This is the time of year when northern “snowbirds” winter in their southern abodes. As a result, they may want to temporarily discontinue all or some coverage on the autos they garage up north. Or someone my have an auto they’re doing a major rebuild on and want to suspend all or some coverage. In commercial lines, some insureds may want to store certain vehicles for the season and, since they’re limited to sitting on a premises for months, cover the liability under the CGL policy and drop collision under the auto coverage.

ISO has BAP suspension and reinstatement endorsements (CA 02 40 and CA 02 38, respectively. ISO does not have PAP endorsements for this, but many carrier have their own forms. Should these endorsements be used?

You can count on some insureds forgetting to call for reinstatement. You can count on there being an unseasonably warm day when an insured is tempted to take the vehicle out for a spin.

Or, as in one real claim, you can have an insured who decides to do a little work on the vehicle, it catches on fire, burns up the vehicle (and garage/house), and the fire spreads to cause five-figure (or more) damage to the house next door.

Or someone steals the Corvette convertible during the lay-up period, kills someone, and the insured is sued.

NEVER suspend the liability coverage on an auto policy. And what you save by suspending the collision coverage for a few months is peanuts compared to the potential for damage (especially if comp is also suspended).

That’s my story and I’m sticking to it. If you believe there is a compelling reason FOR suspending coverage, your comments can be added below.

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Bill Wilson

Founder at InsuranceCommentary.com
One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information

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