Insuring Automobiles from Factory to Dealer

Rough Notes, Oct 2004 by Parr, Arthur L

WITH the remarkable progress which has been enjoyed by the motor track owners operating (through the additional facilities of connecting carriers) country-wide for the transportation of merchandise of a general nature, it is only fitting and proper that the same mode of transportation should follow for the prompt and efficient movement of automobiles themselves from factory to dealer.

Generally speaking, the factory's responsibility so far as their product is concerned ceases at the time the property leaves their premises, the liability in turn passing on to the public truckman who, in the category of a common carrier, is legally liable for the merchandise until its safe arrival at final destination, the words "final destination" to be construed as meaning the premises of the dealer to which the automobiles are consigned.

Mileage Premium

While there are two methods in general use so far as the underwriting of this class is concerned, the most practical plan is to arrange for the issuance of an annual policy to which is attached a schedule of rates per $100 of value-such rates being governed (in addition to the underwriters judgment) by the geographical nature of territory traveled as well as the length of mileage involved. Rates in general use would average about as follows:

Flat Annual Premium

The second method of underwriting, as referred to in the preceding paragraph, involves the writing of an annual policy for a named amount and subject to a flat annual premium, which plan, however, has proven most unadvantageous from the company's standpoint as the premium so derived is seldom, if ever, anywhere near the premium to be obtained though the first method outlined, which calls for premium charges to be based on actual liability assumed by the company per each individual trip.

While space does not permit us to deal with the policy contract in detail, it is most essential that coverage be drawn to include the following hazards:

(a) Fire, including lightning, self-ignition and internal explosion of conveyance.

(b) Perils of the seas, lakes, rivers and/or inland water while on ferries only, including general average and salvage charges for which the assured is legally liable.

(c) Collision, meaning thereby the violent and accidental contact of the motor truck with any other automobile, vehicle or object; but excluding "loss or damage by coming in contact with any portion of the roadbed, or by striking the rails or ties of street, steam or electric railroads, or by coming in contact with a stationary object in backing for loading or unloading purposes."

(d) Upset and/or overturning of the motor truck or trucks while on land, meaning thereby the complete upset of the carrying vehicle and its contents.

(e) Collapse of bridges and culverts.

(f) Flood (meaning thereby rising navigable waters and river floods only.)

(g) Cyclone, tornado or windstorm, excluding loss or damage caused by hail,

Defined and Explained by ARTHUR L. PARR, Manager Marine Department Poor, Bowen, Bartlett & Kennedy, Inc., Baltimore, Md.