Topics covered:

Format

Declarations

Symbols for covered autos

Miscellaneous

Format

 Like other ISO coverage forms, the business auto coverage form (BAP) is combined with coverage form declarations, common policy conditions, and any applicable endorsements to be used as either a monoline policy or as one coverage part in a multi-line, or package, policy.

 Declarations

 The declarations page contains six items, the first of which is filled in with the named insured's name, address, and form of business, as well as the dates of the policy period. Item two contains a schedule of the coverages that can be provided under the auto form. Opposite each coverage is a space for indicating the covered autos, limit of insurance, and premium for that coverage. Indicating covered autos in item two is accomplished by entering the appropriate numerical coverage symbol or symbols next to each coverage.

 Item three is a schedule of covered autos owned by the named insured. All autos owned by the named insured at policy inception are described here (unless, of course, no coverage is desired on a particular auto). The applicable classification data are also listed, as well as the premiums, limits, and deductibles for each owned covered auto. Item four is a schedule of hired or borrowed auto coverages and premiums, for both liability and physical damage insurance. Item five is a schedule for nonownership liability coverage. Item six is a schedule that is used only for public autos and autos of leasing or rental concerns that are rated on the basis of gross receipts or mileage.

 Symbols for Covered Autos

 The coverage symbols are used to signal, in item two, which autos qualify as covered autos for each coverage being purchased. Unless a coverage symbol is shown beside a coverage, that coverage will not apply. And, unless the correct coverage symbol is shown, the insured may be without coverage that it should have had.

 Since each of the symbols relates, in the first place, only to "autos," it is important to know that the auto form defines "auto" as a land motor vehicle, trailer or semitrailer designed for travel on public roads. This is a very broad definition encompassing vehicle types ranging from motorcycles to the largest tractor-trailer rigs. However, it should be noted that under no conditions can mobile equipment qualify as a covered auto. Thus, if the insured has vehicles that fall under the policy definition of mobile equipment, none of the coverage symbols will be of any help in insuring it. The policy definition of mobile equipment and the available methods of insuring mobile equipment are discussed later in this section.

 The description of covered auto designation symbols are as follows.

 Symbol 1 — Any "Auto"

 Analysis

Symbol 1 makes any auto a covered auto. The insured will have coverage for any auto that is owned, hired, borrowed, or used by the named insured. When symbol 1 is used, there is no need to indicate any other coverage symbol because symbol 1 encompasses all of them. Any auto that the insured acquires during the policy period is automatically covered and need not be reported to the insurance company before the insurer conducts an audit of exposures, which is ordinarily at the end of the policy period.

 From the insured's point of view, symbol 1 is clearly the best choice unless the insured wishes not to insure hired autos or nonownership liability. However, virtually any insured should be advised not to avoid buying hired and nonowned autos coverage, since almost any entity has a potential for exposures arising in those areas even if it does not anticipate using hired, borrowed, or nonowned autos.

 Symbol 2 — Owned "Autos" Only

 Analysis

 Symbol 2 applies to owned "autos" only. That is, symbol 2 provides no coverage for hired, borrowed, or nonowned autos. However, like symbol 1, it provides automatic coverage for any auto of which the named insured acquires ownership during the policy period. In addition, if symbol 2 is used for liability coverage, it extends the liability coverage to cover trailers or semitrailers that the named insured does not own while attached to power units that the named insured does own.

 Symbol 2 can be used for any of the coverages that are available under the business auto form, depending on the circumstances. For example, it might be used for purposes of liability coverage when the insured does not wish to purchase nonowned autos coverage, which would be automatically included under symbol 1. More commonly, symbol 2 is used for providing "automatic" physical damage insurance on a fleet of owned autos.

 Symbol 3 — Owned Private Passenger "Autos" Only

 Analysis

 Symbol 3 applies to owned private passenger autos only, including private passenger autos of which the named insured acquires ownership during the policy period. This symbol can also be used for any coverage under the auto form. For example, it might be used as an underwriting tool when an insurer is willing to cover a fleet of private passenger autos but does not want to assume liability for larger vehicles that the insured might acquire during the policy period. An equally practical application might be for uninsured motorists coverage in a state where uninsured motorists coverage is not mandatory and the insured only wishes to have the coverage on its private passenger vehicles.

 Symbol 4 — Owned "Autos" Other Than Private Passenger "Autos" Only

 Analysis

 Symbol 4 is limited to owned autos other than private passenger type vehicles, including autos of the same type that the named insured acquires ownership of during the policy period. Moreover, when used for liability coverage, symbol 4 includes nonowned trailers or semitrailers while attached to power units owned by the named insured, for liability coverage only. Although symbol 4 could be used for any auto form coverage, depending on the circumstances, it is probably more commonly used as an underwriting tool than as a symbol of first choice by the insured.

 Symbol 5 — Owned "Autos" Subject To No-Fault

 Analysis

 Symbol 5 is for owned autos that are required to have no-fault benefits in the state where they are licensed or principally garaged, and so its use is limited to signaling no-fault (or personal injury protection) coverage. Autos that the named insured acquires ownership of during the policy period are automatically covered if they too are required to have no-fault benefits.

 Note that symbol 5 is not appropriate in states where the named insured has the right to buy no-fault coverages but is not "required" to do so. In such states, no-fault coverage can be purchased by the insured through the use of an endorsement.

 Symbol 6 — Owned "Autos" Subject To A Compulsory Uninsured Motorists Law

 Analysis

 Symbol 6, used only for uninsured (and underinsured) motorists coverage, insures owned autos subject to a compulsory uninsured motorists law, including autos that the named insured acquires ownership of during the policy period that are also subject to a compulsory uninsured motorists law. If the named insured is not required to carry uninsured motorists coverage or can reject the coverage, another symbol — 2, 3, 4, or 7 — needs to be used to provide uninsured motorists coverage, if it is desired.

 Symbol 7 — Specifically Described "Autos"

 Analysis

 Symbol 7 signals coverage for specifically described autos only, i.e., autos described in item three of the declarations. By virtue of provisions under paragraph B of section I, however, symbol 7 coverage is extended to an auto the named insured acquires after policy inception if (1) the insurer already insures all autos that the named insured owns for the coverage being sought or the newly acquired auto replaces an auto previously owned by the named insured that had that coverage; and (2) the named insured asks the insurer, within thirty days after acquiring the auto, to insure it for that coverage. With respect to liability coverage, symbol 7 also covers trailers or semitrailers that the named insured does not own, while attached to any power unit described in item three of the declarations.

 Obviously, the coverage that symbol 7 provides for newly acquired autos is inferior to the automatic coverage that comes with the other coverage symbols and for that reason should, if at all possible, be avoided by insureds. If, for example, an insured wants to self-insure physical damage losses to some of its owned autos, it would be better, from the insured's viewpoint, to use symbol 2 and exclude the self-insured autos by endorsement, than it would to use symbol 7. Then, the insured will have automatic coverage for any autos acquired during the policy period and will not be faced with the thirty-day reporting requirement of symbol 7.

 Symbol 8 — Hired "Autos" Only

 Analysis

 Symbol 8 applies to "hired autos only," including only such autos that the named insured leases, hires, rents, or borrows, and not including autos owned by the named insured's employees, partners, or members of their households. (Liability for use of employees' autos is insurable under symbol 1 or 9.)

 If the named insured's liability coverage is through symbol 1, hired autos coverage is automatically included and symbol 8 need not be shown. If, however, symbol 1 is not used for liability coverage, symbol 8 must be shown beside liability coverage if the policy is to provide liability coverage for hired or borrowed autos. For example, an insured with symbol 7 for liability coverage will need to add symbol 8 as well, if hired autos coverage is desired.

When symbol 8 is used for either liability or physical damage coverage, the hired auto coverage schedule in item four of the declarations needs to be filled in. Note that the other insurance clause on CA 00 01 states that for hired auto physical damage coverage, any covered auto that the named insured leases, hires, rents, or borrows is deemed to be a covered auto that the named insured owns; this means that coverage under the BAP is primary under those conditions.

 It should also be noted that under the covered autos section of the form in paragraph C, automatic liability coverage is provided for temporary substitute autos if the coverage part provides any form of liability coverage. The temporary substitute auto must be used with the owner's permission as a substitute for a covered auto the named insured owns that is out of service because of its breakdown, repair, servicing, loss, or destruction. Formerly, temporary substitute autos were not covered unless the named insured purchased hired auto coverage. The coverage for a temporary substitute applies excess of other collectible insurance since the temporary substitute is not an auto that is owned by the named insured.

 Symbol 9 — Nonowned "Autos" Only

 Analysis

 Symbol 9—"nonowned autos"—is used to provide liability coverage for the use of autos that the named insured does not own, lease, hire, rent, or borrow that are used in connection with the named insured's business. This may be an auto owned by an employee of the named insured or by partners or members (if the named insured is a limited liability company), or members of their households, or by anyone else, such as a friend of the named insured's who offers to use his own car to run an errand for the named insured. As with symbol 8, if symbol 1 has been used for liability coverage, symbol 9 need not be shown as well. However, if liability coverage on owned autos is signaled through another symbol, symbol 9 will need to be shown alongside that symbol if "nonowned autos" liability coverage is desired. When nonowned autos liability coverage (also widely known as employers nonownership liability coverage) is purchased, whether through symbol 1 or symbol 9, the schedule for nonownership liability that appears as item five of the BAP declarations must be completed.

 Symbol 19 ― Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only

 Analysis

 Symbol 19 is a symbol put in place with the coming of the March 2006 edition of the business auto coverage form. This symbol applies to those autos that are land vehicles and that would qualify under the definition of mobile equipment under the BAP if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged. Currently, such vehicles are considered as autos under the auto policy and the general liability (CGL) policy, and are supposed to have coverage under the auto policy, not the CGL form. So, if the insured has any such vehicles that he wishes to insure, symbol 19 is the proper auto designation symbol to use.

 Miscellaneous

 Paragraph B under section I of the business auto coverage form addresses the status of owned autos the named insured acquires after the policy begins. If any of symbols 1 through 6 and 19 are used, the named insured has automatic coverage for autos of the type described until the end of the policy period. If symbol 7 is used, the named insured will have only the limited coverage for newly acquired autos discussed earlier in connection with symbol 7, a feature of which is a thirty-day reporting requirement.

 Paragraph C under section I sets forth coverage extensions, which consider certain trailers and mobile equipment to be covered autos for purposes of liability insurance if the policy provides liability insurance. The trailers to which the extension applies are those with a load capacity of 2,000 pounds or less designed primarily for travel on public roads. As noted previously, mobile equipment qualifying for the extension is that which is being carried or towed by a covered auto. These extensions apply if liability coverage is included in the coverage form — the liability coverage could be through any symbol, whether as broad as symbol 1 or as narrow as symbol 8 only. Also, the extensions only apply for purposes of liability coverage.

 And, this paragraph goes on to note that any auto not owned by the named insured that is used as a temporary substitute for an owned covered auto is considered a covered auto for liability coverage. The owned auto has to be out of service because of its breakdown, repair, servicing, loss, or destruction. So, if the insured borrows a car while the owned auto is being serviced at the garage, that borrowed auto is covered for liability purposes while the insured is using it. Of course, since the borrowed auto is not owned by the named insured, the coverage under this auto policy is excess over any other collectible insurance, but the coverage is there for the insured.

 On the subject of trailers, it should be remembered that the term "auto" as used in the auto form includes a trailer or semitrailer. So, the coverage symbols can be used to insure trailers as well as cars, trucks, or other self-propelled vehicles; in addition, symbols 2, 4, and 7 have a specific provision for liability coverage on nonowned trailers used with owned power units. The question arises then as to whether the trailer coverage extension is superfluous. If the insured has coverage for trailers under the definition of auto, what is the purpose of language specifically providing liability coverage for trailers with a load capacity of 2,000 pounds or less? The purpose can be to provide liability coverage for trailers that somehow manage to "fall through the cracks". If by some circumstance, the insured is using a trailer that is not included within the designation symbol as a covered auto, the BAP will provide liability coverage for that trailer as long as the load capacity is 2,000 pounds or less and it is designed primarily for travel on public roads.