NationaLease-provided insurance substitute vehicle policies and procedures

DEFINITIONS:

• Substitute Vehicle – A short-term rental provided by one Member or Developing Member (DM) to another Member (or DM) to replace a vehicle that is out of service due to a mechanical malfunction, accident or other difficulty that renders it inoperative while en route to or from its domiciled location. This definition shall also relate to the term “Temporary Substitute.”
• Rentee – The Member (or DM) requesting a Substitute Vehicle for its driver or customer’s driver.
• Rentor – The Member (of DM) providing the Substitute Vehicle.
• Rental Vehicle – A vehicle rented under a rental agreement by a National Truck Leasing System Member (or DM) to its customer for a period of 30 days or less.
• NationaLease Agreement – An Agreement executed between National Truck Leasing Association, Inc. d/b/a National Truck Leasing System (“NationaLease” or “NationaLease”) and a Member (or DM) granting a Membership or Developing Membership in NationaLease.
• NationaLease Substitute Auto Policy – A contingent liability and physical damage policy covering any auto provided by a National Truck Leasing System Member or Developing Member (“Rentor”) operating under a valid NationaLease Agreement to a customer of another National Truck Leasing System Member (“Rentee”) as a “Temporary Substitute.” The policy has $1M Liability; there is a $10,000 deductible and $100,000 maximum for Physical Damage (see page 2 for details).

POLICY:

It is the responsibility of the Rentor to secure a Substitute Vehicle for any Rentee requesting assistance for its driver or customer’s driver. If no Substitute Vehicle is available at the Rentor’s facility, the Rentor must exert maximum effort to secure a Substitute Vehicle from another source.

The Rentee requesting the Substitute Vehicle and providing insurance coverage, either through its own policy of insurance or its customer’s policy of insurance, is responsible in case of accident or other loss for which there is no recoverable insurance or is self-insured. The Rentor providing the Substitute Vehicle will not be put in the position of sustaining a loss unless adjudicated as the negligent party, as the Rentor’s Vehicle will be covered by the NationaLease Substitute Auto Policy in event of a failure of the underlying coverage provided by Rentee’s Customer and/or Rentee’s own insurance.

The Rentor providing a Substitute Vehicle shall be responsible for the completion of a rental agreement using the proper legal name of the Rentee or the Rentee’s NationaLease d.b.a. as listed in the NationaLease Membership Directory or ServiCenter Directory. Rental agreements in the name of the operator of the Substitute Vehicle that is not a NationaLease Member (or DM) fall outside of this policy and should be treated as any other rental agreement; also, such rentals will not be covered under the NationaLease Substitute Auto Policy.

A Rentor may require additional proof of insurance from the Rentee as soon as reasonably possible and the Rentee shall supply that additional proof in an expeditious manner. It is unnecessary, however, to delay the rental since the Rentor’s vehicle is covered under the NationaLease Substitute Auto Policy. It is only necessary for the Rentor to determine that the Rentee is participating in the NationaLease Substitute Auto Policy. (A Listing of these participating Members (and DMs) covered under this Nationalease Sub Insurance Program is e-mailed to the insurance contact at each Member’s or Developing Member’s headquarters at the beginning of each month).

Substitute Auto insurance applies when the underlying vehicle is out of service. In most cases the Rentor of a Substitute Vehicle will have possession of the vehicle which is out of service. This is ample evidence that the vehicle is, in fact, out of service. In those rare circumstances when a Rentor does not have possession of the out-of-service vehicle, it is prudent to verify (via fax or at least telephonically until a fax can be obtained) that the underlying vehicle is in fact out of service, and its location. Substitute Auto coverage does not apply if the underlying vehicle is operating at the same time as the vehicle rented by the Rentor – that would be an “extra” vehicle and require its own insurance coverage.

The rate structure for Substitute Vehicles is the actual rental rate in effect at the time of the agreement with maximum rental rates as set annually by the NationaLease Board of Directors. The Rentee is fully responsible for all costs relating to securing the Substitute Vehicle.

APPLICATION OF THE NATIONALEASE SUBSTITUTE AUTO POLICY:

In order to receive coverage under the NationaLease Substitute Auto Policy, Members (and DMs) that rent a Substitute Vehicle under these Policies and Procedures must understand the following and adopt the following procedures:

1. This NationaLease Substitute Auto Policy has $1,000,000 liability as defined on the Certificate of Insurance, for a maximum period of 30 days. There is a $10,000 deductible and $100,000 maximum for Physical Damage coverage. Coverage for U.S. Members is afforded by Insurance Corporation of Hannover and produced by Lockton Risk Services. U.S. Members (who are listed as “covered”) who require a Substitute Vehicle are covered by the Hannover Policy whether renting from a U.S. or a Canadian Member or Developing Member.
   
   Insurance coverage under the NationaLease Substitute Auto Policy for Canadian Members for Substitute Vehicle rentals in Canada is no longer available and those rentals must be treated like any other rental. (See #7 below)
   
   
2. Any NationaLease Member (or DM) that rents a Substitute Vehicle to another NationaLease Member (or DM) can now do so without receiving proof of primary insurance coverage for the vehicle being substituted. The NationaLease Substitute Auto Policy does assume that there is a primary insurance policy in front of the NationaLease policy that insures the Substitute Vehicle.
   
   
3. The NationaLease Substitute Auto Policy applies in any situation in which one Member (or DM) rents to another NationaLease Member (or DM) to replace a vehicle that is out of service due to a mechanical malfunction, accident or other difficulty that renders it inoperative while en route to or from its domiciled location. The vehicle being replaced can be a Lease Vehicle, a Rental Vehicle, a vehicle operating under a Dedicated Contract Carriage Agreement or a vehicle under an agreement of Contract Maintenance. All Substitute Vehicle rentals must include a rental agreement between two NationaLease Members or Developing Members. The Rentor should not rent a Substitute Vehicle to another Member’s (or DM’s) customer.
   
   
4. This policy is for Substitute Vehicles only and does not cover extras or short-term rentals between member companies.
   
   
5. If a Member (or DM) incurs a Physical Damage loss as a result of renting a Substitute Vehicle to another Member, NationaLease will reimburse the renting Member or Developing Member for the $10,000 Physical Damage deductible exposure and assume the responsibility of recovering it from the Rentee and/or the customer. This policy applies only when there is no other collectible insurance on the vehicle substituted.
   
   
6. In the event that a Rentor does not have a Substitute Vehicle available, the Rentor must exert maximum effort to secure a Substitute Vehicle from an alternate source. In that event, the Rentor should rent that Substitute Vehicle from the alternate source and then re-rent that vehicle to the Rentee for the NationaLease Substitute Auto Policy to provide coverage to that Third-Party Vehicle. The NationaLease Substitute Auto Policy does not cover vehicles rented by the alternate source directly to the Rentee.
   
   
7. Excluding Quebec Members (or DMs) a Canadian Member’s customer that breaks down and needs a Substitute Vehicle while traveling in the U.S. is covered by the existing Substitute Auto Policy. If that Canadian customer returns to Canada, they remain covered (if they rented from a U.S. Member or DM). The NationaLease Substitute Auto Policy does not cover Quebec Members because of complex aspects of Quebec Insurance law. When a Quebec Member needs a Rental Vehicle anywhere in the NationaLease system, the Rentor, for purposes of Auto Liability Insurance, needs to make sure that the vehicle rented is specifically named in the insurance certificate provided by the Quebec Member. Additionally, Physical Damage insurance on that Rentor’s vehicle while in the possession of the Quebec Member or the Quebec Member’s Customer is virtually non-existent, so the Rentor is relying on the credit of the Quebec Member for physical damage.

3/3/06