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INSURANCE
FILINGS
By Roland L. Enz - President,
California Plus Insurance Service, Inc.
It is amazing how many
recurring insurance issues never get settled, nor do we wish to recognize
their importance until we absolutely must deal with them. This month’s
Insurance Report will focus on several of these problematic issues
in regards to your insurance filings.
Your operating authority is supported by the insurance filing made
by your insurance company at the time that the insurance policy is
purchased. Since both the Sate of California Department of Motor Vehicles
(intrastate) and the Federal Highway Administration (interstate) require
these filings, it is important to understand the relationship that
the insurance company has with each of these public entities. The
filing indicates, to the government agency, the required insurance
that you as the authority holder has. It simply makes representation
that your insurance is in compliance with your authority. More specifically,
the filing indicates the insurance company, policy number, policy
period and insurance limits. It does not, however, indicate the unit
insured or the number of units insured. In fact, the insurance company
(through the filing) only makes representation that you are insured,
whether you have one or one-hundred vehicles running under your authority.
This vague representation creates a major problem with the insurance
company making the filing when the insured removes a vehicle from
the policy. Other problems occur with leased vehicles or vehicles
running under your authority that are not on the policy.
If you wish to delete a vehicle from your policy, the insurance company
is very emphatic about what is needed for its removal. If it is sold,
they will require a Bill of Sale or a copy of the DMV Liability Release.
If it is not sold but deleted from the policy, a major problem arises.
Since the filing does not indicate vehicles, even if the vehicle has
been deleted, in the event of a loss, the insurance company is still
on the hook. Up until recently, if you surrendered your plates, the
DMV would give a Non-Op Certificate. This procedure is no longer available.
Some insurance companies will accept a DMV Form 102, Planned Non-Operation
Certificate, which simply states that the vehicle will not be operated,
moved, towed or left standing upon any California highway. This has
to be completed and forwarded to the Department of Motor Vehicles
with a $10 fee. But there is a flaw in this system. The certification
does not take effect until the next registration period, and most
insurance companies will not delete vehicles that are still owned,
even if they are not being operated. This becomes a major issue between
the insured and insurance company, and certainly will create a situation
that cannot be resolved. In the event of deleting a vehicle in concurrence
with the addition of a new vehicle, make sure that the dates coincide.
If not, you will owe additional premium.
Each year, at renewal, you go through the same exercise with the DMV
and the Federal Highway Administration (FHWA). Forty five days prior
to your insurance expiration, you will get a computer generated letter
indicating that your authority will cease on that day. Like all of
us, you will probably be shopping for lower rates or just waiting
until the last minute to renew your coverages. The insurance filing
made by the insurance company will not go out until they (the insurance
company) receive the renewal order from you. The filing with the FHWA
is not a problem, since it is made electronically, but dealing with
the Department of Motor Vehicles is another matter.
Since the DMV does not accept faxes, the filing has to be mailed.
And, after they (the DMV) receive the filing, it will most likely
sit on someone’s desk for two weeks. Over the holidays, I had a filing
sit at the DMV for three weeks. As long as there is no lapse in coverage,
they will accept the filing without penalty but, legally, you cannot
operate until the filing is posted and you receive your renewal from
the DMV. If you are operating before receiving this renewal and get
stopped by the CHP, you will be cited. It’s not right. The DMV will
deny that they are behind in posting these filings, but I know better.
I have attempted to have a supervisor respond to me regarding this
matter but it falls on deaf ears.
In the event of a policy cancellation (either voluntary or for non-payment),
cancellation will not take effect until the DMV or the FHWA or both
have been notified. Law requires that they be given a 30-day notice
of termination. Since they require this notice, additional time has
to be taken into consideration for processing and mail. Throughout
this passing time, during the cancellation process, the clock is still
ticking. Insurance premiums, which still need to be paid, are accruing.
This is why insurance companies, when selling new policies, find it
necessary to collect three months up front (on a direct bill policy)
or why premium finance companies collect a 25% downpayment.
Form E Filings and Certificates of Insurance issued to the various
state agencies that you operate through are also affected by these
requirements. To properly protect your authority and your right to
operate without any interruption, your insurance renewal should be
done at least two weeks prior to expiration. Don’t wait so long that
it becomes a problem. If you have any comments or insurance-related
questions, contact me at 1-800-699-7101.
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