Chapter 5 | Truckers and Motor Carriers Coverage Forms

Educational Objectives
Upon completion of this section, you should be able to:

  1. Define the term "Trucker."
  2. Define the term "Motor Carrier."
  3. Describe the purpose of the Truckers Coverage Form.
  4. Describe the purpose of the Motor Carriers Coverage Form.
  5. Define the three methods used to determine premium for Trucker/Motor Carrier risks.

INTRODUCTION

The Truckers Coverage Form (TCF) is a specific policy for a business whose major enterprise is the transporting of goods of others for hire and who obtains operation rights from a public authority. The following definition is found in the Commercial Lines Manual, Division One - Automobile, Rule 24: "a trucker is a person or organization in the business of transporting goods, materials or commodities for another." The Truckers Coverage Form (CA 00 12) is designed to meet the unique needs of the trucking industry and eliminates the need to attach various special endorsements to the Business Auto Coverage Form to cover these needs.

Not all "so-called" truckers require the use of this form; only those that fit the manual definition of a Trucker as described above. The TCF is not required by owner-operators of trucks or truck-tractors who may hire out their services to other truckers, even though these owner-operators come within the definition of a "trucker." This exception exists because these owner-operators are covered as insureds on a primary basis under the TCF of the trucking firm that engaged them. The Motor Carriers Coverage Form (MCF) is an alternative to the TCF. A Motor Carrier is defined as a person or organization providing transportation by auto in the furtherance of a commercial enterprise. The MCF (CA 00 20) is more flexible and provides coverage for non-regulated carriers, private carriers, or owner operators while hauling for others or themselves.

MOTOR CARRIERS

Motor Carriers are trucking companies that earn profits by transporting the freight of other businesses or of individuals or groups. They operate in local areas, intrastate (within one state), and interstate (between states).

There are four types of Motor Carriers: common, contract, specialized and exempt.

Common Carrier
A Motor Carrier who is engaged in the public transportation of goods, materials or commodities for compensation between fixed terminals, or over a regular route, even though there may be occasional, periodic, or irregular departures from such terminals or routes. A common carrier offers its services to the general public and is obligated to charge the same rate to all shippers for like services.

Contract Carrier
A Motor Carrier who is engaged in the public transportation of goods, materials or commodities for compensation under individual contracts to provide a special or individual service required by the needs of particular shippers. A contract carrier may negotiate an agreed price for its services and is not obligated to treat all shippers equally.

Specialized Carrier
A Motor Carrier, either common or contract carrier, who is engaged in the public transportation of goods, materials or commodities requiring special equipment, i.e., the hauling of radioactive materials.

Exempt Carriers
These are carriers that are exempt from certain government regulation (i.e., carriers of agricultural products or newspapers). They establish their own routes, determine their own insurance requirements and do not have to meet other regulations. However, these carriers are restricted by the area they can service. Regulations allow them to operate in only specific areas such as New York Metro delivery area, between only certain counties or only within a particular town or city. To deliver outside of the restricted areas would require a filing and regulation by the appropriate governmental agency.

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REGULATORY AGENCIES

The regulation of the surface transportation industry, which includes trucking, buses, freight forwarders and transportation brokers (including rail carriers), falls within the jurisdiction of governmental agencies or commissions.

The function of these bodies is to control the operation of the various types of carriers. This is accomplished through: establishment of fair rates; insurance requirements; service standards; accounting and financial report procedures; sales/ mergers-acquisitions of carriers and other areas included in the regulations.

Interstate Commerce Commission (ICC)
Prior to being absorbed into the Department of Transportation, the ICC was one of the regulatory agencies which acted as an independent agency of the United States government. It enforced federal laws that dealt with the transportation of passengers and property by land and water across state lines. The commission regulated the rates and trade practices of companies that arrange for and transport goods and passengers by train, motor vehicles, and boats.

A closer examination of the ICC shows that its carriers are classified according to the amount of carrier operating revenue (includes both interstate and intrastate amounts), and regulated through the issuance of Certificates or Permits.

Class I - Carriers having average annual gross transportation operating revenues (including interstate and intrastate) of $5 million or more from passenger motor carrier operations.

Class II - Carriers having average annual gross transportation operating revenues (including interstate and intrastate) of less than $5 million from passenger motor carrier operations.

Certificates and Permits may be restrictive, and spell out the types of goods and commodities which may be hauled, but explicitly delineate territories and routes to be traveled. A common carrier requires a Certificate of Public Convenience and Necessity. A contract carrier requires a Permit.

All of these operations continue but are under the DOT "umbrella."

Department of Transportation (DOT)
This is an executive department of the United States government. The department develops and promotes national transportation policies and programs. It coordinates programs that provide safe, economical, and efficient transportation on land, sea and in the air.

Public Utility Control (PUC)
This is a territorial or statewide regulatory body which oversees activities in trucking operations within a particular territory or state.

Nuclear Regulatory Commission (NRC)
This is an independent United States government agency set up in 1975 to take on all of the licensing and regulatory functions formerly assigned to the Atomic Energy Commission. Its purpose is to ensure that the civilian uses of nuclear materials and facilities are conducted in a manner consistent with the public health and safety, environmental quality, national security, and the antitrust laws. The major share of the commission's efforts is focused on regulating the use of nuclear energy to generate electric power. The Nuclear Regulatory Commission regulates the transportation of radioactive materials.

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INSURANCE REQUIREMENTS

The Truckers Coverage Form was developed to meet the unique needs of the trucking industry. One of the primary features distinguishing the Truckers Coverage Form from the standard Commercial Automobile policy is the requirement that a trucker must insure any other trucker hauling for it on a primary basis.

This requirement is outlined on pages 8 & 9 of the Truckers Coverage Form under Section V, Truckers Conditions. Section B, General Conditions, Item 5, Other Insurance - Primary and Excess Insurance Provisions states, "This Coverage Form's Liability Coverage is primary for any covered 'auto' while hired or borrowed by you and used exclusively in your business as a 'trucker' and pursuant to operating rights granted to you by a public authority. This Coverage Form's Liability Coverage is excess over any other collectible insurance for any covered 'auto' which is hired or borrowed from you by another 'trucker'." This distinction will become important in determining whether or not, for example, a leased vehicle should be added to the policy as a specified vehicle.

Not all truckers require the Trucker's Coverage Form. Only those who come within the commercial auto manual definition of "trucker" are eligible. Truckers are entities in the business of transporting goods, materials or commodities for another. This encompasses public and contract carriers subject to ICC and state regulation, exempt commodity carriers, furniture movers as well as contractors and building materials dealers who haul for others.

Those who haul their own goods, materials or commodities or those who are public or private passenger liveries are not eligible for the Truckers Coverage Form. Owner-operators or those who hire out their services to other truckers also do not need the Truckers Coverage form since they are covered on a primary basis under the Truckers policy of the trucking firm for whom they are hauling. In this instance, most owner-operators would carry their own policy since they would be without insurance when they are not actually engaged in hauling; but this policy does not change the fact that they are covered as primary under the hiring trucking company's policy.

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POLICY DECLARATIONS

The Truckers Coverage Form Policy Declarations is the source document for determining what coverage symbols and, by extension, what basis of premium applies to a specific policy. The coverage symbols are as follows:

Symbol 41 - ANY AUTO - This symbol is used only for liability and indicates automatic coverage for all autos owned, acquired, borrowed or hired.

Symbol 42 - OWNED AUTOS ONLY. Only autos you own (and for liability coverage any trailers you don't own while connected to a power unit you own). This includes those autos you acquire ownership of after the policy begins. This symbol indicates fleet automatic coverages for owned autos of any type and can be used for liability or physical damage.

Symbol 43 - OWNED COMMERCIAL AUTOS ONLY. Only those trucks, tractors and trailers you own (and for liability coverage any trailers you don't own while connected to a power unit you own). This includes those trucks, tractors and trailers you acquire ownership of after policy begins. This symbol indicates automatic coverage for other than private-passenger type autos.

Symbol 44 - OWNED AUTOS SUBJECT TO NO-FAULT. Only those autos you own which are required to have No-Fault benefits in the state where they are licensed or principally garaged. This includes those autos you acquire ownership of after the policy begins provided they are subject to the No-Fault law in the state where they are licensed or principally garaged. This symbol provides automatic coverage for all the insured's owned vehicles required to have no fault.

Symbol 45 - OWNED AUTOS SUBJECT TO A COMPULSORY UNINSURED MOTORISTS LAW. Only those autos you own which, because of the law in the state where they are licensed or principally garaged, are required to have and cannot reject uninsured motorists insurance. This includes those autos you acquire ownership of after the policy begins provided they are subject to the same state uninsured motorists requirement. This symbol designates automatic uninsured motorists coverage only for states with mandatory uninsured motorists laws.

Symbol 46 - SPECIFICALLY DESCRIBED AUTOS. Only those autos described in ITEM FOUR for which a premium charge is shown (and for liability coverage any trailers you don't own while attached to any power unit described in ITEM FOUR). This symbol provides coverage only for specified vehicles and is non-fleet automatic.

Symbol 47 - HIRED AUTOS ONLY. Only those autos you lease, hire, rent or borrow. This does not include any private passenger type auto you lease, hire, rent or borrow from any member of your household. When this symbol is used, it makes any auto the insured hires, leases or rents a covered auto except any private-passenger type owned by any of the insured's employees or agents or members of their household. It triggers liability insurance on a primary basis for hired or borrowed autos.

Symbol 48 - TRAILERS IN YOUR POSSESSION UNDER A WRITTEN TRAILER INTERCHANGE AGREEMENT. Only those trailers you do not own while in your possession under a written trailer interchange agreement in which you assume liability for loss to the trailers while in your possession. This symbol indicates trailer interchange insurance.

Symbol 49 - YOUR TRAILERS IN THE POSSESSION OF ANOTHER TRUCKER UNDER A WRITTEN TRAILER INTERCHANGE AGREEMENT. Only those trailers you own or hire while in the possession of another trucker under a written trailer interchange agreement. When Symbol "49" is entered next to a PHYSICAL DAMAGE INSURANCE coverage in ITEM TWO, the PHYSICAL DAMAGE INSURANCE exclusion relating to loss to a trailer in the possession of another trucker does not apply to that coverage. This symbol removes the physical damage exclusion from the insured's trailers while they are in the possession of another trucker under a trailer interchange agreement.

Symbol 50 - NON-OWNED AUTOS ONLY. Only those autos you do not own, lease, hire, rent or borrow are used in connection with your business. This includes private-passenger type autos owned by your employees or members of their household but only while used in your personal affairs. This symbol provides coverage for autos used in the insured's business which are not owned, leased, hired, rented or borrowed.

Item Four of the Declarations is the Schedule of Covered Autos You Own. This lists the vehicles owned at policy inception with the applicable classifications.

Item Five of the Declarations is the Schedule of Hired or Borrowed Covered Auto Coverage and Premiums and will indicate the state, estimated exposure, rate and premium for Hired Autos. This is often included on Truckers Policies on an "If Any" or minimal exposure basis. Since coverage is primary and the rates are often quite high, this is an area deserving careful attention at final audit. Item Six of the Declarations is the Schedule of Non-Ownership Liability which lists the estimated number of employees and the applicable premium. In many instances, the policy will show only the minimum number of employees at 0-25. This is another area requiring attention at audit since the rates can be significantly higher with a higher number of employees.

Item Seven is the Trailer Interchange Insurance which lists the daily rates and estimated premium. The basis of premium is the number of trailer days.

Item Eight is the schedule for trucking insureds written on the gross receipts basis.

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BASIS OF PREMIUM

Truckers can be rated on either a specified vehicle basis or on a gross receipts basis. The specified vehicle basis requires the company representative to list the vehicles for additions and deletions as well as the listed rating territories, vehicle size class, business use and zone rating. The gross receipts basis requires knowledge of the ICC Uniform Systems of Accounts as well as the various inclusions and exclusions identified in the definition of gross receipts for a truckers policy. The ICC Uniform Systems of Accounts is no longer required but commonly used by truckers and motor carriers today for accounting simplicity.

Specified Vehicle Basis
When a Truckers Policy is written on a specified vehicle basis the auditing of the vehicles is very similar to the auditing of a standard Commercial Automobile policy. The determination must be made for vehicles not included on the original policy or added by endorsement as to the type of coverage on the policy. This can be done by examining the Coverage Symbols on the Policy Declarations. If Symbols 42 or 43 are present, this indicates fleet automatic coverage for newly acquired vehicles and, therefore, these vehicles should be added by the auditor. If these symbols are not present, it is still prudent practice for the auditor to provide notice to appropriate company personnel that there are unscheduled vehicles.

One main difference between the Truckers Policy and the Commercial Automobile Policy is that the coverage for the Truckers Policy is primary. This means non-owned vehicles used exclusively by the trucker must be scheduled on the policy in the same manner as an owned vehicle. It will be up to the company representative in these instances to determine whether or not the non-owned vehicle is used exclusively by the insured.

The fact that a written contract exists or that a vehicle has been permanently painted or identified with the conspicuous trademark, name, or insignia of the insured for which hauling is being done is not sufficient evidence to document exclusive use by the insured. The written contract could be in the form of a lease or other contract. This is important due to the classification structure of specified vehicles. If the company representative is in doubt about whether or not the individual circumstances of a particular non-owned vehicle qualifies as exclusive use, the issues should be escalated to appropriate company personnel for further determination. It should be remembered that this rule must be applied on a vehicle by vehicle basis and not in a blanket fashion to all non-owned vehicles. Non-owned vehicles which are determined not to be used exclusively by the insured would still be included under Cost of Hire.

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Rule 90 of the Automobile Division of the CLM states that autos leased for six months or more must be treated as owned autos when the lessee is responsible for providing the primary insurance covering the vehicle. Since Hired Autos are covered on a primary basis automatically under the Trucker's policy, they will meet the coverage criteria. Thus, vehicles leased 6 months or more in the trucking industry should be treated as owned.

Once it is determined that a vehicle should be included as a specified vehicle, the next step is determining the applicable classification. In auditing Truckers Policies, it should not be assumed that the vehicles already listed on the policy are in all instances correctly classified. There is much confusion regarding the proper classification of vehicles. The company representative's expertise should be used in verifying the classifications of all scheduled vehicles, not just those to be added at expiration of the policy. Very significant premium variances are applicable based upon classification determinations.

The primary factors in determining vehicle classification are the size as determined by either the Gross Vehicle Weight (GVW) or the Gross Combined Weight (GCW), the business use and the radius of operations. In addition, a secondary classification is also used which is based on the usage type of the specific vehicle. The secondary classification can be different for each vehicle based on the specific usage of the vehicle. It does not have to be the same for every vehicle on the policy.

In underwriting or auditing both Truckers and Commercial Automobile policies, the primary difficulty is in determining what records to use. Unlike payroll or sales these are often not clear-cut record sources with secondary verification sources.

For the determination of a listing of vehicles to be included, the following is an outline of potential record sources.

  • Vehicle Titles or copies
  • Vehicle Registrations or copies
  • Vehicle Listings
  • Depreciation Schedules
  • Motor Fuel Tax Records
  • Vehicle Leases or Contracts
  • Cost of Hire Records
  • Purchased Transportation Accounts
  • Bills of Sale - for deleted vehicles
If a vehicle is being listed as deleted, it is important that evidence of actual disposition of the vehicle be obtained. Many times vehicles may be out of service for mechanical or economic reasons but they would not be deleted from the policy.

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Gross Vehicle Weight (GVW)/Gross Combined Weight (GCW)
In determining the Gross Vehicle Weight (GVW) or the Gross Combined Weight (GCW), the company representative should not rely solely upon the vehicle titles or registrations as they often show only the gross or tare weight used by the particular state for registration purposes. No dependable relationship exists between registered weights and the manufacturer's specified GVW or GCW. There are a variety of sources for this information:
  1. Statement of Origin - This is a paper required by law for each new vehicle which will state the GVW or GCW. Many states require that this be supplied to the Department of Motor Vehicles upon registration so this may not be available.
  2. Bill of Sale - Bills of Sale prepared by the dealer may list the weights.
  3. Rating Plate - This is usually affixed to the vehicle by the manufacturer and it is usually located on the door plate of the vehicle. This is the most reliable source for weight information. Care should be taken since they list only the GVW and not the GCW for tractor-trailer combinations. This information may be the same for vehicles of the same type so it may not be necessary to physically check each vehicle.
  4. Reference Publications - These publications such as the Truck Blue Book, the Commercial Car Journal or the Branham Automobile Reference Book can be helpful as the Vehicle Identification Number (VIN) can be used to determine the weight of a particular model. These publications may be available in the Loss Control or Claims Departments of the company representative's individual companies.
With regard to business use, most of the vehicles used by Truckers would fall within the definition of Commercial use with the main exception being service or tow trucks used to maintain the insured's own fleet.

The last classification factor is the radius of operations. This is a key area as this factor is heavily weighted in determining the final rates. In many instances, the radius of operations will be listed on the policy as local when in fact the actual radius of operations is much greater. The radius of operations is measured on a straight line from the street address of principal garaging. The determining factor is regular operation within one of the listed zones. There is no prescribed definition of regular operation. Much of this will be up to company interpretation. If the radius of operations is in doubt, it is advisable to check source documents such as bills of lading, invoices and motor fuel taxes to determine either where the insured's customers are located or where motor fuel taxes are being paid.

The last two digits of the vehicle classification are determined by the secondary classification. It should be remembered that these secondary classifications should be applied on an individual vehicle basis and not to the business of the insured as a whole.

Cost of Hire
Cost of hire is used as a basis of premium either in conjunction with specified vehicles or on a stand-alone basis if there are no specified vehicles. It is important to keep in mind that the coverage provided by a Truckers Policy is primary coverage and not excess coverage. As a consequence, the existence of a Certificate of Insurance for the hired vehicle is not relevant to whether or not the cost of hire is included for premium calculations. The cost of hire for all hired vehicles should be included. Cost of hire must be broken down by state.

Cost of hire is defined as follows:
  • The total dollar amount of costs incurred by the insured for the hire or lease of autos (including trailers and semi-trailers).
  • The total wages of all operators and drivers helpers of autos.
  • The total dollar value of any other costs, i.e., repairs, maintenance, fuel, etc., directly associated with operating hired or leased autos whether such costs are absorbed by the insured or have been paid to the lessor, owner or others.
  • Cost of hire does not include the total dollar amount of costs incurred by the insured for hire or lease of automobiles specifically described in the policy as owned autos for which the premium has been established on a specified car basis.
When a trucker actually hires a vehicle, the cost of hire must include the driver. If an auto is hired without an operator, the wages of the operator provided by the named insured must be added to the cost of hire. Wages include salary, overtime, bonuses, commissions and any other compensation. Cost of hire should not include the cost of hire from common carriers operating under their own ICC rights.

In some instances, the policy may contain an endorsement entitled "Truckers-Excess Coverage for The Named Insured and Named Lessors for Leased Autos." This endorsement is used with the Truckers Coverage Form to indicate that the primary coverage on autos which are leased from the concern(s) indicated on this endorsement is provided by those concerns. There is no clear basis for excluding the cost of hire from concerns covered by this endorsement. This situation should be referred to the company.

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Gross Receipts
The third and most common premium base for a trucker's policy is gross receipts. Why are gross receipts used? Gross receipts as a basis of premium for liability exposures of Trucking companies is primarily a way to deal with the impracticality of using the Specified Vehicle basis. Gross receipts is often used when the trucker's fleet is composed of a large number of vehicles. Due to the amount of work necessary to individually rate each vehicle, specified vehicle rating is usually considered impractical when it comes to Truckers.

Another troublesome area in which Gross Receipts can be beneficial is when a substantial amount of Cost of Hire exposure is developed by the Trucker. The rate for Cost of Hire is usually developed using the characteristics of the insured's own fleet. When that fleet is small or used in a different manner than the hired vehicles, local vs. long-haul for example, the resulting rate may not be a true representation of the exposures assumed. In situations where the Trucker utilizes a large number of owner-operators and/or Motor Carriers to carry out its actual operations, the rate for Cost of Hire exposures may be inadequate or exorbitant for the exposures involved.

A unique feature of the Trucker's Policy, in contrast with the Business Auto Policy, is that it extends coverage on a primary basis for hired or borrowed vehicles when those vehicles are used exclusively and pursuant to operating rights granted by a public authority. Thus, we need to be sure that all exposures, and not just the owned-vehicle exposure, are accounted for on the audit. By basing premium on the total revenue of the insured, we automatically pick up all potential exposures generated by the insured's operations regardless of whether the load was transported on our insured's own trucks, by another trucker or by using hired or borrowed vehicles. Gross receipts also avoids potential disputes over whether a hired vehicle is rented on a long-term, and consequently included as an owned auto not the insured's policy, or on a short-term, included as Cost of Hire exposure, basis.

Gross Receipts Defined
Gross Receipts is normally defined as:
Gross Receipts means the total amount to which you are entitled for shipping or transporting property during the policy period regardless of whether you or any other carrier originate the shipment or transportation. "Gross Receipts" includes the total amount received from renting equipment, with or without drivers, to anyone who is not a trucker and 15% of the total amount received from renting any equipment to any trucker.

Gross receipts does not include:
  1. Amounts you pay to railroads, steamship lines, airlines and other motor carriers operating under their own ICC or PUC permits.
  2. Advertising Revenue.
  3. Taxes which you collect as separate item and remit directly to a governmental division.
  4. C.O.D. collections for cost of mail or merchandise including collection fees.
  5. Warehouse storage fees.
Components of the Gross Receipts Definition
"Gross Receipts means the total amount to which you are entitled for shipping or transporting property..."

(A) Whether shipment originates with the named insured,
  • This states that the company (insurer) is entitled to 100% of the insured's receipts from trucking operations over its permit rights when the shipment originates with the insured.
(B) or other carriers,
  • In those cases where the insured has an arrangement with another carrier to haul a shipment that may originate with another carrier, the company is entitled to 100% of the gross receipts that are generated from the shipment of goods used over our insured's permits rights.
(C) and shall include the total amount received from the rental of equipment, with drivers, to any person or organization not engaged in the business of transporting property of hire,
  • Trucking firms will lease vehicles, with drivers, to firms not in the business of trucking; for instance, a cattle rancher, a furniture manufacturer. The company is entitled to 100% of the receipts.
(D) and shall include the total amount received from the rental of equipment, without drivers, to any person or organization not engaged in the business of transporting property for hire.
  • This involves leasing vehicles without drivers to firms not in the business of trucking, i.e., a manufacturer or contractor. The company is entitled to 100% of the receipts.
(E) and 15% of the total revenue received from the rental of equipment with drivers to any person or organization engaged in the business of transporting property for hire,
  • This may occur when our insured leases vehicles, with drivers, to other trucking firms for use on permit rights other than our insured's. Two occasions may give rise to this occurring: (1) when our insured wants to haul the load to its destination, even though the point of destination extends past his permit rights; in order to do so, he must lease his equipment with the driver to the carrier having the permit rights. (2) Our insured simply leases his equipment with a driver to another carrier for no specific purpose. In these instances, the company is entitled to only 15% of the rental revenue.
(F) and 15% of the total amount received from the rental of equipment, without drivers, to any person or organization engaged in the business of transporting property for hire.
  • In those cases where our insured rents out his vehicles (without drivers) to other trucking firms for use on permit rights other than our insured's, the company is entitled to 15% of the rental revenue.
Again, a quality inspection of the insured's records for a policy based on a gross receipts would include much of the information outlined in steps five and six of the specified auto basis procedures. A thorough review of the sales journal is required.

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ACCOUNTS USED TO DETERMINE GROSS RECEIPTS

The following is a list of common ICC accounts (from the "Uniform System of Accounts") used to determine gross receipts. Motor Carriers are not required to use this system any longer; however, some Motor Carriers may still record their revenues in this manner. The information is included since it outlines gross receipts inclusions and exclusions and provides a reference when the account numbers are encountered. The company representative's understanding of these accounts can greatly enhance the quality of the inspection of the insured's records, since the development of premium is directly tied to the insured's activity, as reflected by these accounts.

Accounts for Other Than Carriers of Household Goods:
3100 - FREIGHT REVENUE INTERCITY COMMON CARRIER. This account includes all revenue earned by the carrier from the transportation of property in intercity service, including pickup and delivery incidental thereto, while operating as a common carrier.

3200 - FREIGHT REVENUE - INTERCITY CONTRACT CARRIER. This account includes all revenue earned by the carrier from the transportation of property in intercity service while operating as a contract carrier. This account also may include C.O.D. fees and reference should be made to their exclusion.

3300 - FREIGHT REVENUE - LOCAL CARTAGE. This account includes revenue earned by common or contract carriers for the transportation of property in local cartage service; including pickup and delivery and local transfer services performed for other carriers and freight forwarders.

This account may contain rental income received from other Motor Carriers. The company representative should determine these receipts from the insured's records and deduct 85%, as only 15% may be used for the premium basis. This account may also contain fees received for handling C.O.D.s. These fees must be deducted when properly identified in the insured's records.

3400 - INTERCITY TRANSPORTATION FOR OTHER MOTOR CARRIERS. This account includes revenue earned from any other Motor Carriers under a purchased transportation arrangement for performing any portion of their intercity haul. Included are:
  • revenue from furnishing vehicle with a driver under lease or similar agreement when the driver is paid by the insured.
  • revenue from transporting freight to complete another carrier's intercity haul,
  • revenue from the transportation in intercity service of loaded or empty trailer from another carrier.
Only 15% of account 3400 should be included for the gross receipts premium base.

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3900 - OTHER OPERATING REVENUE. This account includes revenues from sources other than account 3100, 3200, 3300, and 3400. Included are revenues for displayed advertising matter, brokerage commissions, garnishment fees, vending machines, snowplow work, operations of lunchrooms and restaurants, various services to other, and miscellaneous revenues. Amounts described by this account are not properly included for gross receipts premium basis. However, this account does include revenue that are includable such as detention charges, stop off fees, extra handling charges, etc.

5410 - VEHICLE RENTS WITH DRIVERS. This account includes the amounts paid to owner-operators and to other motor carriers under a purchased transportation arrangement. Under a purchased transportation arrangement, the hired or leased vehicles are operated under our insured's operating rights or permit. This expense should be ignored when determining the adjustments to gross receipts.

5420 - VEHICLE RENTS WITH DRIVERS - VEHICLE PORTION ONLY

5430 - VEHICLE RENTS WITHOUT DRIVERS. Both of these accounts include the expenses of renting equipment where the equipment is under the insured's exclusive control and use. These expenses should be ignored when determining the adjustments to gross receipts.

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8320 - LEASE OF DISTINCT OPERATING UNIT - CREDIT. This account includes amounts received for the rental of a distinct operating unit or the rental of operating authority leased by the insured to others to use in Motor Carrier operations, when the lessee has exclusive possession.

5440 - OTHER PURCHASED TRANSPORTATION - MOTOR CARRIERS. This account includes the amounts paid to other carriers, for transportation of goods under the other carriers operating rights or permits.

100% of this expense is to be subtracted from gross receipts.

5490 - EQUIPMENT RENTS - CREDIT. This account is credited with rents received for owned or leased revenue vehicles that are furnished to others without drivers or where the driver is paid on the payroll of the lessee.

(Note: Rents from vehicles furnished or leased to others with drivers are recorded as revenue in either account #3300 or #3400.)

15% of this account should be included as gross receipts, if the vehicles are rented to another motor carrier. However, if endorsement CA 23 12 is attached to the policy, 100% should be included. If the rental is to someone other than a motor carrier, 100% is to be included.

Account for Carriers of Household Goods:

3100 - MOVING REVENUE - INTERCITY COMMON CARRIER - OWN RIGHTS. This account series includes all lines-haul revenue earned by the carrier from the transportation of property in intercity service while operating as a common carrier.

3200 - MOVING REVENUE - INTERCITY CONTRACT CARRIER - OWN RIGHTS. This account series includes all line-haul revenue earned by the carrier from the transportation of property in intercity service while operating as a contract carrier.

3300 - MOVING REVENUE - LOCAL. This account series includes revenue earned by common or contract carriers from the transportation of property in local moving services. This account may contain amounts for "rent of local vehicle and driver." If so, assuming the rents are received from another motor carrier, only 15% of revenue from the rental operation should be included. (However, if endorsement CA 23 13 is attached to the policy then 100% should be included.)

3400 - MOVING REVENUE - INTERCITY TRANSPORTATION FOR OTHER MOTOR CARRIERS. This account series includes revenue earned from any other motor carriers under a purchased transportation arrangement for performing any part of their intercity haul. Revenue should only be recorded in this account when the carrier's vehicle, supplied with or without operators, is operated under the other motor carrier's operating permit or rights.

Included are the following revenue sources:

Furnishing of line-haul vehicle with driver under lease or similar arrangement when the driver is paid by the insured,

Transporting of household goods to complete another carrier's intercity haul, and

Transportation in intercity service of loaded or empty trailers from another carrier.

15% of this account should be included as gross receipts. However, if endorsement CA 23 12 is attached to the policy, 100% should be included.

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3600 - SUPPLEMENTAL TRANSPORTATION SERVICES. Included in this account are additional transportation charges for such things as extra stops, pick-ups, delivery, empty mileage and other miscellaneous services rendered in connection with intercity transportation of household goods.

Careful analysis of the sources of revenue in this account is necessary to determine the amount, if any, to be excluded. Otherwise, 100% of this revenue should be included as gross receipts.

3900 - OTHER OPERATING REVENUE. This account series contains miscellaneous revenues that are not to be included for the gross receipts premium base, such as amounts received for insurance claims, garnishment fees, coin-operated machine receipts, or scale revenue. However, this account does include revenue that are includable such as detention charges, stop-off fees, extra handling charges, etc.

7610 - PURCHASED TRANSPORTATION - EQUIPMENT RENTS - WITHOUT DRIVER. All of the accounts (7610 - 7650) include the expenses of renting equipment where the equipment is under the insured's exclusive control and use. These expenses should be ignored when determining the adjustments to gross receipts.

7620 - PURCHASED TRANSPORTATION - TRACTOR RENTS WITH DRIVER - FROM AGENT. All of the accounts (7610 - 7650) include the expenses of renting equipment where the equipment is under the insured's exclusive control and use. These expenses should be ignored when determining the adjustments to gross receipts.

7630 - PURCHASED TRANSPORTATION - TRACTOR RENTS WITH DRIVER - FROM OWNER-OPERATORS. All of the accounts (7610 - 7650) include the expenses of renting equipment where the equipment is under the insured's exclusive control and use. These expenses should be ignored when determining the adjustments to gross receipts.

7640 - PURCHASED TRANSPORTATION - TRACTOR-TRAILER RENTS WITH DRIVER - FROM AGENT. All of the accounts (7610 - 7650) include the expenses of renting equipment where the equipment is under the insured's exclusive control and use. These expenses should be ignored when determining the adjustments to gross receipts.

7650 - PURCHASED TRANSPORTATION - TRACTOR-TRAILER RENTS WITH DRIVER - FROM OWNER-OPERATORS. All of the accounts (7610 - 7650) include the expenses of renting equipment where the equipment is under the insured's exclusive control and use. These expenses should be ignored when determining the adjustments to gross receipts.

7690 - PURCHASED TRANSPORTATION- EQUIPMENT RENTS - CREDIT. This account is credited with amounts received by the insured for owned or leased revenue vehicles that are furnished to others either without drivers or when the driver is paid on the lessee's payroll.

(Note: Rent from vehicles furnished with drivers is recorded in either account #3300 or #3400.)

15% of this account should be included as gross receipts if the income is from rental to another motor carrier. (However, if endorsement CA 23 12 is attached to the policy, 100% should be included.) If the rentals are to non-motor carriers, then 100% of this income is to be included.

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9320 - LEASE OF DISTINCT OPERATING UNIT - CREDIT. This account includes amounts received for the rental of a distinct operating unit or the rental of operating authority leased by the insured to others to use in motor carrier operations when the lessee has exclusive possession.

"Distinct operating unit" means all of any portion of a route or routes covered by a certificate of convenience and necessity or by a permit, including motor vehicles and other physical property owned and used in the operation thereof. As this account will contain both revenue and expense data, 15% of the amounts credited to this account should be included as gross receipts.

Accounts Used by Passenger Carriers:

3000 - OPERATING REVENUE. This account includes the total operating revenues as provided in the primary operating revenue accounts derived by the carrier from its motor carrier operations. It is a consolidation account of the other subsidiary accounts listed below.

3200 - PASSENGER REVENUE. This account includes all revenue accrued from the transportation of passengers over regularly operated routes. It is net of refunds and inclusive of chartered service revenue and baggage revenue. 100% of this account should be included as gross receipts.

3300 - MAIL REVENUE. This account includes revenue earned from the transportation of the United States and other mails, and from bonuses for special mail transportation. 100% of this account should be included as gross receipts.

3400 - EXPRESS REVENUE. Included in this account are amounts earned by the insured from the transportation of express matter (including milk and cream) at specified tariff rates. 100% of this account should be included as gross receipts.

3500 - NEWSPAPER REVENUE. Included in this account are amounts earned from the transportation of newspapers at specified tariff rates. 100% of this account should be included as gross receipts.

3600 - OTHER OPERATING REVENUE. Included in this account are amounts derived from snowplowing and advertising displays in or on vehicles. This account also includes excess route revenues over tariff revenues. The excess route revenues should be included at 100% with the other items excluded from gross receipts.

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ADDITIONAL POINTS

  1. An insured trucker may lease vehicles from another concern and the owner of these vehicles, even though operating under the insured trucker's permit, has agreed to assume insurance liability (Endorsement CA 23 08). In such cases, only 15% of the insured trucker's billings for the use of these leased vehicles should be included.
  2. An insured trucker may lease vehicles to another concern which will use its own permit in their operation, but the insured trucker has agreed to assume insurance liability. (Endorsement CA 23 12). In such cases 100% of the amount billed for the use of these vehicles is to be included as exposure.
  3. It is an accepted audit requirement to record the receipts (billings) monthly, and develop the other related inclusions or deductions in a similar manner.
  4. Occasionally, a truck may return empty or a tractor may be driven back without a semi-trailer. In the trucking circles this is known as "bobtailing" and for insurance purposes it could mean that these vehicles are covered for non-trucking activities if not rented to others or used in the trucking business. Endorsement CA 23 09 will be attached to the policy if Bobtail coverage is provided, and each vehicle involved is classified by the 4-digit class code 7489. This is concern to owner-operators only. Equipment owned by the insured is covered when empty. Hired vehicles (owner-operators) are covered only when performing hauling operations under our insured's rights. They are the only ones who need the bobtail coverage. They can obtain it under a policy issued directly to the owner-operator or the motor carrier can add it to their policy as an accommodation.
  5. There are other sources of information for the trucking industry that can assist the auditor in verifying information. They include:
    1. The Truck Blue Book provides official used truck valuations for all models of medium and heavy-duty trucks including the five-digit VIN code for easy identification.
    2. the TTS Blue Book of Trucking Companies provides important financial and operating data from 1,700 carrier annual reports submitted to the ICC, plus state reported data on 300 major carriers who do not report to the ICC.
    3. the TTS National Motor Carrier Directory provides information on over 25,000 trucking companies. Information includes: CEO; headquarters address; motor carrier and phone number; revenue; number of trucks, tractors and trailers (owned/leased); plus the year the firm was established.
Trailer Interchange Agreement (CA 23 13)
In certain situations with Truckers/Motor Carriers, the carrier may use loaded trailers belonging to another trucker that may have been left at various terminals to be unloaded. If convenient, these unloaded trailers may be used by another trucker who has entered into a trailer interchange agreement with the trailer's owner. Insurance coverage may be provided for physical damage to trailers not owned by a trucker but in the trucker's possession. Since the rate is based on the radius, value, and the length (days) of use of each trailer, the 4-digit class code for each trailer under this agreement is 9990.

The Commercial Lines Manual provides under Rule 24 of Division One - Automobile, defines a trailer interchange agreement as "a written agreement which requires one trucker to reimburse the other for any damage to the other's owned trailer while in his possession." Since the premium base is the number of days the trailer is used by another trucker, the auditor obtains the number of days the trailer is in the possession of the other trucker in addition to the radius and value. If there is an even interchange of nonowned trailers and owned trailers under the agreement with coverage ceasing when the owned trailers are in the possession of the other party, there is no additional charge for this coverage. For example, if Trucker M and Trucker C each have seven trailers covered by the interchange agreement, no additional charge needs to be made. The reason for not charging an additional premium is that each trucker has the liability responsibility of seven trailers.

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THE TRUCKERS/MOTOR CARRIERS COVERAGE FORMS
Truckers

  • Section I - Covered Autos
    This section describes the symbols used on the Truckers Auto Policy to activate coverage. Here is the list of Symbols with a brief explanation for each:
SYMBOL 41 - ANY "AUTO."

SYMBOL 42 - OWNED "AUTOS" ONLY. Only those "autos" you own (and for liability coverage any "trailers" you do not own while attached to power units you own. This includes those "autos" you acquire ownership of after the policy begins.

SYMBOL 43 - OWNED COMMERCIAL "AUTOS" ONLY. Only those trucks, tractors and "trailers" you own (and liability coverage "trailers" you don't own while connected to a power unit you own). This includes those trucks, tractors and "trailers" you acquire ownership of after the policy begins.

SYMBOL 44 - OWNED "AUTOS" SUBJECT TO NO-FAULT. Only those "autos" you own that are required to have no-fault benefits in the state where they are licensed or principally garaged. This includes those "autos" you acquire ownership of after the policy begins provided they are required to have no-fault benefits in the state where they are licensed or principally garaged.

SYMBOL 45 - OWNED "AUTOS" SUBJECT TO A COMPULSORY UNINSURED MOTORISTS LAW. Only those "autos" you own that because of the law in state where they are licensed or principally garaged are required to have and cannot reject uninsured motorist coverage. This includes those "autos" you acquired ownership of after the policy begins provided they are subject to the same uninsured motorists requirements.

SYMBOL 46 - SPECIFICALLY DESCRIBED "AUTOS." Only those "autos" described in Item Three of the Declarations for which a premium charge is shown (and for liability coverage any "trailer" you do not own while attached to any power unit described in Item Three).

SYMBOL 47 - HIRED "AUTOS" ONLY. Only those "autos" you lease, hire, rent or borrow. This does not include any "autos" you lease, hire, rent or borrow from any of your employees or partners or members of their households.

SYMBOL 48 - "TRAILERS" IN YOUR POSSESSION UNDER A WRITTEN TRAILER OR EQUIPMENT INTERCHANGE AGREEMENT. Only those "trailers" you do not own while in your possession under a written "trailer" or equipment interchange agreement in which you assume liability for "loss" to the "trailers" while in your possession.

SYMBOL 49 - YOUR "TRAILERS" IN THE POSSESSION OF ANOTHER TRUCKER UNDER A WRITTEN TRAILER INTERCHANGE AGREEMENT. Only those "trailers" you own or hire while in the possession of anyone else under a written "trailer" interchange agreement. When Symbol "49" is entered next to a Physical Damage Coverage in Item Two of the Declarations, the Physical Damage Coverage exclusion relating to "loss" to a "trailer" in the possession of anyone else does not apply to that coverage.

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SYMBOL 50 - NONOWNED "AUTOS" ONLY. Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your employees or partners or members of their households but only while used in your business or your personal affairs.
  • Section II - Liability Coverage
    This section defines the insured, indicates amounts paid in case of a claim, and lists exclusions which the policy will not cover for liability.
  • Section III - Trailer Interchange Coverage
    This section applies to insured's legal liability for damage to non-owned trailers.
  • Section IV - Physical Damage Coverage
    This section lists the conditions and exclusions when physical damage is provided for owned autos.
  • Section V - Truckers Conditions
    This section lists the rights of the insured, the insurance company, and the various special stipulations for the Truckers Auto Policy type. Note that the policy condition B-6 states that the final premium will be developed by audit.
  • Section VI - Definitions
    This section defines and clarifies various words and phrases used in the policy, such as "autos," "mobile equipment" and "insured."
Motor Carrier
  • Section I - Covered Autos
    This section describes the symbols used on the Motor Carriers Auto Policy to activate coverage. Here is the list of Symbols with a brief explanation for each:
SYMBOL 61 ANY "AUTO."

SYMBOL 62 OWNED "AUTOS" ONLY. Only those "autos" you own (and for liability coverage any "trailers" you do not own while attached to power units you own.) This includes those "autos" you acquire ownership of after the policy begins.

SYMBOL 63 OWNED PRIVATE-PASSENGER TYPE "AUTOS" ONLY. Only the "private-passenger type autos" you own. This includes those "private-passenger type autos" that you acquire ownership of after the policy begins.

SYMBOL 64 OWNED COMMERCIAL "AUTOS" ONLY. Only those trucks, tractors and "trailers" you own (and for Liability Coverage any "trailers" you don't own). This includes those trucks, tractors and "trailers" you acquire ownership of after the policy begins.

SYMBOL 65 OWNED "AUTOS" SUBJECT TO NO-FAULT. Only those "autos" you own that are required to have no-fault benefits in the state where they are licensed or principally garaged. This includes those "autos" you acquire ownership of after the policy begins provided they are required to have no-fault benefits in the state where they are licensed or principally garaged.

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SYMBOL 66 OWNED "AUTOS" SUBJECT TO A COMPULSORY UNINSURED MOTORISTS LAW. Only those "autos" you own that because of the law in state where they are licensed or principally garaged are required to have and cannot reject uninsured motorist coverage. This includes those "autos" you acquired ownership of after the policy begins provided they are subject to the same uninsured motorists requirements.

SYMBOL 67 SPECIFICALLY DESCRIBED "AUTOS." Only those "autos" described in Item Three of the Declarations for which a premium charge is shown (and for liability coverage any "trailer" you do not own while attached to any power unit described in Item Three).

SYMBOL 68 HIRED "AUTOS" ONLY. Only those "autos" you lease, hire, rent or borrow. This does not include any "autos" you lease, hire, rent or borrow from any of your employees or partners or members of their households.

SYMBOL 69 "TRAILERS" IN YOUR POSSESSION UNDER A WRITTEN TRAILER OR EQUIPMENT INTERCHANGE AGREEMENT. Only those "trailers" you do not own while in your possession under a written "trailer" or equipment interchange agreement in which you assume liability for "loss" to the "trailers" while in your possession.

SYMBOL 70 YOUR "TRAILERS" IN THE POSSESSION OF ANOTHER TRUCKER UNDER A WRITTEN TRAILER INTERCHANGE AGREEMENT. Only those "trailers" you own or hire while in the possession of anyone else under a written "trailer" interchange agreement. When Symbol "70" is entered next to a Physical Damage Coverage in Item Two of the Declarations, the Physical Damage Coverage exclusion relating to "loss" to a "trailer" in the possession of anyone else does not apply to that coverage.

SYMBOL 71 NONOWNED "AUTOS" ONLY. Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your employees or partners or members of their households but only while used in your business or your personal affairs.
  • Section II - Liability Coverage
    This section defines the insured, indicates amounts paid in case of a claim, and lists exclusions which the policy will not cover for liability.
  • Section III - Trailer Interchange Coverage
    This section applies to insured's legal liability for damage to non-owned trailers.
  • Section IV - Physical Damage Coverage
    This section lists the conditions and exclusions when physical damage is provided for owned autos.
  • Section V - Motor Carrier Conditions
    This section lists the rights of the insured, the insurance company, and the various special stipulations for the Motor Carrier Policy type. Note that the policy condition B-6 states that the final premium will be developed by audit.
  • Section VI - Definitions
    This section defines and clarifies various words and phrases used in the policy, such as "autos," "mobile equipment" and "insured."

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