Deciphering Commercial Auto Policy Symbols
One or More Symbols Should Be Listed in the Declarations
The ISO Business Auto Coverage Form (BACF) is a standard insurance form used by many insurers to provide commercial auto coverages. The BACF utilizes a set of numbers, called covered auto designation symbols, to indicate the types of autos that are insured for each kind of coverage. Because each symbol triggers coverage for a specific category of vehicles, it's important to understand what the numbers signify.
What the Symbols Mean
When your business is insured under a business auto policy, one or more covered auto symbols should be listed in the declarations next to each coverage you've purchased. The numbers indicate which autos are "covered autos" for that coverage. The covered auto designation symbols include the numbers 1 through 9 and 19. Their meanings are explained on page 1 of the BACF.
Of the 10 available symbols, symbol 1 affords the broadest coverage. It triggers coverage for any auto used in your business, including autos you (the named insured) own or hire and autos owned by someone else, such as an employee. Symbol 1 can be used to trigger auto liability coverage only. It cannot be used to initiate any other type of coverage.
Symbol 1 includes vehicles you acquire during the policy period. You need not report newly acquired autos to your insurer before your policy expires.
When symbol 1 appears next to liability coverage in the declarations, the named insured is covered for claims arising from accidents caused by any auto used in the business. This means that you are covered for claims stemming from the use of owned, hired, or non-owned autos. Your employees are also insured for liability but the coverage afforded to them isn't as broad. The BACF automatically extends liability coverage to anyone (such as an employee) driving, with your permission, a vehicle you own or hire. These individuals don't qualify as insureds while driving autos owned by them as those vehicles are considered non-owned autos.
Symbols 2, 3 and 4
Symbols 2, 3, and 4 can be used to trigger liability or physical damage coverage. Symbol 2 initiates coverage for all autos you own, including private passenger type autos and commercial vehicles (trucks). Symbol 3 designates private passenger autos only while symbol 4 triggers coverage for commercial vehicles only.
All of these symbols afford automatic coverage for autos you acquire during the policy period. Symbols 2 and 4 automatically afford liability coverage for any trailer you don't own that is attached to a car or truck that you do own.
Symbols 5 and 6
Symbol 5 is used to provide no-fault coverage for autos you own when such coverage is required by law. No-fault auto laws exist in twelve states and Puerto Rico. Symbol 6 is used to trigger uninsured motorist coverage for autos you own. This symbol is used only when your state requires you to purchase UM coverage and doesn't permit you to reject it.
Symbol 7 covers the vehicles described in the declarations and any trailer you don't own that's attached to a car or truck listed in the declarations. No other autos are covered. Unlike the symbols outlined above, symbol 7 covers newly acquired vehicles for 30 days after the purchase date, not for the duration of the policy period. To insure the new auto beyond the 30 days, you must report it to your insurer within the 30-day period. You must also pay the applicable premium.
If a new vehicle you acquire is an addition to your fleet, the coverages that apply to your existing vehicles will extend to the new vehicle if all vehicles you own are insured under the policy. For example, suppose your business owns six vehicles, all of which are private passenger vehicles, which are insured on a business auto policy. Three months into your policy period your business purchases a pickup truck. If all six cars are insured for liability, comprehensive and collision coverages, those coverages will apply to the pickup as well. However, if all of the cars are insured for liability but only three are covered for physical damage, the pickup will be insured for liability only.
What if you buy a new vehicle to replace one you sold or that was "totaled" in an accident? In this case the new vehicle will be afforded the same coverages that applied to the former vehicle.
If you acquire a new auto and symbol 7 is listed next to any coverages in the declarations, be sure you tell your insurer about the new vehicle within 30 days of the purchase date. Otherwise, your coverage for that auto will end after the 30-day period.
Symbol 8 designates hired autos. This term includes vehicles you hire, rent, lease, or borrow. Symbol 8 does not cover any vehicle you hire, rent, lease, or borrow from any of your employees, partners, or members (if you are a limited liability company) or any members of their households. Symbol 8 may be used to insure hired autos for liability or physical damage coverage.
Symbol 9 is used to cover non-owned autos for liability. Non-owned autos are vehicles you use in your business but do not own, hire, rent, lease, or borrow. Examples are vehicles that are owned by your employees or partners and used in your business.
Finally, symbol 19 designates mobile equipment that is subject to a compulsory or financial responsibility law. This symbol is rarely needed. This is because the standard business auto policy considers mobile equipment (such as a bulldozer or forklift) an auto if it's being driven on a public road and is required by law to be insured for liability. Because such vehicles qualify as autos, they can be covered via any symbol (such as 1, 2, or 4) that triggers coverage for commercial autos you own.
Symbol 19 may be used if you acquire mobile equipment during the policy period, the vehicle must be insured for liability, and none of the symbols currently used on your policy are appropriate. For example, suppose that you purchase a commercial auto policy that covers only hired and non-owned autos. Two months after your policy begins you buy a forklift. The law in your state requires you to insure a forklift for liability if you want to drive it on a public road. Symbols 8 and 9 don't cover owned autos so symbol 19 can be added to cover the forklift.