10.4 The Business Auto Policy and Covered Auto Symbols

Quick Answer: The Business Auto Coverage Form (CA 00 01) uses covered auto designation symbols in the declarations to decide which vehicles are insured for which coverage. Symbol 1 is any auto; 2 is owned autos only; 7 is specifically described autos; 8 is hired autos only; 9 is non-owned autos only. Liability is Section II, and it includes covered pollution cost or expense arising from a covered accident, with defense outside the limit. Physical damage is Section III, written as comprehensive, specified causes of loss, or collision.

Almost every commercial claim an all-lines adjuster touches involves a vehicle somewhere: the contractor's truck, the caterer's van, the employee's own car on a company errand. Reading the symbols correctly is the first step in every business auto file.

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Covered Auto Designation Symbols

Symbols appear on the declarations next to each coverage. A symbol shown for liability does not carry over to physical damage. This is the single most common misreading of a business auto declarations page.

Exam Trap: Symbols 8 and 9 Never Insure the Vehicle Itself

Symbols 8 and 9 pick up liability exposures for vehicles the insured does not own. They do not, standing alone, provide physical damage coverage for the hired or non-owned auto. Damage to a rented vehicle requires symbol 8 shown for physical damage with a hired auto physical damage endorsement, or the rental agreement's own damage waiver.

Newly Acquired Autos

Under symbols 1, 2, 3, 4, 5 and 6, newly acquired autos are covered automatically. Under symbol 7, a newly acquired auto is covered only if the insurer already covers all autos the insured owns, or if the insured notifies the insurer within 30 days of acquisition.

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Section II — Liability Coverage

The insurer pays all sums an insured legally must pay as damages because of bodily injury or property damage caused by an accident and resulting from the ownership, maintenance or use of a covered auto. It also pays:

• Covered pollution cost or expense — but only where the pollutants are not being transported or held for the insured's business and the cost arises from an accident that also caused covered bodily injury or property damage. Pollutants that are part of the cargo are excluded.
• Defense and supplementary payments, paid in addition to the limit: defense costs, up to $2,000 for bail bonds, cost of bonds to release attachments, reasonable expenses the insured incurs at the insurer's request including loss of earnings up to $250 a day, court costs, and post-judgment interest. The duty to defend ends when the limit is exhausted.
• Out-of-state coverage extensions, which automatically increase limits and add no-fault or other statutory benefits to meet the requirements of another jurisdiction.

Who Is an Insured for Liability

1. The named insured for any covered auto.
2. Anyone else while using with permission a covered auto the named insured owns, hires or borrows — with important exceptions:
   • The owner or anyone else from whom the insured hires or borrows a covered auto, other than a trailer connected to a covered auto the insured owns;
   • The insured's employee while using an auto the employee or a member of the employee's household owns;
   • Anyone using a covered auto while working in a business of selling, servicing, repairing, parking or storing autos (that business needs its own auto dealers coverage);
   • Anyone other than an employee or partner while moving property to or from a covered auto;
   • A partner or member of the named insured for an auto owned by that person or a member of their household.
3. Anyone liable for the conduct of an insured, but only to the extent of that liability.

Key Liability Exclusions

Expected or intended injury; contractual liability outside an insured contract; workers' compensation and employer's liability; bodily injury to a fellow employee; care, custody or control of property; handling of property before or after it is in or on the covered auto; movement of property by mechanical device other than a hand truck; operations of certain mobile equipment; completed operations; pollution beyond the covered pollution grant; war; and racing.

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Section III — Physical Damage Coverage

Three coverages, chosen per vehicle in the declarations:

Glass breakage, animal strikes and falling objects may be treated as a collision loss at the insured's election, so a single deductible applies when the same event also causes collision damage. In Florida, F.S. § 627.7288 requires that the comprehensive deductible not apply to windshield damage — the zero-deductible windshield rule, which reaches motor vehicle policies issued in Florida by authorized insurers providing comprehensive or combined additional coverage.

Physical Damage Additional Coverages

• Towing and labor — reimbursement up to the limit shown, for private passenger autos only unless endorsed, for labor performed at the place of disablement.
• Transportation expenses — for a stolen private passenger auto, commonly $20 per day up to $600, beginning 48 hours after the theft is reported and ending when the auto is returned or the insurer pays for the loss.
• Loss of use expenses for a hired auto the insured is contractually obligated to pay, commonly $20 per day up to $600.

Physical Damage Exclusions

Wear and tear, freezing, mechanical or electrical breakdown, and blowouts unless caused by other covered damage; war; nuclear hazard; loss to tapes, records, discs and similar audio, visual or data electronic devices designed for use with audio, visual or data electronic equipment; and loss to equipment designed for the detection of speed measuring equipment (radar detectors).

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Endorsements That Change the Answer