Rule 75-Truckers and Rule 122

Rule 75. TRUCKERS

A. Eligibility -- A trucker is a person, firm, or corporation in the business of transporting goods, materials, or commodities for another. Such a risk is still in the truckers classification even if it calls itself or advertises as a contractor, building contractor, building material dealer, sand and gravel hauler, or some other similar name. Autos used in moving operations are also truckers, even though they are not subject to the truckers secondary rating factors.

B. Premium Development—Bodily Injury and Property Damage Liability, Property Protection Insurance, and Personal Injury Protection Coverages

1. Transporting Exclusively for One Concern For any person, firm, or corporation transporting property exclusively for one concern, classify and rate the autos as though the autos are owned by such concern.

2. All Others For All Other Persons, Firms, or Corporations Transporting Property for Others

a. Classify and rate owned and long term leased (i.e., more than 30 days and exclusive lease) autos for bodily injury and property damage liability coverage on a specified auto basis.

b. Classify and rate short term leased (i.e., 30 days or less or nonexclusive lease) autos for bodily injury and property damage liability coverage on a cost of hire basis as follows:

(1) For autos not used in trucking operations, refer to Rule 122. Hired Autos.
(2) Autos Used in Trucking Operations
(a) Determine the radius of the risk’s operation.
(b) Calculate a specified auto premium for the highest rated auto or combined tractor-trailer unit for the highest rated territory or zone to which it operates (“operates to” means from the garage location to the unloading location).
(c) Multiply the specified auto premium determined in (b) above by .0020.
(d) Compute the advance premium by multiplying each $100 of the estimated total annual cost of hire by the cost of hire rate.
(e) Unless there is a change in exposure during the policy period, the advance premium computed at the beginning of the policy term is the earned premium.
(f) Compute the earned premium at the rates in force at the inception of the policy, in the same manner as was used to compute the advance premium.
(g) The minimum premium shall be $86 for $20,000/40,000 bodily injury and $14 for $10,000 property damage liability coverage, provided coverage for the hired autos of the risk is afforded by the same company that is insuring the owned autos of the risk; otherwise the minimum premium shall be the applicable specified auto premium calculated in accordance with subparagraph B.2.b.(2)(b) above.

3. If the following are applicable, refer to Appendix 1 for the premiums:

a. Uninsured Motorists
b. Michigan Catastrophic Claims Association
c. Michigan Assigned Claims Facility d. Michigan Limited Property Damage (minitort)

4. If the policy is extended to cover the owner of the auto as an additional insured, multiply the otherwise applicable bodily injury and property damage liability rate by 1.04. The 1.04 factor shall apply in all instances except with respect to the original leasing corporation.

C. Definition of Cost of Hire

1. Cost of hire means

a. the total dollar amount of costs incurred for the hire of autos (including trailers and semitrailers) and if not included therein;
b. the total remuneration of all operators’ and drivers’ helpers of hired autos whether hired with a driver or lessor or an employee of the lessee, or any other third party;
c. the total dollar amount of any other costs (i.e., repair, maintenance, fuel, etc.) directly associated with operating the hired autos whether such costs are absorbed by the insured, paid to the lessor or owner, or paid to others.

Note: The following expenses may also be considered in determining cost of hire:

(i) Purchase transportation
(ii) Leasing expenses
(iii) Equipment rental
(iv) Commissions to owner/operators

2. Cost of hire does not include the total dollar amount of costs incurred by the insured for hire or lease of autos specifically described in the policy as owned autos for which the premium has been established on a specified auto basis.

3. Cost of hire expenses are subject to a minimum amount computed pro rata per annum per power unit for the number of days the vehicle or vehicles are hired. The minimum amount is as follows:

a. Long Distance (as defined in Rule 74) Tractors or Tractor/Trailer Rigs—$60,000.
b. All Other Vehicles—A fair market value which encompasses the definition of cost of hire as detailed above. If the insured can demonstrate that a reasonable amount has been paid, the servicing carrier shall accept that amount as the fair market value, if the amount is supported by receipts or other appropriate documentation of costs which are reasonable and customary for the class of vehicle hired.

Rule 122. HIRED AUTOS

This Rule applies to risks other than truckers hiring autos for use in their trucking operations. For truckers, refer to the Truckers Rule.

A. Primary Coverage—Premium Determination

1. If the insured is providing the primary insurance covering the hired, loaned, leased, or furnished autos and the term of the lease or agreement is

a. six months or more, rate as follows:
(1) Rate as though owned by the insured.
(2) If the policy is extended to cover the owner of the auto as an additional insured, multiply the otherwise applicable bodily injury and property damage liability rate by 1.04. The 1.04 factor shall apply in all instances except with respect to the original leasing corporation.
(3) Attach the CA 20 01 Lessor—Additional Insured And Loss Payee or CA 99 47 Employee As Lessor endorsement.

b. less than six months, rate as follows:
(1) Public Autos Determine the applicable cost of hire rates per $100 cost of hire as follows:
(a) Taxicabs and Limousines. Charge 0.86% of the specified auto rates for the highest rated taxicab or limousine determined in accordance with the applicable Manual rule.
(b) School and Church Buses. Charge the Private Passenger Hired Auto rates shown on the rate schedules.
(c) All Other Buses. Charge 0.034% of the specified auto rate for the highest rated bus determined in accordance with the applicable Manual rule.

(2) Other than Public Autos
(a) Separately estimate the cost of hire for those autos for which the insured is providing the primary insurance.
(b) Multiply the Hired Auto rate displayed on the rate schedules by 6.00.
(c) Multiply the rate determined in paragraph (b) above times each $100 cost of hire.

(3) All Autos Cost of hire means

(a) the total dollar amount of costs incurred for the hire of autos (including trailers and semitrailers) and if not included therein;
(b) the total remuneration of all operators’ and drivers’ helpers of hired autos whether hired with a driver or lessor or an employee of the lessee, or any other third party; and
(c) the total dollar amount of any other costs (i.e., repair, maintenance, fuel, etc.) directly associated with operating the hired autos whether such costs are absorbed by the insured, paid to the lessor or owner, or paid to others. Cost of hire does not include the total dollar amount of costs incurred by the insured for hire or lease of autos specifically described in the policy as owned autos for which the premium has been established on a specified auto basis.

Note: The following expenses may also be considered in determining cost of hire:
(i) Purchase transportation
(ii) Leasing expenses
(iii) Equipment rental
(iv) Commissions to owner/operators

2. If the owner of the auto is providing the primary insurance and the insured is providing the excess insurance, rate according to paragraph B.

B. Excess Coverage—Premium Determination

1. Estimate the total cost for the hire of autos. Do not include charges for services performed by motor carriers subject to the insurance requirement of any public authority regulating motor carriers.

2. To compute the advance premium, multiply the Michigan hired auto rate on the rate schedules times each $100 cost of hire in each state. Add the total cost of hire premium for all states.

3. Unless there is substantial change in exposure during the policy period, the advance premium is the earned premium.

4. The minimum premium shall be $45 for bodily injury, $20,000/40,000 limits and $8 for property damage, $10,000 limit.