Lessons In Auto Insurance Coverage – From “Tommy Boy”


Many of you have probably seen the 1995 movie “Tommy Boy”—arguably Chris Farley’s finest film. It also stars David Spade as his reluctant work colleague, Richard. Together, the two travel the country on a business trip, in Richard’s mint 1967 Plymouth Belvedere GTX.

If you’ve seen the movie, you know what happens. If not, well—let’s just say Richard’s car takes quite a beating. Either way, we thought referencing the movie would be a fun way to talk about a topic that most of you probably find boring: auto property damage coverage.

Our Claims Manager (and “Tommy Boy” fan) Mike Wagner gives you the overview of our policies. HOLY SCHNIKES, here we go …

CIRSA Property & Crime Coverage Document
CIRSA provides insurance coverage for members’ vehicles.  The coverage states:


B. Automobile Physical Damage

We will pay for direct physical loss of or damage to an “auto”:

1. Owned by a “Member”; or
2. Which the “Member” is obligated to insure under contract; caused by or resulting from any “covered cause of loss” subject to the limitations, terms, and conditions of this policy.

Under this coverage, we provide both comprehensive and collision coverage for your entity’s autos. This includes cars, pickups, and larger vehicles like snowplows, busses, and dump trucks. So, if this happened, your entity’s auto would be covered.

When an auto crashes into another object, it would be a collision loss, even if a fire ensues afterward. But there are plenty of other things that can damage your entity’s vehicles. Like, for instance, this.

Yes, if you’re crazy enough to put a deer in the back seat of an entity vehicle and it causes damage, it would be a comprehensive loss. So would other (more likely) causes, such as hail, windshield damage, or a vehicle fire that results from an electrical problem. Whether damage is from a collision or comprehensive loss, your entity’s auto physical damage deductible will apply.

CIRSA coverage also pays for direct physical loss or damage to an auto that you’re obligated to insure under contract (see #2 above). So, if your entity is required by contract to insure an auto, then CIRSA will provide coverage. An example of this would be a bus that is owned by a third party, but insured under contract by a member entity.

Coverage for rental cars
Coverage Part I, Coverage G, of the CIRSA Property & Crime Coverage provides coverage for rental cars as follows:

G. Rental Car Contracts

We will pay for loss of or damage to an automobile hired by the “Member” under a “rental car contract” including loss of use and other charges as assumed under a “rental car contract,” if such loss or damage occurs while such automobile is being used on activities for the “Member.”

It is further agreed that valuation shall be on a replacement cost basis for loss under a “rental car contract.”

As outlined above, we provide both collision and comprehensive coverage to vehicles rented by your entity. However, vehicles must be used for entity-related activities.

For example, if one of your employees rents a vehicle under the name of your entity for the purpose of a business meeting for your entity, CIRSA provides collision and comprehensive coverage for the vehicle. However, if the employee rented a vehicle under the name of your entity and decided to take a personal vacation, CIRSA would not provide any physical damage coverage.

Who is insured: my entity or individuals in my entity?
Auto coverage generally follows the vehicle, not an individual person.  So while it may be wise to limit the use of entity-owned vehicles only to employees (and potentially avoid incidents like this), our insurance policy does not place these limits on vehicle use.

Additionally, because coverage follows the vehicle, if a non-employee drives one of your entity’s vehicles, CIRSA will still provide physical damage coverage to the vehicle. The personal auto carrier for driver is not responsible for this coverage, regardless of employment status.

When does coverage not apply to a loss?
The CIRSA Property & Crime Coverage policy is an All Risk type of insurance policy. This means losses are covered unless a specific policy exclusion or provision applies to limit or exclude coverage.

The most likely types of losses not covered would be a mechanical breakdown, wear and tear, faulty maintenance, and yes, an infestation of bees that causes damage to the vehicle. The policy also requires that there be a direct physical loss. So if your M&M’S® roll into your heater vent, there would have to be damage to the vehicle for coverage to apply.

Once my entity has a loss, what is owed?
The coverage document states:


A. VALUATION: We will determine the value of covered property in the event of loss or damage as follows:
2. Automobiles at actual cash value at the time of loss, or the cost to repair, whichever is less. However, firefighting trucks, ambulances, and street sweepers will be valued at replacement cost as of the date of loss or damage, if such coverage was selected by the “Member” on its application.

“Actual cash value” and “replacement cost value” are common insurance terms meaning:

  • Replacement cost value is exactly what you think it is: the amount of money it should cost to repair or replace a damaged or destroyed item. Sometimes betterment is applied to reduce this value if a wearable item is damaged.

    An example of this would be a tire or a mechanical item, such as an engine, needs to be replaced. Under most scenarios, CIRSA will offer the cost to repair the damage without any deduction other than your self-chosen retention deductible.

  • Actual cash value is the depreciated value of the cost to repair or replace an item, based on age, condition, and lifespan. Under most circumstances, we apply depreciation to the replacement cost value to arrive at the actual cash value.

For the vast majority of auto damage claims, what is owed is the actual cash value to repair or replace the damaged or destroyed auto. Exceptions to this would be damage to rental cars, as outlined in Coverage G above.

Also, as discussed in A (2) of the Conditions section of Coverage Part I, firefighting trucks, ambulances, and street sweepers are valued at replacement cost value, if you select this type of coverage on your application.

If I report an auto loss, what can I expect from CIRSA?
We will assign a claim representative to investigate what happened, and quantify the amount of damage to the vehicle. Sometimes we use an appraiser. With your assistance, we will dispose of any salvage, and also determine if there is potential to pursue recovery from a third party.

If you have questions about our auto insurance policies, contact Mike Wagner at mikew@cirsa.org.


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