Businesses insure their vehicles on commercial auto forms, most often ISO's Business Auto Coverage Form (CA 00 01; the 10 13 and 11 20 editions are cited on exams). Instead of listing each car for each coverage, the form uses numbered covered auto symbols to say which autos each coverage applies to. This guide covers the symbols, liability, physical damage, the common endorsements, and the related garage, trucking and federal motor carrier rules. State law adds compulsory limits, no-fault and uninsured motorists rules on top of the form.

Who uses it

The business auto form is for organizations (and individuals insuring business vehicles) with cars, trucks, vans and trailers. A corporation with a fleet of company pickups driven by employees insures them on a business auto policy; the PAP is built around an individual named insured and resident spouse. Auto dealers, repair shops and parking operations use dealer or garage forms; trucking companies use motor carrier or truckers forms.

Covered auto symbols

• Symbols 2 + 8 + 9 together give the same result as symbol 1.
• Newly acquired autos are covered automatically under symbols 1 through 6 and 19. Under symbol 7, a new auto is covered only if the insurer already covers all owned autos of that kind or it replaces a covered auto, and the insured asks for coverage within 30 days.
• A business with no owned autos whose employees run errands in their own cars needs nonowned liability (symbol 9) for its vicarious liability.
• To cover damage to cars the business rents, show physical damage for symbol 8 (hired auto physical damage).

Liability coverage

The insurer pays damages for bodily injury or property damage to which the insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto, and has the right and duty to defend. Business auto liability is usually written with a single limit per accident. Defense costs are in addition to the limit.

Who is an insured:

• The named insured for any covered auto.
• Anyone using a covered auto the named insured owns, hires or borrows, with permission, except: the owner of an auto hired or borrowed (other than a trailer connected to a covered owned auto); an employee using a covered auto the employee or a household member owns (the employee's own policy is primary); someone using the auto in an auto business other than the named insured's; and some others.
• Anyone liable for the conduct of an insured.

Supplementary payments (outside the limit): up to $2,000 for bail bonds (the PAP pays $250), up to $250 a day for lost earnings at the insurer's request, court costs, and interest.

Exclusions include: expected or intended injury; contractual liability (except an insured contract); workers compensation and employers liability; fellow employee injury (left to workers compensation); care, custody or control (property owned or transported by the insured; cargo needs motor truck cargo coverage); movement of property by a mechanical device not attached to the auto, other than a hand truck (the CGL covers that); operating machinery or equipment such as cherry pickers, pumps or compressors mounted on the vehicle; completed operations; pollution, except fuels and fluids needed for the auto's normal operation within limits; war; and racing, stunting or demolition contests and practice for them.

Mobile equipment (a forklift or bulldozer used on a job site) is not an "auto"; its liability goes under the CGL, except while it is carried or towed by an auto or subject to compulsory auto insurance laws.

Physical damage coverage

• Comprehensive: any cause except collision or overturn. Glass breakage, hitting a bird or animal, and falling objects or missiles are comprehensive; glass broken in a collision may be treated as collision.
• Specified causes of loss: a cheaper named-peril alternative: fire, lightning or explosion; theft; windstorm, hail or earthquake; flood; mischief or vandalism; and sinking, burning, collision or derailment of a conveyance carrying the auto.
• Collision: the covered auto's collision with another object or its overturn.
• Towing and labor: for covered private passenger autos, labor at the place of disablement, up to the limit shown for each disablement.
• Exclusions: wear and tear, freezing, mechanical or electrical breakdown and blowouts, unless caused by another covered loss such as total theft; war and nuclear hazard; electronic equipment not permanently installed; radar detectors; racing; diminution in value.
• Limit: the lesser of ACV or the cost to repair or replace with like kind and quality, minus the deductible.

Conditions

• Coverage territory: the U.S., its territories and possessions, Puerto Rico and Canada; and anywhere in the world for a private passenger auto leased, hired, rented or borrowed without a driver for 30 days or less, provided suit is brought in those places.
• Other insurance: primary for owned autos, excess for nonowned autos (a trailer connected to a covered owned auto follows that auto's coverage).
• Duties after an accident: prompt notice, cooperation, copies of legal papers, no voluntary payments.

Medical payments, PIP and uninsured motorists

Auto medical payments, personal injury protection (symbol 5) and uninsured/underinsured motorists (symbol 6 where compulsory) are added by state-specific endorsements. Medical payments and PIP pay regardless of fault; UM and UIM pay what the insured could recover from an at-fault driver with no or too little insurance.

Common endorsements

• Drive Other Car (CA 99 10): covers a named individual (and family) who has no personal auto policy while driving autos the business does not own.
• Individual Named Insured (CA 99 17): when the named insured is an individual, adds PAP-like coverage for family members.
• Employees as Insureds (CA 99 33): makes employees insureds while using autos the named insured does not own in its business, removing the employee-owned-auto exception.
• Lessor - Additional Insured and Loss Payee (CA 20 01): makes the leasing company an additional insured for liability and loss payee for physical damage.
• Rental Reimbursement (CA 99 23): pays for a substitute vehicle while a covered auto is repaired after a covered loss.
• Garagekeepers (CA 99 37): an auto service business's liability for damage to customers' cars in its care, custody or control.

Trucking and federal rules

• Motor truck cargo insurance (inland marine) covers a carrier's liability for others' goods in transit.
• Trailer interchange covers the insured's legal liability for others' trailers held under a written interchange agreement.
• Interstate for-hire motor carriers must meet FMCSA minimums (49 CFR 387.9) for vehicles of 10,001 pounds or more: $750,000 for general freight, $1,000,000 for oil, and $5,000,000 for certain hazardous materials (such as hazardous substances in bulk or explosives).
• Financial responsibility is shown with Form MCS-90, an endorsement to an insurance policy, or Form MCS-82, a surety bond (49 CFR 387.15). The MCS-90 guarantees the federally required public liability protection even for losses the policy would otherwise exclude.

Residual market

Businesses that cannot buy auto liability in the voluntary market use the state's residual market mechanism (automobile insurance plan, joint underwriting association or reinsurance facility).

Common traps

• Symbol 1 is any auto; symbol 7 is only the autos listed.
• Hired (8) means rented or borrowed from others, not from employees; employees' own cars are nonowned (9).
• An employee driving the employee's own car on company business is not an insured under the employer's business auto liability (unless CA 99 33 is attached); the business itself is protected under symbol 9.
• Hitting an animal is comprehensive; swerving into a tree is collision.
• Bail bonds: $2,000 in the business auto form, $250 in the PAP and CGL.
• Mobile equipment liability belongs to the CGL, not the auto policy.
• MCS-90 is the insurance endorsement; MCS-82 is the surety bond.