Avoid Potential for Coverage Denial by Accurately Including all Automobiles on Fleet Policy

Risk and fleet managers handle a plethora of responsibilities with their commercial automobile fleet. One important task is ensuring every fleet vehicle to be insured is included in their automobile policy at inception. Not advising the insurer of an automobile can lead to a denial of coverage, potentially putting the corporation’s assets at risk should a loss occur.

The 21B Blanket Fleet Coverage Endorsement requires that, at policy inception, an accurate list be provided of all vehicles owned by, registered (licensed) or leased more than 30 days to the named insured for coverage to apply to those vehicles.

In Canada, there are several versions of the 21B Blanket Fleet Coverage Endorsement used, based on province, all of which contain similar standard wording. OPCF 21B is for Ontario licensed automobiles, and specifically provides as a condition of coverage at section 3.1: “The schedule of automobiles that you filed with us must include all automobiles in your fleet, as described on 2.1, on the effective date of your policy or renewal. There is no coverage for automobiles owned or leased by you before the effective date of your policy or renewal if they are not included on the schedule of automobiles filed with us. For coverage to be provided for these automobiles, you must file a request for coverage.” 

Additionally, the mandatory coverages of Liability, Accident Benefits, Uninsured Automobile and Direct Compensation-Property Damage are provided for all newly acquired automobiles. However, the optional physical damage coverages are only provided if the newly acquired automobile is of a similar type of use or description of automobile to those already listed under the existing 21B provincial Blanket Fleet Endorsement(s). Too often, CNA Canada receives incomplete information.

What does this mean for you? For fleet and risk managers, it’s critical to work with your broker and carefully account for all automobiles and automobile types in your fleet, as well as all provinces where automobiles are registered. Further, when new automobiles are added to your fleet, ensure they are similar to those automobile types already described under the policy to make sure all coverages are provided, and registered in the provinces/territories known to the insurer. This also allows the insurer to rate the new automobiles, determine applicable deductibles, any required endorsements, and provide you with the annual rate for each new automobile.  Doing this will avoid any “surprises” at renewal and year-end adjustment.

A decision handed down several years ago by Alberta’s Court of Queen’s Bench provides valuable lessons on the need to provide a clear, complete listing of fleet automobiles under the 21B Blanket Fleet Coverage Endorsement. The case involved a policyholder who entered into an insurance contract, but did not include a certain truck on its initial vehicle list under the SEF 21B Blanket Basis Fleet Endorsement to the policy. When that truck was involved in an accident, the insurer denied coverage on the basis that the policyholder failed to include the truck on the list of vehicles provided at policy inception.

The court ruled in favour of the insurer finding that there was no coverage for the truck under the policy.  As is noted in the decision, “the Blanket Fleet Endorsement, expressly states that the Policy covers all automobiles, except those that were previously owned and undisclosed.” In short, the truck wasn’t on the initial vehicle list, so it wasn’t covered.¹ 

Report Automobiles, Then Check and Double Check Schedule

To avoid this outcome, risk managers, fleet managers and brokers should follow these important steps when completing the 21B Blanket Fleet Coverage Endorsement:

1.     For coverage to apply, an accurate list of all vehicles owned, registered (licensed) or leased more than 30 days to the named insured must be provided at policy inception. This includes year, make, model, Vehicle Identification Number (VIN), type, use, radius, cargo and location. Any previously owned/leased automobiles missed are therefore not covered, and no required duty to defend exists.

2.      The blanket fleet policy limits coverage on any newly acquired automobiles, depending on the type of coverage. While mandatory coverages are provided, full coverage – namely physical damage coverage – is limited to only vehicles of a similar type where a deductible has been provided on the form. The policyholder, through their broker, must advise the insurer of the following:

          a.     Any new or type of automobile not already described under the policy;

          b.     Any new location (city/town/province) where automobiles have been added and not already described under the policy, with deductibles provided;

          c.     If a vehicle is in a new province, the policyholder and broker would have to advise the insurer to get even the mandatory coverages. New policy and applicable forms would be needed for the mandatory coverages to apply.

3.      Check and double check your schedule to ensure no automobile has been missed -- immediately advise your broker and/or CNA if any vehicles have been missed, so your policy can be properly endorsed.

4.      If you have new or different types of automobiles not previously described, or there is an expansion into new regions or provinces, promptly let your broker and CNA know so the policy can be amended to the new groups, and possibly new provinces with all the appropriate Certificates of Insurance and new endorsements for the new province(s).

Further, it is important to continue to monitor the fleet for any changes that occur during the policy period; don’t assume that a 21B Blanket Fleet Coverage Endorsement will capture all changes and provide coverage. 

CNA Canada wants to make sure your fleet is properly covered – you don’t want to find out you have coverage issues after a loss occurs. Review your copy of the 21B Blanket Fleet Coverage Endorsement with your broker to ensure you have no potential coverage gaps, and that information on the schedule is accurate.