2-20 Commercial Auto Insurance Symbols Flashcards
Which is NOT a component of a typical, stand-alone business auto policy?
Garage coverage form
A typical stand-alone BAP includes business auto declarations, the business auto coverage form, the common policy conditions form, and the nuclear energy liability exclusion endorsement. The garage coverage form is designed for auto dealers and provides auto liability and general liability coverage. The auto dealers form, introduced in 2013, is intended to replace the garage coverage form.
Augusta wants her business auto policy (BAP) to cover liability on every auto her business owns during the policy term. She does not want coverage on any other vehicles. What symbol(s) should the declarations list?
Symbol 2 covers all autos owned at the beginning of the policy period and any autos acquired during the policy period.
Item One—Named Insured, Form of Business
Item One identifies the insurer and lists the named insured, describing it as a corporation, partnership, limited liability company (LLC), individual, or some other type of organization, such as an unincorporated social or fraternal organization.
Item Two—Schedule of Coverages and Covered Autos
Item Two has a schedule of the various coverages available under the policy. Beside each coverage is a space for one or more numerical symbols—auto coverage symbols—that specify the autos insured by a particular coverage. The limit of insurance for the coverage is also listed. Lastly, a premium charge is noted beside each coverage limit.
Symbol 1—Any Auto
Symbol 1 is intended to be used only for liability coverage. Some insurers use it for other coverages as well. When symbol 1 is selected, any auto, whether owned, nonowned, hired, or otherwise, is a “covered” auto. This is the broadest symbol available and preferred by most insureds. When this symbol is used, there is no need for any other symbol to indicate liability coverage.
Symbol 2—Owned Autos Only
Symbol 2 covers all autos owned at the beginning of and acquired during the policy period. When symbol 2 is used for liability coverage, any nonowned trailer attached to an owned power unit is also covered. This symbol often is used to indicate medical payments, UM, UIM, and physical damage collision coverages.
Symbols 3 and 4—Owned Private Passenger Autos and Owned Autos Other Than Private Passenger Autos
Similar to symbol 2, symbols 3 and 4 apply only to autos owned by the named insured. Symbol 3 indicates owned private passenger autos. Symbol 4 indicates all other types of owned autos. Each symbol indicates coverage for autos of the same type that are owned at the beginning of or acquired during the policy period. They also indicate coverage for nonowned trailers.
Symbol 3 often designates auto medical payments and physical damage other-than-collision (comprehensive) coverage. It can also indicate towing and labor coverage when that coverage is purchased. It does not cover injuries for which workers compensation is payable.
Symbol 4 often designates physical damage specified causes of loss coverage.
Symbols 5 and 6—Owned Autos Subject to No-Fault and Owned Autos Subject to a Compulsory Uninsured Motorists Law
Because symbols 5 and 6 denote mandatory coverages that cannot be waived (symbol 5 for no-fault coverage and symbol 6 for uninsured motorist coverage), they can only be used in a few states.
Symbol 7—Specifically Described Autos
Symbol 7 indicates coverage only for autos listed in a schedule of covered autos in Item Three of the declarations. When this symbol is used for a particular coverage, a newly acquired auto is covered only if:
the insurer already provides that coverage on all autos the named insured owns, or the newly-acquired auto replaces one that previously was owned and insured for the same coverage and
the insured informs the insurer within 30 days after acquiring the new auto that the insured desires coverage for it
When symbol 7 is used for liability coverage, liability arising from nonowned trailers attached to a power unit described in the Schedule of Owned Autos (Item Three) of the declarations is covered.
Symbol 8—Hired Autos Only
The BAP defines a hired automobile as one the insured leases, hires, rents, or borrows. It is not one that the insured leases, hires, rents, or borrows from an employee, partner, member of a limited liability company (when the named insured is a limited liability company), or members of their households. Symbol 8 indicates coverage for liability and physical damage.
Businesses that never lease or rent a vehicle may think they have no need for hired auto coverage. They may be surprised to learn that the BAP treats a borrowed vehicle as a hired auto—not a nonowned auto—unless it is borrowed from an employee, a partner, or another member of a limited liability company.
Symbol 9—Nonowned Autos Only
Nonowned automobiles are autos that are used in the insured’s business but are not owned, leased, hired, rented, or borrowed by the insured. This symbol indicates autos owned by the insured’s employees, partners, members of limited liability companies, or members of their households while the autos are used in the insured’s business or personal affairs. Symbol 9 is used only to indicate liability coverage.
Symbol 19—Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only
Symbol 19 indicates liability coverage for land vehicles that would ordinarily be classified as mobile equipment except that they are subject to a motor vehicle law (e.g., compulsory liability, financial responsibility, no-fault, UM/UIM) in the state where they are licensed or principally garaged.
Item Three—Schedule of Owned Autos
This schedule in the declarations provides rating and underwriting information (description, cost, territory, radius of operation, business use, size, loss payee, coverage limits, deductibles, and premiums) about the insured’s autos.
Item Four—Schedule of Hired or Borrowed Auto Coverage and Premiums
This schedule in the declarations shows the estimated exposure and premium for hired or borrowed autos.
Item Five—Schedule for Non-Ownership Liability
When symbol 1 (any auto) or symbol 9 (nonowned autos only) is shown in Item Two for liability coverage, Item Five should show the number of the insured’s employees. This number is used to set the premium.
