Commercial auto insurance is different from other types of policies in many ways. There is one aspect that stands out: the use and application of a Covered Auto Symbol to each line of coverage within the policy.
These Covered Auto Symbols may be different on each line, but the number itself means the same thing no matter which insurance company you choose. Your commercial auto insurance policy will include a Business Auto Coverage Form (more than likely some version of the CA0001) that includes a Description Of Covered Auto Designation Symbols which breaks down the definition of each numeric symbol that may be included on the policy.
These symbols will be included on your declarations page, and the position of the covered auto symbol is just as important as the definition. For the purposes of this article we will include symbols 1-9 as described by the Business Auto Coverage Form.
Symbol 1 “Any Auto”.
This symbol is usually included on the first box of the declarations page under “Liability” and is the most broad of any symbol. This means that the coverage applies to ANY AUTO used by the policyholder, period. The only limitation to this coverage is that it must be an auto as defined by the policy, which, under the Business Auto Coverage Form (CA0001) is:
- “Auto” means:
- A land motor vehicle, “trailer” or semitrailer designed for travel on public roads; or
- Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, “auto” does not include “mobile equipment”.
This is the preferred auto symbol for liability under the policy, and should be purchased if at all possible as it will encompass employee vehicles used for business, newly purchased vehicles not yet scheduled on the policy, or a vehicle that may have been inadvertently omitted from the policy. Coverage under this symbol carries a higher premium charge.
Symbol 2 Only “Owned” Autos
Less broad than symbol 1, this symbol limits coverage to only autos that are owned by the policyholder. This would include autos owned by the policyholder but not scheduled on the policy (for whatever reason), or owned autos acquired during the policy period. If the policyholder owns the auto, coverage is provided under the policy coverage line for the auto.
Naturally, if the owned auto is not scheduled on the policy, a premium charge for that auto will occur upon notice of ownership and/or claim, whichever comes first. The definition of “Auto” still applies under this symbol.
Symbol 3 Owned Private Passenger “Autos” Only
This further limits the coverage for the policyholder. Coverage under the line with symbol 3 includes the definition of “Auto” under the policy, but only if those autos are classified as “private passenger” vehicles. Commercial vehicles would need to be insured separately. This symbol is not used often, but if you find it on your policy, check with your broker to be sure you aren’t inadvertently leaving commercial vehicles off of your policy.
Symbol 4 Owned “Autos” Other Than Private Passenger “Autos” Only
The opposite of symbol 3, this symbol provides coverage for any auto as defined by the policy that is not a private passenger auto. If your vehicle fleet includes only commercial autos, this symbol would provide coverage for those vehicles only. Any purchased private passenger autos would need to be insured separately.
Symbol 5 Owned “Autos” Subject To No Fault
This symbol usually appears on the declarations page next to Personal Injury Protection (PIP) and/or Medical Payments coverage lines. No Fault refers to coverage that is required to be paid under a state law regardless of who is at fault in an accident. The coverage line usually pays for medical expenses and/or lost wages, depending on the law of the state where the accident occurs (not the state where the insurance was purchased, an important distinction).
This symbol limits the coverage in two ways: the auto covered must be “owned” by the policyholder, and must be subject to the no fault coverage law of the state.
Symbol 6 Owned “Autos” Subject To A Compulsory Uninsured Motorists Law
Uninsured Motorists Coverage will usually include this symbol, which even further limits the coverage line next to which symbol 6 appears. The auto involved in the accident will not receive coverage unless it is owned by the policyholder, and is subject to compulsory uninsured motorist law in the state where the accident occurs.
Symbol 7 Specifically Described “Autos”
This symbol limits the coverage under the policy to only those autos that are described on the policy. That means that the auto will only be covered if it is owned by the policyholder and is specifically scheduled on the policy. This would include newly acquired vehicles purchased during the policy period as long as the company is notified within 30 days of purchase. Failure to notify the insurance carrier of a newly purchased vehicle means the vehicle has no coverage after the first 30 days of purchase. This window of time may vary from company to company, but is usually 30 days or less.
Symbol 8 Hired “Autos” Only
Hired autos include any auto that is leased, rented or borrowed for business use. This does not include any auto that is leased, rented or borrowed from an employee, partner, member or household member of a policyholder. Those limitations are important, for reasons we will see in a moment.
Symbol 9 Nonowned “Autos” Only
This symbol is the opposite of symbol 2 in that it offers coverage only if the vehicle is not owned, leased, hired, rented or borrowed by the policyholder and used in connection with the business. Autos owned by employees, partners, members or household members of the policyholder are included, but only while used in business or your personal use.
Use of this symbol picks up the gaps left by symbol 8, but only when those symbols are used together on the same policy under the same coverage line.
The Covered Auto Symbol listed next to the coverage on the policy, based on the definitions above is extremely important. The best symbol you can purchase is symbol 1, but what about combinations of other symbols?
A common fallacy among brokers is that symbol 7 (specifically described autos) + symbol 8 (hired autos) + symbol 9 (non-owned autos) is equal to a symbol 1 (any auto). While the combination comes close, it is not equal to the broad coverage of symbol 1, so you may be subject to gaps in coverage.
Talk with your broker about your vehicles, their usage, and the possibility of vehicles being purchased or swapped out during the policy period. Ask yourself the following questions:
- Do my employees use their personal vehicles for business?
- Do I use my spouse’s vehicle for business while mine is in the shop?
- Do we rent vehicles on business trips?
- Do we borrow vehicles for business use?
It can be difficult to know every scenario, so buying the broadest coverage available will assist in assuring that your business is covered on every front of exposure. This is not an exhaustive list of coverage symbols available, so talk to your broker to build the policy that is right for your business.