An agent’s client has an employee who plans to rent vehicles in their own name. The client’s business owner policy hired auto liability extends to the insured and the employee, but it is “excess coverage.”

Q: "When hired auto liability coverage is under a commercial general liability or BOP form and the coverage is ‘excess,’ what is it excess over: the rental firm’s liability coverage, the employee’s auto liability coverage or both?"

A: “I've never seen hired/non-owned coverage that didn't specify what it was excess over.

The ISO business auto policy says it is excess over ‘any other collectible insurance,’ which could include coverage on the non-owned auto and personal auto coverage of an employee.

The ISO personal auto policy says it is excess over ‘any other source of recovery,’ which could include insurance or even self-insured funds. To complicate matters, about half of U.S. states have laws addressing primacy for non-owned autos, and those laws vary significantly regarding the type of non-owned auto—rental car, dealership car, and so on.​

ISO does not have a hired/non-owned endorsement under its CGL program, though many insurers do. ISO has no CGL solution for this. ISO's BOP program can include hired/non-owned coverage, but it too has no solution when an employee rents an auto.

The only ISO solution is in the BAP program, and that involves use of the CA 20 54 - Employee Hired Autos endorsement. This endorsement makes the BAP primary and confirms that employees are insureds.

Many BOP policies are excellent. They package commonly needed coverages similar to the way a homeowners policy does. However, they don’t work well in some situations. This is a good example. ISO’s BAP program has many endorsements not available in a BOP program.

For another example, check out the VU article ‘If the BOP Fits, DON’T Wear It!’ The article features a handful of faculty responses to an Ask an Expert question regarding an insurer that agreed to issue a BOP to a boat dealer client. The agents wonder whether one of the BOP’s exclusions would negate coverage for some of the insured’s operations. In their responses, VU experts emphasize that a BOP is simply not equipped to handle certain exposures.”

Bill Wilson is director of the Big “I” Virtual University.

This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, email logon@iiaba.net to request login information.