Transportation risk management and insurance—avoiding gaps and traps: risk management

Camping Magazine, March-April, 2005 by Ed Schirick

Your camp strategy for managing automobile risks needs review and updating on a regular basis. ACA Standards TR 1-19 forms a solid framework upon which to build your plan. Tailoring your camp's risk management plan to avoid gaps and traps requires additional work.

Here are some facts and thoughts for you and your staff to consider as part of this process:

* Each camp is different, obviously, with some having little or no transportation risk. However, just about every camp either owns a business vehicle, has employees who use their personal vehicle on camp business, or hires vehicles at some point for use in the business.

* Transportation risks at camp develop out of the ownership and use of automobiles, including their maintenance--and typically include liability from negligent actions, which results in bodily injury to people or damage to your property and to other people's property. These risks are typically transferred to an insurance company through the purchase of automobile insurance.

No Differences

One faulty assumption some insurance buyers make is that there are no differences in insurance protection offered to customers by various insurance companies. The fact is there can be big differences.

These differences are because of a variety of factors, such as their internal systems and procedures and the risk appetite of the insurance company's underwriting department.

For example, if you take a long-term lease on a vehicle or buy a vehicle with little or no money down, you could be exposed to financial loss if you have an accident that "totals" the vehicle early in the lease, or loan.

This risk of financial loss can be included in the camp automobile insurance policy through the purchase of an endorsement called "Auto Loan Lease Gap Coverage." While this endorsement is universally available, some insurers may be unwilling to provide the protection. If you find yourself in this situation, discuss the matter with your insurance broker. Ask your broker to check with your auto insurer to determine if this additional protection is available through your insurance company.

Another difference may involve the scope of the liability protection provided by automobile policies. Some insurance companies want to limit protection to only those automobiles listed (scheduled) on the policy. Others are willing to provide liability protection for any auto. These differences are not obvious to buyers, but are apparent to insurance brokers and advisors. Assuming your camp qualifies, it is better to purchase a policy providing liability protection for any auto.

Suspension of Liability and Physical Damage Insurance

Nearly every camp has vehicles, which are "laid up" or suspended at some point during the year. The primary risk management concern here relates to preventing the use of these vehicles when they are not insured. A secondary concern is to protect them against physical damage when they are "laid up." In some states, license plates must be surrendered before an insurance company will suspend liability insurance. Other states may not require this. In jurisdictions without a license plate surrender regulation, there is a real risk a vehicle could be operated without liability insurance protection if you have scheduled automobile liability insurance.

To prevent use of these uninsured vehicles, some directors remove the plates from each vehicle, even though the law doesn't require this. Others put signs on the vehicles not currently insured to notify caretakers and other staff that the vehicles should not be used. How do you manage this risk? Another potential problem involves continuing physical damage insurance on vehicles stored for the winter months. If you aren't sure how you are managing these risks, review the issues with your insurance brokers and advisors.

Coverage Territory

Some camp directors are under the mistaken impression they have automobile insurance for all of their automobile-related risks wherever their business takes them. This is not so. The automobile insurance policy limits the territory within which coverage is provided as follows:

The coverage territory is:

a. The United States of America;

b. The territories and possessions of the United States of America;

c. Puerto Rico;

d. Canada; and

e. Anywhere in the world, if:

1) An auto of the private passenger type is leased, hired, rented, or borrowed without a driver for a period of thirty days or less; and

2) The insured's responsibility to pay damages is determined in a suit on the merits, in the United States of America, the territories and possessions of the United States of America, Puerto Rico, or Canada or in a settlement the insurance company agrees to. (1)

There is no insurance protection for automobile accidents outside this coverage territory. This means no insurance coverage for vans hired with, or without drivers outside the policy coverage territory; nor would there be coverage if you drive your own vehicles into Mexico, for example. If your camp has programs operating outside of this coverage territory consult with your insurance advisors to determine how your automobile risks outside the coverage territory can be properly insured.