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3. CA-20-54

Form CA 20 54: Employee Hired Autos Endorsement

1. What the form is

The CA 20 54, titled "Employee Hired Autos Endorsement," is a commercial auto endorsement that modifies the Business Auto Coverage Form (CA 00 01) and similar forms (such as those for Business Auto Physical Damage, Garage, Motor Carrier, and Truckers). Its primary purpose is to extend coverage to employees who rent or hire vehicles in their own names while conducting business for their employer. This endorsement is crucial because, without it, the standard Business Auto Policy (BAP) might not cover such situations, potentially leaving the employee and the employer exposed.

Specifically, the endorsement amends the "Who Is An Insured" section of the policy to include these employees for liability coverage. For physical damage coverage, it treats these employee-rented vehicles as if they were owned covered autos by the named insured, meaning the employer's policy provides primary coverage rather than excess. This is a significant benefit as it helps protect the employee's personal auto policy and assets from being primarily responsible in the event of an accident during business use.

2. Classes of business it applies to

This endorsement is particularly relevant for businesses where employees frequently travel and need to rent vehicles. Examples include:

• Sales-driven organizations: Companies with outside sales representatives who travel to meet clients and may rent cars at their destinations. For instance, a pharmaceutical sales rep flying to another state for meetings and renting a car at the airport.
• Consulting firms: Consultants who travel to client sites and require rental vehicles for local transportation.
• Companies with multiple locations or that require travel for training/conferences: Employees attending industry events, training sessions, or visiting other company branches might rent cars in their own names.
• Any business where employees might occasionally rent a vehicle for company purposes, even if it's not a regular occurrence. This could be an employee using their personal credit card to rent a van for a local delivery when company vehicles are unavailable.

The key scenario is when the rental agreement is in the employee's individual name, rather than the company's name, but the vehicle is being used for business purposes with the employer's permission.

3. Special considerations

• Hired Auto Coverage Prerequisite: For the CA 20 54 to apply, the named insured's policy must already include Hired Auto coverage (Symbol 8) for both liability and physical damage.
• Permission and Business Use: Coverage under this endorsement applies only when the employee has the employer's permission to rent the vehicle and is using it while performing duties related to the employer's business. Personal use during a business trip, such as sightseeing, may not be covered, and the employee might have to rely on their own insurance.
• Primary vs. Excess: A significant feature of this endorsement is that it makes the employer's physical damage coverage primary for the employee-rented auto. For liability, while the endorsement adds the employee as an insured, the interaction with the rental company's insurance and the employee's personal auto policy can be complex and may depend on the specific circumstances and policy language. The endorsement intends to shift the initial burden from the employee's personal assets.
• Volunteers: It's important to note that this endorsement specifically applies to "employees." If volunteers are renting vehicles in their own names for the organization's business, a different endorsement, CA 04 39 (Volunteer Hired Autos), would be needed to provide similar coverage.
• Contractual Requirements: The need for this endorsement often arises when employees use personal credit cards for rentals, making the rental contract in their name. If a corporate card is used and the rental is in the company's name, the standard Hired Auto coverage on the BAP would typically apply without needing this specific endorsement.

4. Key information for agents and underwriters

• Identifying the Exposure: Agents should proactively discuss travel and vehicle rental practices with their commercial clients. Key questions include: Do employees travel for business? Do they rent cars? In whose name are the cars rented (employee's or company's)? How are rentals paid for? This helps identify the need for the CA 20 54.
• Risk Assessment: Underwriters should consider the frequency of such rentals and the types of employees who will be driving. While the endorsement provides important coverage, it does represent an increased exposure for hired autos. The driving records of employees who frequently rent vehicles could be a consideration, though typically the BAP ratings are not based on individual employee MVRs in the same way as a personal auto policy.
• Coverage Gaps: Without this endorsement, a significant coverage gap can exist. If an employee rents a car in their name for business and has an accident, the employer's BAP might deny coverage for the employee's liability and for damage to the rental car, pushing responsibility to the employee's personal auto policy (which may have lower limits or exclude business use of non-owned vehicles) or personal assets. The CA 20 54 is designed to fill this gap.
• Pricing: There will likely be a premium charge associated with adding this endorsement, as it broadens coverage. The cost will depend on the insurer's rating methodology and the extent of the exposure.
• Clarity on "Permission": The endorsement requires that the employee has the named insured's permission to rent the vehicle for business purposes. While often implied, having clear company policies on business travel and vehicle rental can prevent misunderstandings. Some versions of the endorsement, like one specific to Louisiana (CA 20 98), explicitly mention "express or implied permission."
• Interaction with CA 00 01: This endorsement directly amends the "Who Is An Insured" and "Other Insurance" conditions of the CA 00 01 Business Auto Coverage Form. It's essential to understand how these modifications change the base policy's application in these specific circumstances.
• Alternative Endorsements: If an insurer is unwilling to add the CA 20 54, the CA 99 33 (Employees as Insureds) might be considered as a partial solution for liability, but it typically provides excess coverage over the employee's PAP and doesn't address physical damage to the rented auto in the same way. The CA 20 54 is generally the more comprehensive solution for this specific exposure.