1. Forms
2. PP
3. PP-03-06

PP 03 06 - Towing And Labor Costs Coverage

The PP 03 06 - Towing And Labor Costs Coverage endorsement is part of a Personal Auto Policy (PAP) and provides a stated amount of coverage for towing and labor costs incurred when a covered auto is disabled. The endorsement modifies the standard Personal Auto Policy (PP 00 01) to add this specific coverage. The amount of coverage is shown in the Schedule or Declarations page of the policy and applies per disablement.

Classes of Business It Applies To

This endorsement applies to personal auto policies covering private passenger vehicles. It is intended for individuals and families who wish to have financial protection against the costs associated with a vehicle breakdown. Examples of when this coverage would apply include:

• A covered auto breaks down on the side of the road due to mechanical failure and needs to be towed to the nearest repair shop.
• A covered auto has a flat tire, and the policyholder requires assistance to change it at the location of the disablement.
• The keys are locked inside a covered auto, and a locksmith is needed to gain entry at the place of disablement.

Special Considerations

There are several important considerations regarding the PP 03 06 endorsement:

• Labor at the Point of Disablement: A key limitation is that labor costs are typically only covered if the labor is performed at the place where the vehicle became disabled. Work performed at a garage or repair shop after the vehicle has been towed is generally not covered by this endorsement.
• Coverage Limits: The policy will only pay up to the limit specified in the Schedule or Declarations for each disablement. Common limits offered are $25, $50, $75, or $100 per disablement, though higher limits may be available, especially for motor homes. Policyholders should choose a limit that adequately reflects potential towing and labor costs in their area.
• Non-Owned Autos: The coverage can extend to "non-owned autos" (e.g., a rental car or a car borrowed by the insured). If a non-owned auto is disabled, the policy will typically provide the broadest towing and labor costs coverage applicable to any "your covered auto" shown in the Schedule or Declarations.
• Relationship to PP 00 01: This endorsement amends the base Personal Auto Policy (PP 00 01). The provisions of the PP 00 01 apply unless specifically modified by the PP 03 06.
• No Requirement for Specific Cause of Disablement: Generally, the disablement can be for any reason for the coverage to apply, subject to policy terms and chosen limits.
• Carrier Variations: While ISO forms provide a standard, some insurance carriers may use their own proprietary endorsements for towing and labor, which might have different terms, conditions, or limitations (e.g., distance limitations for towing or requirements for the vehicle to be disabled a certain distance from home).

Key Information for Agents and Underwriters

Agents and underwriters should consider the following when dealing with the PP 03 06 endorsement:

• Pricing: This coverage is typically offered for an additional premium. The premium will vary based on the limit of coverage selected.
• Risk Assessment: The risk associated with this coverage is generally low on a per-vehicle basis, but frequency can be a factor. Underwriters might consider the age and condition of the vehicles being insured, as older or poorly maintained vehicles may have a higher likelihood of disablement. However, detailed underwriting for this specific coverage is usually minimal.
• Coverage Gaps: Agents should clearly explain the limitation that labor is covered only at the place of disablement. This prevents misunderstandings where clients might expect coverage for repair work done at a garage. Also, clarify that the cost of parts is not covered.
• Advising Clients: Agents should help clients select an appropriate coverage limit based on typical towing rates and labor charges in their locality. It's also important to explain that this coverage is separate from and more limited than broader roadside assistance programs offered by auto clubs or some manufacturers, which might include services like fuel delivery, battery jump-starts, or more extensive locksmith services without the "at the place of disablement" labor restriction.
• Documentation: Ensure the selected coverage limit and the premium for the PP 03 06 are clearly shown in the policy Declarations or on the endorsement schedule.