The Insurance Review - June 2008
NON-OWNED TRAILERS
By Roland L. Enz - President, California Plus Insurance
Throughout the years that I have been writing truck related insurance articles, I have neglected spending any time on the specific area of non-owned trailers, semi and/or pull. Like the trailer, the liability follows the tractor or truck. With physical damage you either have it or you don’t (it is a separate coverage that has to be purchased separately). With non-owned equipment you should be aware of the coverages and conditions that are related to the subject.
Many of you pull someone else’s trailer. Your liability coverage is extended to that unit or units through that part of the policy indicating coverage either as “Unidentified semi or pull trailer,” “Non-owned semi or pull trailer” or “Trailer Interchange.” The terminology pertaining to this coverage provides third party liability for the trailer that you pull, much the same as the liability coverage for the tractor or truck. With unidentified or non-owned coverage, the trailer must be attached to your tractor for coverage to exist. As soon as the trailer is disconnected from the tractor/truck coverage is not provided. This also pertains to coverage for physical damage and/or cargo. I cannot tell you how many trailers are left, disconnected from their tractors, parked on the side of the road, throughout California.
“Trailer Interchange” broadens the scope of coverage and provides coverage for any trailer or trailers in your care, custody and control. This coverage is not always available from your insurance company. If it is not available through your insurance company, your agent can provide it through another source. If at all possible, shop for an insurance company that will include it in one policy (this will save you a considerable amount of money). For the most part, the majority of all non-owned trailers are covered through those parts of the policy outlining coverage for an unidentified trailer or non-owned trailer. If coverage is provided through the Trailer Interchange, premiums are based on the number of trailers and the number of days used by the insured.
If you own a trailer or trailers and if they are not specified on your policy, coverage does not exist. Coverage is only provided for those trailers that you do not own. If you own trailers and if you also pull someone else’s trailers, make sure that both specified and non-owned trailers are included in your policy.
Unidentified or Non-owned Physical Damage (not to be confused with property damage) can also be purchased. This coverage provides collision and other specified coverages of loss for those trailers that you do not own. For this coverage to exist, the trailer must be attached to the tractor that provides the coverage. If the non-owned trailers are covered through the Trailer Interchange, Physical Damage can be purchased. With this particular coverage, coverage exists to any non-owned trailer that you have in your care, custody and control. Premiums for this coverage are based on the combined values of all trailers in your care, custody and control.
Cargo coverage follows the tractor and, again, with any non-owned equipment, coverage does not exist if the trailer is detached from the insuring tractor. Cargo can be written on a Bill of Laden Form that would provide coverage in any situation, attached or unattached, but generally that coverage is only available for multi-unit risks. With this type of coverage, premium is usually based on the number of power units or on annual gross receipts. These are the basic areas that you as an owner operator should be aware of, but there are other issues to consider.
There are many other liability issues that exist between the tractor and any non-owned trailer. Even with liability following the tractor, case law expands liability to include the ownership of the non-owned trailer. Adjudicated cases such as Smith vs. Travelers give the legal establishment the ability to attack the trailer owner. Anyone that provides you with a trailer will also require documentation from your insurance company naming them as an additional insured. This limits the exposure of the trailer owner and only provides liability up to the limits of the tractor’s policy. If you own trailers, rent, lend or just have someone else pull them, make sure that you have coverage extended to you through an additional insured endorsement provided by the truck policy pulling your trailers. This does not eliminate liability, but it does provide a line of defense. If your trailers are insured on your policy and if you rent, loan or have someone else pull them, your policy would also come to your rescue. Your insurance company will not be happy with it, but coverage does exist.
There is a great big gaping hole in coverage or “no coverage” when a non-owned, unidentified trailer, that is entrusted to you, is dropped, spotted or disconnected from the tractor. As outlined above, in the majority of cases, Liability, Physical Damage and Cargo coverage cease to exist. If you own trailers, even if pulled by someone else, that provides you with an additional insured endorsement, cover your backside by providing your own coverage or contingent coverage. These areas should be discussed with your insurance agent so you have a complete understanding of what the risks are and what has to be done to mitigate loss.
Unattended trailers have their own particular areas of liability. I have had an insured that only had Non-owned trailer coverage on his policy, but also owned trailers. One night one of his owned trailers that were spotted (unattended) rolled down a hill and wiped out several parked cars. He found out the hard way that no coverage existed. Unattended and parked trailers are an attractive playground for children. We know of two losses resulting in children being injured when landing gear collapsed. Since this was a non-owned vehicle, detached from the tractor, coverage did not exist for the insured. Liability quickly shifted to the owner of the trailer.
One thing that bothers me is seeing detached and loaded trailers, parked on the street or in vacant lots, just waiting for someone to hook up and steal the unattended trailer and load. Who do you think the ownership of the stolen product and trailer is going to look toward for compensation? Can you afford this type of loss? If you have questions, do not hesitate to discuss them with your agent. And if you have any comments or questions regarding insurance, do not hesitate to call me at California Plus Insurance Service, Inc. in Modesto, California at 1-800-699-7101.