Insuring Nonowned Autos

November 8, 2010

Introduction

Summary: The business auto coverage form (BAP) can be used to insure autos owned by the named insured as well as autos that the named insured does not own. The insuring of autos owned by the named insured is relatively uncomplicated—see Business Auto Form for a discussion of the various coverage symbols that can be used for that purpose; the article is on the Auto A.3 pages. In contrast, the insuring of autos that the named insured does not own can be problematic and so, warrants an additional explanation beyond the description of coverage symbols.

This discussion provides an overview of the different coverages available for insuring autos not owned by the named insured. Subsequent articles, referenced below, examine each of these coverages in more detail for the benefit of those interested in a particular coverage.

Hired Autos

In the BAP, CA 00 01, coverage for hired autos (symbol 8) includes autos leased, hired, rented, or borrowed by the named insured, other than autos hired or borrowed from an employee or a partner of the named insured or a member of their respective households. Insurance coverage for hired autos is discussed elsewhere in this tab; see Insuring Hired and Borrowed Autos; Auto M.3. If the insured uses symbol 8 on his auto policy, then a hired auto is considered a covered auto under the insuring agreements (liability coverage and physical damage coverage), subject to the exclusions and conditions on the BAP that apply to covered autos. Also, the insurance provided by the BAP is excess over any other collectible insurance since the hired auto is not owned by the named insured. But note that the BAP does state that for hired auto physical damage coverage, any covered auto hired by the named insured is deemed to be a covered auto owned by the named insured; in other words, this situation makes the named insured's BAP primary insurance.

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