Other Commercial Lines (Commercial Auto, Workers Compensation, Umbrella/Excess)
Commercial auto, workers compensation, and umbrella
Commercial auto uses numbered covered-auto symbols. Symbol 1 means any auto; 2 means owned autos only; 7 means specifically described autos; 8 means hired autos only; 9 means non-owned autos only. Hired and non-owned coverage protects the business when employees drive rentals or personal cars on business. For interstate motor carriers, the MCS-90 endorsement is a promise to pay public liability claims even when the policy would otherwise exclude them, and the insurer may seek reimbursement from the insured; it is not a substitute for cargo or physical damage coverage.
Workers compensation is a statutory, no-fault system with an exclusive remedy against the employer. Part One covers statutory benefits; Part Two covers employer's liability for suits outside the statute, with limits stated per accident, per employee, and policy limit for disease; Part Three covers other states. Premium equals payroll times class rates, adjusted by the experience modification factor, and is audited. Iowa requires most employers to carry workers compensation, subject to statutory exemptions.
Umbrella and excess policies sit above underlying liability coverage. An umbrella may drop down to cover losses not covered by the underlying policies, subject to a self-insured retention; a true excess policy pays only after underlying limits are exhausted and generally follows the form of the underlying policy. Defense obligations differ, and umbrella policies often defend once the retention is met.
Traps: confusing symbols 8 and 9; treating the MCS-90 as first-dollar coverage; assuming an umbrella is always pure excess; forgetting that Part Two limits are separate from Part One benefits.
Rule of thumb: identify the underlying schedule, then decide whether the policy drops down (umbrella) or not (excess).
Worked example: A $1M auto liability loss with $500,000 of underlying coverage and a $2M umbrella with no retention: the underlying policy pays $500,000 and the umbrella pays the remaining $500,000.