavy truck has a
GVW over 45,000 lbs. A 4 ton or larger vehicle
would be in the extra-heavy size class
Vehicle Size/ Weight
• Truck-tractors (Motorized vehicle without a
body for carrying commodities or materials,
equipped with a fifth wheel device for semitrailers. Heavy truck-tractors have a GCW of
45,000 lbs or less; extra-heavy truck-tractors have
a GCW over 45,000 lbs.
Vehicle Size/ Weight
• Semi-trailer. Semi-trailers are equipped with a
fifth wheel coupling device for use with a trucktractor, with a load capacity over 2,000 lbs
(includes converter gears commonly referred to as
dollys or bogies, used to convert containers into
semi-trailers).
Determination of the Primary
Classification
• To determine the first three digits of the
Classification Code you must consider the nature
of the business use. Business use is broken down
into three categories:
– Service
– Retail
– Commercial
Determination of the Primary
Classification
• These three categories apply to all vehicles except:
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Extra heavy truck-tractors
Semi-trailers
Trailers
Service or utility trailers (0 - 2000 lbs load capacity)
Service Use Defined
• Vehicles used to transport the insured’s personnel,
tools, equipment and incidental supplies to and
from job locations are classified as “Service” use.
These vehicles are usually found at a job site the
majority of the workday.
Service Use Defined
• Risks typical of this class are artisan contractors
such as:
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Carpenters
Electricians
Tile setters
Plumbers
Retail Use Defined
• Vehicles used to pick up property from or deliver
property to individual households are classified as
“Retail” use. Risks typical of this class are:
– Dry Cleaners and Laundries
– Store delivery trucks
– Dairy home delivery
Commercial Use Defined
• Vehicles used to transport property other than
those with the business use categories of Service
or Retail are included in the “Commercial”
Category. Examples would be:
– Manufacturers
– Bakery products distributors
– Wholesale milk dealers
Multiple Use Vehicles
• There are many times when a vehicle can be
placed under more than one classification.
• When a vehicle is involved in two or more of
these classes, it becomes necessary to establish the
amount of use the vehicle has in each activity to
determine the proper class. The proper class is
determined according to the percent of use in
each category.
Secondary Classification
• The Secondary Classification is the final factor
needed to determine the proper rate classification.
• The secondary Classification is based on the
degree of hazard found in certain classifications.
Of course, the premium charge for a more
hazardous classification will be more than for a
less hazardous classification.
Secondary Classification
• Use the Secondary Classification Code for the
fourth and fifth digits of the Classification.
Business Auto Coverage Form
CA0001
• For coverage to apply under the commercial auto
coverage part, a vehicle symbol must be shown on
the declarations page. These symbols are
described in detail on the Business Auto coverage
form.
Business Auto Coverage Form
CA0001 - Symbols
• Symbol 1 covers any “auto” owned, rented,
leased or otherwise in the possession of the
insured.
• Symbol 2 covers Owned Private Passenger
“Autos” only.
• Symbol 3 is seldom used. It limits coverage to all
owned private passenger cars which are not
normally insured on a commercial policy.
Business Auto Coverage Form
CA0001 - Symbols
• Symbol 4 provides blanket coverage for Owned
“Autos” other than Private Passenger “Autos”
only. (Includes Liability Coverage for non-owned
“trailers” while attached to owned power units.)
• Symbol 5 provides blanket No Fault benefits, and
is used in states where such coverage is
mandatory
Business Auto Coverage
Form CA0001 - Symbols
• Symbol 6 provides blanket Uninsured Motorists
Coverage, and is used in states where such
coverage is mandatory with no right of rejection.
• Symbol 7 confines coverage to specifically
described vehicles. As the majority of vehicle
policies are written on a schedule basis, symbol 7
will appear on most of them. It can appear
opposite any coverage shown on the Declarations.
(Includes Liability Coverage for non-owned
“trailers” while attached to owned power units).
Business Auto Coverage
Form CA0001 - Symbols
• Symbol 9 applies only to “autos” the insured
does not own, lease, hire, rent, or borrow that are
used in connection with the insured’s business.
(Includes “autos” leased, hired, rented or
borrowed from employees, partners, members of
the insured’s company, or members of their
households, but only while used in the insured’s
business or personal affairs.
Covered Autos
• If liability coverage is provided on the following
types of vehicles, they are considered covered
autos:
– Trailers with a load capacity of less than 2000 pounds
– Mobile equipment being carried or towed by an insured
vehicle.
– Any non-owned vehicle used with the permission of its
owner as a temporary substitute for an owned covered
vehicle that is out of service for repair, breakdown,
servicing or loss or destruction.
Liability Coverages
• Like the personal auto policy, the liability section
of the commercial auto policy covers:
– Bodily Injury & Property Damage
– Legal Defense Costs
– All expenses incurred by Farmers in investigating a
claim
– Up to $2,000 cost of bail bonds
Commercial Policy Exclusions
• Coverage does not apply to any of the following:
– Expected or intended injury
– Contractual Liability Workers’ Compensation
– Employer’s Liability
– Fellow Employee Claims
Commercial Policy Exclusions
• Coverage does not apply to any of the following:
– Damage to property in the care, custody or control of
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the insured.
Damage to “handled property”.
Movement of Property by Mechanical Device.
Operation of Mobile Equipment.
Products and completed operations.
Commercial Policy Exclusions
• Coverage does not apply to any of the following:
– Pollution
– War
– Racing
Uninsured Motorist
• Not mandatory in all states
• Not needed if insured carries Workers
Compensation coverage and only transports
employees of the business
• Waiver must be signed if coverage is rejected by
insured.
Underinsured Motorist
Coverage
• Pays all sums the insured is legally entitled to
recover as compensatory damages from the
owner or driver of an “underinsured motor
vehicle”.
Personal Injury Protection
• Under PIP the insured recovers damages from
auto accidents from their own insurance company
rather than from the other party’s insurer.
– This coverage is also known as “No Fault Coverage”.
Auto Medical Payments
Coverage
• Pays for reasonable expenses for necessary
medical and funeral services to or for an insured
who sustains bodily injury caused by an auto
accident.
Optional Coverages
• Hired Auto Coverage
– Provides liability coverage on autos that are leased,
hired, rented or borrowed.
Optional Coverages
• Non-Owned Auto
– Provides liability coverage for vehicles which the named
insured does not own, hire, lease, rent or borrow that
are used in connection with the business. This coverage
is excess of any other insurance.
Optional Coverages
• Additional Insured- Lessor
– Used to name the owner of a leased or rented vehicle as
an additional insured
Optional Coverages
• Drive Other Car Coverage
– Used to afford liability, auto medical payments,
uninsured/underinsured motorist and physical damage
coverages for specifically named individuals and their
spouses while they are using a non-owned auto.
Optional Coverages
• Hired Autos Specified as Covered Autos
– Provides primary coverage on vehicles that the insured
hires, borrows or leases for an extended period of time.
Optional Coverages
• Individual Named Insured
– Provides coverage for the named insured’s spouse and
family members who are residents of the same
household.
Physical Damage Coverage
• Comprehensive covers any cause of loss except
collision of the auto with another object, or
overturn of the auto.
Physical Damage Coverage
• Specified Causes of Loss insures these perils:
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Fire, lightning, explosion
Theft
Windstorm, hail or earthquake
Flood
Mischief or vandalism
Sinking, burning, collision or derailment of a
conveyance transporting the covered auto.
Physical Damage Coverage
• Collision coverage pays for damage to an
insured vehicle as a result of impact with another
object or the overturning of the vehicle.
• Towing coverage is available for private
passenger type vehicles only. It pays for towing
and labor performed at the place of disablement.
Physical Damage Coverage
• Temporary Transportation Expense
– applies only to covered autos which have either
Comprehensive or Specified Causes of Loss Coverage.
It pays up to $15 per day up to a maximum of $450 for
temporary transportation expense incurred by the
insured due to a total theft of the covered auto of the
private passenger type. There is a 48 hour waiting
period before this extension takes effect.
Mobile Equipment
• This endorsement is used to insure self propelled
special equipment licensed for road use for Bodily
Injury and Property Damage Liability
(locomotion hazard), Medical Payments,
UM/UIM, and/or physical damage insurance
when it is intended to be insured as an “Auto.”
Rental Reimbursement
Coverage
• Provides coverage for rental costs incurred for the
rental of an auto to replace a damaged “covered
auto.” The maximum that can be paid is the
agreed upon daily limit shown on the
endorsement.
Electronic Equipment
Coverage Endorsements
• Citizens’ Band Radio Coverage
• Tapes, Records and Discs Coverage
• Audio, Visual and Electronic Data and
Equipment Coverage
– Farmers can add coverage for all these types of
equipment.
Policy Conditions
• The conditions section sets out the obligations
of the insurance company and the policy holder.
– It is especially important that the insured be encouraged
to become fully aware of his/her obligations
concerning a loss or potential loss.
Appraisal
• This condition stipulates that in the event of a
physical damage loss, an appraisal process will be
followed. This process involves the selection of
two competent appraisers- one by the insured and
one by the company. In the event the appraisers
cannot agree, they will select a competent and
impartial umpire to make the final decision. This
provision requires each party to :
– pay its chosen appraiser; and
– bear the other expenses of the appraiser and umpire
equally
Duties in Event of Accident,
Claim, Suit or Loss
• See page 7 of CA 0001 for a complete listing
Legal Action Against Us
• Bringing legal action is generally prohibited unless
all parties have fully complied with policy
provisions. Furthermore, we must agree in writing
that the insured is obligated to pay. Otherwise, the
amount of the obligation must have been finally
determined in a judgement. This means the suit
may be brought against us only to recover an
agreed settlement or final judgement.
Loss Payment- Physical
Damage Coverages
• This condition gives the insurer the right to settle
a physical damage loss in any way it chooses of
the listed options which are:
– Pay for, repair or replace damaged or stolen property
– Return stolen property at our expense and pay for
damage that results from the theft
– Take all or part of the damaged or stolen property at an
agreed or appraised value
Transfer of Rights of
Recovery Against Others
• This is a statement of the insurer’s subrogation
rights. If an insured to or for whom the insurer
makes payments under the policy has rights to
recover damages from another, those rights are
transferred to the insurer to the extent of
payment. Furthermore, the insured must
cooperate in the company’s effort to subrogate
against guilty parties. Also the insured must not
do anything after an accident or loss that would
waive the company’s right to subrogation.
General Conditions
• Bankruptcy
– This condition affirms our obligation under the policy
regardless of the insured’s financial condition. We must
provide coverage in accordance with the terms of the
policy despite the insured’s bankruptcy.
General Conditions
• Concealment, Misrepresentation or Fraud
– Certain actions by the insured can void coverage. The
Concealment, Misrepresentation or Fraud provision can
be the basis for denying a claim when there is evidence
that:
• Coverage was obtained fraudulently.
• The insured intentionally concealed or misrepresented
material facts that would have caused the insurance
company not to issue the policy.
• There is other fraud, such as that involved in making a
claim under the policy.
Concealment
• Concealment by the insured is intentionally
withholding facts that should have been provided
to the insurance company.
• Misrepresentation by the insured is making an
incorrect statement with the intention of
deceiving the insurance company.
– For concealment or misrepresentation to void a policy,
such concealment or misrepresentation must concern a
material fact.
Material Fact
• A material fact is information which, had the
insurance company known, would have caused
the company to decline the risk, or include in the
policy entirely different provisions than originally
included.
– For example: the company may have declined to issue the policy or
issued it with a lower limit of liability had the truth been known.
Fraud
• Fraud is similar to misrepresentation but involves
a false statement intended to deceive and induce
the insurance company to part with something of
value or to surrender a legal right.
• An act of fraud involves four elements:
– Someone deliberately lies.
– The intent of the lie is for someone else to rely on that
lie.
– The other person relies on that lie.
– As a result of the lie, damages are or will be suffered by
the person relying on that lie.
Liberalization
• Business auto policies are always subject to this
revision. This condition affords the insured
additional coverage automatically if the business
auto coverage form is revised to provide more
coverage at no additional premium charge. This
provision allows the insured to benefit from a
more liberal policy provision automatically as
soon as it becomes effective.
No Benefit to Bailee
• A bailee is a person that has temporary custody
of property belonging to someone else. The
policy prohibits a bailee from benefitting from the
insured’s insurance coverage in the event of a loss
to the property and allows the insurer to recover
from the bailee for any paid loss under the
coverage form for which the bailee is legally
liable. Only the insured should benefit from the
policy.
Other Insurance
• This condition deals with how coverage applies
when more than one policy is in effect to cover
the same loss. See policy form for details.
Premium Audit
• This condition discusses how final premiums will
be calculated. The deposit premiums under the
business auto coverage form are only an estimate,
based on the estimated exposures. Farmers will
compute the actual premium at the end of the
policy period based on the actual exposures.
Policy Period, Covered
Territory
• This condition determines when and where
coverage will apply. The business auto coverage
form covers accidents and losses occurring during
the policy period within the coverage territory.
The coverage territory is the United States, its
territories and possessions, Puerto Rico, and
Canada. Coverage also applies to a covered auto
while being transported between any of these
places.
Two or More Coverage
Forms Issued By Us
• This condition limits recovery to no more than
the actual amount of loss or damage. The
purpose is to prevent an insured from recovering
the amount of the loss from more than one
source. This is commonly referred to as “Stacking
Limits.” This condition does not apply to any
coverage that was issued specifically to apply as
excess insurance.