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Coverage Education

01 Oct


Do you need garagekeepers coverage?

October 1, 2016 | By |

If you run a shop, do some towing, or allow other truckers to park on your premises, you may be held legally liable for a loss to a non-owned auto. A garagekeepers policy provides physical damage coverage for trucks, tractors, or trailers that you do not own but are in your possession for service or storage as part of your garage operations.

Direct primary garagekeepers coverage will compensate the vehicle owner even if you are not responsible for the loss, such as in the case of weather-related damages. This type of coverage can protect your operation and preserve goodwill in your business relationships.


If you are working on a loaded truck owned by someone else, you can also be liable for any damages to the client’s cargo, including theft; since the cargo doesn’t belong to you, your cargo policy will not respond. A property-of-others endorsement will cover losses to clients’ cargo while their vehicle is in your possession.

For more information on this and other insurance topics and coverage, please call our office.

15 Sep


Is an individual doing work for me an independent contractor or employee?

September 15, 2016 | By |

Several tests can be used to determine whether an individual qualifies as an independent contractor or employee for the purposes of state and federal laws. Fundamentally, all of these tests seek to answer the question, does the company control how the work will be performed (suggesting an employer-employee relationship) or does the company deal only with the results of this work (suggesting an independent contractor relationship)?

Five of the most common tests are:

  • IRS Factor Control Test (or 20 Factor Test): used in regard to IRS withholding, Immigration
  • Economic Reality Test: used in regard to Fair Labor Standards Act, Workers’ Compensation, Discrimination
  • Relative Nature of Work Test
  • ABC Test: used in regard to Unemployment benefits
  • Common Law Test (or Right to Control Test:) used in regard to Discrimination, ERISA, Worker Adjustment and Retraining Notification Act, National Labor Relations Act, Labor Management Relations Act

The test used depends upon the particular statutes or government agencies involved. Please not that these tests are only guidelines and are not applicable in every situation. Therefore, a worker may be considered an employee under one statute, but an independent contractor under another.

Misclassifying employees as independent contractors carries financial risks. In addition to penalties and fees, companies may also be charged with liabilities including back taxes and overtime. This may also open the company to lawsuits related to:

  • Denial of ERISA and other benefits
  • Denial of Workers’ Compensation
  • Denial of Family Medical Leave Act (FMLA)
  • Discrimination for failure to accommodate for a disability
  • Failure to include the individual in employee count which resulted in the company appearing not to be required to comply with Title VII, ADA, ADEA, FMLA, WARN Act, Affirmative Action, or other state or federal employment laws
  • Failure to retain proper tax forms for employees
  • Disputed ownership of rights to completed work

For more information and relevant forms, visit For more information on this and other insurance topics and coverage, please call our office.

01 Sep


What is Workers’ Compensation?

September 1, 2016 | By |

Workers’ compensation is a state-regulated program, and is required of certain employers by law in most states. It covers wage-loss benefits, medical treatment, and rehabilitation for employees who suffer a work-related injury or illness. Workers’ compensation also includes employer liability coverage, meaning that employees who receive these workers’ compensation benefits cannot file suit against their employer in connection with the work-related injury or accident, with few exceptions.

When an employee suffers a work-related injury or illness, the workers’ compensation policy covers the costs of the employee’s wages and medical care, and many workers’ compensation policies have programs which help to facilitate recovery and expedite return-to-work.

Premiums for workers’ compensation are determined by business classification and payroll. Classifications group businesses with like businesses, and these classification categories and determined by rating bureaus. Payroll is determined on an individual basis by a premium audit. A premium audit typically includes the insured submitting information about the business’s owners/officers, employee gross payroll, job descriptions, and subcontractors. When an audit is completed, the insured receives a statement that outlines the classifications, payroll amounts, rates, and other policy changes.

Cost Management

There are several ways an employer can manage the cost of workers’ compensation.

  • Choose your insurance agency carefully. Exclusive and captive agents are limited to offering only one carrier for workers compensation, while independent agents represent multiple insurance companies, and have the ability to compare policies for the best value.
  • Implement a formal safety program. Many employers who implement safety measures, such as written safety procedures, prompt claims reporting, and return-to-work programs, find that they are able to effectively reduce the costs of workers’ compensation.
  • Talk about safety with your employees. Provide training for injury prevention, and allow for meetings that address safety issues.

For more information on this and other insurance topics and coverage, please call our office.

15 Aug


Does a driver need to be tested for drugs and alcohol after an accident?

August 15, 2016 | By |


FMSCA regulations require alcohol and drug testing of drivers who are required to have a CDL.

Alcohol tests must be taken two to eight hours after the accident occurred. Drug test must be taken within 32 hours of the accident. Unless there are extenuating circumstances, the driver must be available for testing, or it may be assumed that the driver has refused testing. A refusal is considered the same as a positive test.

For more information on this and other insurance topics and coverage, please call our office.

01 Aug


What is Occupational Accident Insurance?

August 1, 2016 | By |

Occupational Accident Insurance provides medical, disability, and accidental death and dismemberment benefits, but it’s not Workers’ Compensation.

Medical Coverage

Our Occupational Accident Insurance offers our clients freedom of choice; they aren’t directed to a network of doctors or hospitals, rather, they can see their family doctor or specialists recommended by their doctor to treat covered accidental injuries, up to the limit of the policy.

Temporary Total Disability

If an individual is unable to work due to a covered occupational accident and medical treatment is necessary, our occupational accident insurance provides compensation for lost income, with some plans offering weekly maximum benefits of up to $700 per week for up to two years during recovery.

Continuous Total Disability

Should a covered injury result in a permanent total disability, individuals may be eligible for a Continuous Total Disability benefit once Temporary Total Disability benefits have expired.

Accidental Death and Dismemberment

Accidental Death and Dismemberment benefits are designed to help individuals and their families adjust to lifestyle changes that result from permanent critical injuries. The included death benefit will provide for dependents should an individual not survive a covered accidental injury.

For more information on this and other insurance topics and coverage, please call our office.

15 Jul


How do I insure my auxiliary power unit?

July 15, 2016 | By |

Physical damage coverage is provided when auxiliary power units (APUs) are permanently attached to a tractor; however, the value of the APU must be included when determining equipment values for insurance coverage. At the time of a total loss, the APU is surrendered because it is included in the salvage value of the tractor.

APUs can be insured separately on an inland marine floater policy. This allows the APU to be insured with an optional lower deductible and provides the flexibility to remove the unit from the tractor at the time of a loss when no damage occurs to the APU.

For more information on this and other insurance topics and coverage, please call our office.

01 Jul


What is a Constructive Total Loss?

July 1, 2016 | By |

A Constructive Total Loss (CTL) is a loss in which the item insured is not totally destroyed but is so severely damaged that the insurance company considers it uneconomical to repair. The insured item will be totaled-out and the title surrendered to the insurance company. Often, a loss equal to 50 or 60 percent of the stated value of the item is considered a CTL. This means that it is important to accurately state the value of insured items to avoid taking a personal loss in a CTL situation.

Here’s an example of a possible CTL:

Jeff purchased two new flatbed trailers, a “lead” and a “pup,” which cost $40,000 and $45,000, respectively. He figured that he would be able to repair any damage to the trailers himself, so to save money on his premium, he insured the trailers for only $15,000 each.

Jeff then had an accident that caused $12,000 in damage to the lead and $9,500 in damage to the pup. He thought that his $15,000 in coverage would cover his costs to repair the trailers. The Claim Adjuster, however, determined that the accident constituted a Constructive Total Loss on the two trailers, and Jeff would receive $30,000 from the insurance company.

Jeff could have repaired his two trailers for $30,000, but because they were totaled-out, he had to surrender the titles of the trailers to the insurance company, meaning that he no longer owned the trailers and could not repair them. The Claim Adjuster was able to sell the trailers to a salvage buyer for $40,000. He was able to reimburse the insurance company for Jeff’s claim and generate a profit of $10,000, which was given to Jeff.

Jeff was left with $40,000 to replace $85,000 in equipment. Had Jeff used a more accurate stated value, his insurance premium would have been higher, but in the case of an accident, his trailers would have been restored to pre-loss condition, even in the case of a CTL.

For more information on this and other insurance topics and coverage, please call our office.

23 Jun


Workers’ comp vs. Occ Acc: what’s the difference?

June 23, 2016 | By |

Workers’ compensation is a state-regulated program, and is required of employers who employ three or more employees at any one time, or employ one or more employees for 35+ hours per week for 13 or more weeks by law in most states. It may cover wage-loss benefits, medical treatment, and rehabilitation—related medical expenses—for employees who suffer a work-related injury or illness. Workers’ compensation also includes employer liability coverage, which may provide protection to an employer if an employee sues the employer in indirect relation to a workers’ compensation claim, often covering legal defense costs, up to the policy limits. Workers’ compensation doesn’t eliminate the issues of an unsafe workplace, however, and employers have a responsibility to maintain a safe working environment for their employees. Click here for specific answers to frequently asked questions about workers’ compensation.

Occupational accident insurance may provide medical, disability, and accidental death and dismemberment benefits, but it’s not workers’ compensation—it isn’t state-regulated or state statutory. Occupational accident policies may cover wage-loss benefits, medical treatments, and rehabilitation for employees or covered independent contractors, but only up to the policy limits. Employers are allowed to choose their coverage and deductible amounts, based upon the employer’s perceived risk.

While workers’ compensation policies typically involve a higher cost to the employer, they may offer more comprehensive coverage, particularly in terms of employer liability, which is not a component of occupational accident coverage. However, owner-operators and other drivers who qualify as independent contractors are not always covered under state workers’ compensation laws; while employee classification is determined by the federal government, workers’ compensation laws are determined by the state government. For these drivers, employers may want to consider occupational accident coverage.

For a useful infographic delineating the differences between workers’ compensation and occupational accident policies, click here. For more information on this and other insurance topics and coverage, please call our office.

15 Aug


Understanding Automobile Liability Pollution Coverage

August 15, 2013 | By |

The following article was originally written by Craig F. Stanovich, co-founder and principal of Austin & Stanovich Risk Managers, LLC, and is being reprinted with the permission of AmWINS Group, Inc.  It originally appeared in AmWINS’s July 2013 Client Advisory. 

On a rainy Monday morning, the interstate highway has been closed due to a serious traffic accident involving a pickup truck and a truck-tractor hauling a gasoline tank semi-trailer (tanker). The pickup truck driver attempted to pass the tanker, lost control due to the wet conditions, and then cut in front of the tanker, causing both vehicles to veer off the road. Fortunately, no one was injured, but the accident caused the tanker to overturn and split open, releasing its cargo – the gasoline. In addition, the pickup truck’s diesel fuel tank and oil pan ruptured, releasing both diesel fuel and motor oil into the environment. The state environmental authority has issued a cleanup order to both the owner of the pickup truck and the owner of the tanker.

The Pickup Truck

The Auto Liability Policy. The pickup truck is owned by S&S Nurseries, Inc. with liability coverage provided by Green Mutual Insurance Company “Green” via an ISO Business Auto Coverage Form (March, 2006 edition) with no endorsements. S&S has tendered the state’s cleanup demand to Green.

The Denial. Green admits the pickup is a covered auto but categorically denies any responsibility for defense or payments for the cleanup, citing as its basis that cleanup is not “property damage,” the cleanup demand is not a “suit,” the costs of cleanup are not “damages” and that, in any event, the policy excludes pollution.

A Failure to Communicate. Is Green’s denial proper? No. Green has completely failed to consider the second auto liability insuring agreement – a promise to pay “covered pollution cost or expense” caused by an accident resulting from a covered auto. Green has also ignored a critical part of its obligation to defend, which includes a duty to defend alleged “covered pollution cost or expense.”

Pollution Exclusion – Cargo. Despite “covered pollution cost or expense,” certainly the pollution exclusion relieves Green of any responsibility in this matter. But even a cursory review of the pollution exclusion plainly reveals it does no such thing. The pollution exclusion applies only if pollutants are being transported or towed by the auto, moved into or from the auto, stored or processed in the auto, or the pollutants are otherwise in transit by or for S&S. What’s more, the pollution exclusion clearly states it does not apply to the release of fuels or lubricants needed for the normal operation of the auto (such as those contained in the fuel tank and the oil pan).

Pollution Exclusion – The Cargo of Another. Coverage applies to pollutants transported, but not in a covered auto (in this case, the gasoline being transported by the tanker, which is not an S&S covered auto). The pollution exclusion does not apply if the pollutants are released because an S&S auto caused the overturn of the other auto (the tanker), provided the accident does not happen on S&S premises.

Coverage Found. In short, the auto liability policy with Green provides S&S with a defense, as well as coverage (to the extent S&S is liable) for the cost of the cleanup of the diesel fuel, motor oil andgasoline, such cleanup costs subject only to the policy limit.

Covered Pollution Cost or Expense. S&S seems to have received a huge benefit from covered pollution costs or expense. If this provision of the auto liability policy is so all encompassing, why does anyone need to purchase auto pollution liability coverage?

Cleanup. Covered pollution cost or expense includes any cost or expense from any demand or regulatory requirement that an insured must clean up or respond to pollutants. It includes any claims by or on behalf of a government authority, such as the cleanup demand made on S&S by the state environmental authority. Put another way: whether the cost of cleanup may be “damages” because of “property damage” or whether an environmental authority’s demand is a “suit,” or even if S&S’ negligence is irrelevant, the auto liability policy will respond to defend and pay costs, subject to all other policy limitations and exclusions, for the cleanup demand made against S&S by the environmental authority.

Restrictions. Covered pollution cost or expense does have its restrictions. Similar to the pollution exclusion, covered pollution cost or expense does not apply and provides no benefit if the pollutants are being transported or towed by the auto, moved into or from the auto, stored or processed in the auto, or the pollutants are otherwise in transit by or for the insured. Enter the need for the “pollution buy-back” endorsement.

The Tanker

Auto Liability Coverage. The owner of the tanker is Pump & Go, Inc. doing business as P&G, a chain of retail gasoline stations. Auto liability coverage is provided by Gas Haulers Insurance Company via an ISO Business Auto Coverage Form (March, 2006 edition) with several endorsements1, including Pollution Liability – Broadened Coverage for Covered Autos (CA 99 48 03 06 edition). P&G has also tendered the state cleanup demand to Gas Haulers Insurance Company.

Acceptance of Coverage. Gas Haulers Insurance Company accepts the tender of defense by P&G of the environmental authority’s cleanup demand. The claims person handling the P&G claim for Gas Haulers Insurance carefully reviews the second insuring agreement – including the definition of covered pollution cost and expense, as well as the pollution exclusion – and determines up to that point, the policy provides no coverage for P&G as the pollutants were clearly being transported by P&G when released. However, the Gas Haulers Insurance claims person reviews the entire policy, including the “pollution buy-back” which is actually the Pollution Liability – Broadened Coverage for Covered Autos endorsement.

Pollution Buy-Back. This endorsement deletes most of the pollution exclusion from P&G’s Business Auto Liability – resulting in coverage for bodily injury or property damage, provided the liability for bodily injury or property damage is not the liability assumed by P&G in a contract or agreement. In other words, if P&G has assumed the liability of others, regardless of whether the liability assumed is in an “insured contract,” the pollution exclusion continues to apply, even with the “pollution buy-back.”

Covered Pollution Cost or Expense. The “pollution buy-back” also changes the policy definition of covered pollution cost or expense. P&G has the benefit of pollution cost or expense coverage even when the pollutants released are being transported or towed by the auto, moved to or from the auto, stored or processed in the auto, or otherwise in transit by or for P&G. It is because of this change in the definition of covered pollution cost or expense that the Gas Haulers Insurance claims person has accepted the tender of defense on behalf of P&G – the demand for cleanup by the state environmental authority falls squarely within the re-defined (via the “pollution buy-back”) “covered pollution cost or expense.”

Owned Premises. By chance, some of the pollutants that escaped from P&G’s tanker in the accident have migrated onto P&G’s own property – a retail gas station that was near the highway where the accident occurred. Will Gas Haulers Insurance deny the cost of cleaning up P&G’s own property as part of this cleanup demand? The claims person for Gas Haulers Insurance finds an exclusion in P&G’s auto liability policy that applies to property owned by P&G. After originally preparing a letter of denial to P&G, the Gas Haulers Insurance claims person looks more closely at the “pollution buy-back” and notices that it also removes the owned property or “care, custody or control” exclusion of the policy to the extent the claim involves pollutants. Due to this change in the owned property exclusion, Gas Haulers Insurance Company does pay for the cost to clean up P&G’s own property – its retail gasoline station.


In order to understand the need and scope of the auto liability Pollution Liability – Broadened Coverage for Covered Autos (CA 99 48 03 06) endorsement, it is important to first grasp the breadth and restrictions found in the promise to pay “Covered Pollution Cost or Expense.” Auto liability pollution coverage can be fully appreciated only after recognizing how “Covered Pollution Cost or Expense” works in conjunction with the Pollution Liability – Broadened Coverage for Covered Autos.

Editor’s Note

The CA 99 48 may not be made available to all insureds with potential cargo-related pollution exposures. Some insureds may be seeking additional, separate or higher limits and perhaps pollution-related coverage beyond that provided by CA 99 48. In those cases, separate coverage may be arranged.

1 MCS-90 Endorsement can be reviewed at

Legal Disclaimer: Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.

17 Oct


Changes in Michigan’s Mini-Tort Law Take Effect

October 17, 2012 | By |

We wish to make our Michigan clients aware that due to the recent passing of House Bill 5362, the Michigan Mini-Tort limit has now increased from $500 to $1,000.

For those unfamiliar, the mini-tort law (also known as limited property damage liability), was developed in response to Michigan’s no fault insurance laws.  No fault laws limit the instances in which an individual can be sued for being at fault in an accident.  The mini-tort exception allows individuals to sue the party who was 50% or more at fault in an accident to recuperate those physical damage losses not covered by the injured party’s insurance.

The recent increase from $500 to $1,000 reflects the growing trend among consumers to take on higher insurance deductibles.  While it is not mandatory that insurance carriers offer mini-tort coverages to their clients, most do as standard practice.  However, not all have increased their policy limit from $500 to $1,000 in time to meet the October 1, 2012 enactment of House Bill 5362.  This means in the event of an accident, consumers may (depending upon their insurance company’s position) be liable for an addition $500 in the event they are more than 50% at fault in an accident.

We have been discussing this recent change with the insurance companies we represent, and have received a number of different responses.  Some companies plan to automatically honor the increased limit for the remainder of the policy term at no additional premium and without issuing an endorsement amending the policy verbiage.  Others will be offering the increased limit, priced accordingly, at policy renewal once the endorsement has been filed with and accepted by the State.  And a number will be reviewing this development in the New Year.

If you have questions regarding this recent legislative change or wish to discuss your policy’s mini-tort limit, please call us at (800) 596-TRUCK (8782).  At the Navigator Truck Insurance Agency we work hard to be accessible, helpful and result oriented.