Commercial Casualty — CGL, Commercial Auto & Workers' Compensation

Correct

The answer is C: The motor carrier's policy provides primary liability coverage

Under the ISO Motor Carrier Coverage Form (CA 00 20), the carrier's liability coverage for a covered auto it hires from another motor carrier and uses exclusively in its for-hire business is primary when the lease does not require the lessor to hold the carrier harmless, and a trailer connected to a covered power unit is covered on the same primary or excess basis as that power unit. Federal leasing rules point the same way: the lease must give the carrier exclusive possession, control and use of the equipment and complete responsibility for its operation (49 CFR 376.12(c)(1)), and must state the carrier's legal obligation to carry insurance that protects the public (376.12(j)(1)). Independent-contractor status is left unchanged by those rules (376.12(c)(4)), so it does not remove coverage. The owner-operator's own policy is not the first layer, and the loss is not split equally between the two policies.

Source: 49 CFR 376.12

Correct

The answer is D: The umbrella pays $0 because the underlying policies paid their full limits, satisfying the judgment.

An umbrella policy provides excess coverage only when the limits of the scheduled underlying insurance are exhausted by a loss. Here the $1.5 million judgment was paid entirely by the underlying policies, $1 million by the CGL and $500,000 by employers' liability, each at its full limit, so no amount remains above the underlying limits and the umbrella pays $0. An umbrella does not follow form to pay a judgment the underlying policies have already paid. It also does not pay only the amount above the CGL limit while ignoring the employers' liability payment, and the unused part of its $4 million limit is not paid out unless a loss exceeds the underlying limits.

Reviewed in our October 2026 California fact-check.