Introduction to Business Auto Coverage
This domain tests the Business Auto Coverage Form: how covered-auto symbols decide which vehicles are insured, who qualifies as an insured, what liability and physical damage each pay, and where the form's exclusions push a loss to another policy.
The symbol system drives everything
The declarations show one or more covered-auto symbols, and every coverage question starts there:
- 1 Any Auto; 2 Owned Autos Only; 3 Owned Private Passenger Autos Only; 4 Owned Autos Other Than Private Passenger Autos; 5 Owned Autos Subject to No-Fault; 6 Owned Autos Subject to Compulsory Uninsured Motorist Law; 7 Specifically Described Autos; 8 Hired Autos Only; 9 Nonowned Autos Only. Symbol 19 exists for mobile equipment subject to a financial responsibility law.
Symbol 2 automatically extends to newly acquired autos, subject to notice and time limits. Symbols 8 and 9 are what protect an employer when an employee drives a rented vehicle or a personal car on company business.
What the form pays
- Section II - Liability. Bodily injury and property damage caused by a covered auto, plus supplementary payments: defense costs outside the limit, up to $2,000 for bail bonds, and up to $250 per day for lost earnings when the insurer asks the insured to attend a hearing or trial.
- Section III - Physical Damage. Comprehensive (other than collision), Collision, Specified Causes of Loss, plus optional Towing and Labor and Transportation Expenses/Loss of Use. Deductibles apply per covered auto.
- Who is an insured. The named insured for any covered auto; anyone using with permission a covered auto the insured owns, hires, or borrows - with carve-outs for the owner of a hired auto and for an employee using a vehicle owned by that employee or a household member.
Worked example
A plumbing company schedules one van under symbol 7. An employee runs a supply-house errand in her own car and injures a pedestrian. The company's auto liability does not respond, because symbol 7 covers only the described van; the employee's personal auto policy is primary. The company's own vicarious exposure is uninsured unless symbol 9 (or 1) is added, or a Drive Other Car endorsement is written for an executive whose only auto is company-provided.
Traps that cost marks
Confusing hired (rented, borrowed, leased) with nonowned (employee-owned used in the business); forgetting that an owned-auto symbol gives no hired or nonowned protection; missing the care, custody, and control exclusion for property carried in the vehicle; assuming auto liability covers an injured employee (that is workers compensation and employers liability territory); and overlooking the public or livery conveyance exclusion.