CA 00 01–BUSINESS AUTO COVERAGE FORM ANALYSIS

(July 2010)

 

INTRODUCTION

Every commercial venture probably has some exposure to automobile liability or physical damage as a normal part of its operations. The Insurance Services Office (ISO) developed CA 00 01–Business Auto Coverage Form and two other major business auto coverage forms to respond to the need for comprehensive auto liability and physical damage coverage for commercial risks. The other forms are the Garage Coverage Form and the Motor Carrier Coverage Form.

Related Articles:

CA 00 05–Garage Coverage Form Analysis

CA 00 20–Motor Carrier Coverage Form Analysis

This analysis is based the 03/10 edition of this coverage form. Changes from the previous edition are in bold print.

CA 00 01–BUSINESS AUTO COVERAGE FORM ANALYSIS

CA 00 01 opens by defining the terms you or your as the named insured and we, us and our as the insurance company providing coverage. Named insured is not defined. As a result, it means only the entities on the declarations. All other definitions are found in Section V–Definitions.

SECTION I–COVERED AUTOS

Numerical symbols are used to determine the autos insured and the coverages provided. These symbols are defined in the Description of Covered Auto Designation Symbols.

The sample Business Auto Declarations has spaces to insert the symbol or symbols next to each of the business auto coverages. The only coverages provided are those that have a symbol or symbols and only those autos designated by the symbol or symbols are covered autos for that coverage.

A. Description Of Covered Auto Designation Symbols

1–Any Auto

This is the broadest symbol designation and it has no limitations or restrictions. If the vehicle is an auto as defined by this coverage form, it is covered, subject to certain exclusions and conditions. Because of the broad scope of the coverage provided, many insurance companies use this symbol very cautiously. Even if a given company uses it for liability, it may not allow its use for physical damage. When Symbol 1 is used, no other symbol should appear in the same box.

Note: See Section V–Definitions for the definition of auto.

Example: Symbol 1 is entered for liability coverage. Entering symbol 8 and 9 would be redundant and could be confusing.

2–Owned Autos Only

This symbol means that any auto the named insured owns is covered, including those acquired after the inception date. In addition, when this symbol is used with liability coverage, any owned or non-owned trailer pulled by an owned vehicle is also covered.

Note: See Section V–Definitions for the definition of trailer.

3–Owned Private Passenger Autos Only

This symbol means that all private passenger type autos that the named insured owns are covered. This includes any private passenger type vehicle acquired after the inception date.

4–Owned Autos Other Than Private Passenger Autos Only

This symbol means that all autos other than private passenger types that the named insured owns are covered, as well as those acquired after the inception date. Similar to Symbol 2 above, the liability coverage provided is extended to any owned or non-owned trailer pulled by this type of owned vehicle.

5–Owned Autos Subject To No-Fault

This symbol applies to vehicles licensed or garaged in a state where no fault coverage is available but only to autos required to have such coverage. Coverage also extends to such autos acquired after the inception date in addition to those the named insured owned on the inception date.

6–Owned Autos Subject To A Compulsory Uninsured Motorists Law

This symbol applies to any auto the named insured owns garaged or licensed in a state that requires that it carry uninsured motorists coverage. It also applies to any auto acquired after the inception date.

Note: This symbol does not apply to vehicles licensed or operated in states that allow the named insured to formally reject Uninsured Motorists coverage.

7–Specifically Described Autos

Only autos specifically scheduled and for which a premium charge is made are covered. Similar to Symbol 2 above, the liability coverage provided is extended to any owned or non-owned trailer pulled by this type of owned vehicle.

8–Hired Autos Only

This symbol covers only autos the named insured leases, hires, rents or borrows. This symbol has a significant limitation. It does not include leased, hired, rented, or borrowed vehicles owned by an employee, partner, LLC member or members of any of the preceding groups' households.

Example: Perry drives a vehicle owned by his company, First-Up, Inc. One snowy morning, Perry's wife's car is behind his in the driveway and, being in a hurry, he takes her vehicle in order to get to work on time. In his rush, he slides into the car in front of him, causing a four-car pileup. First-Up's insurance company does not respond to this loss because Perry borrowed his wife's car.

9–Non-Owned Autos Only

This symbol only applies to autos the named insured uses in its business that it does not own, lease, hire, rent or borrow. Autos owned by employees, partners in the case of a partnership, members in the case of limited liability companies or members of the preceding group's households are included. Covered status is only while those non-owned autos are used in either the named insured's business or personal affairs.

Example: In the example above, First Up's insurance company would have responded if Perry used his wife's car to drive to his first appointment instead of just to work if Symbol "9" was on the declarations.

19–Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only

This symbol applies only to land vehicles considered mobile equipment under the definition of mobile equipment. It extends Business Auto Coverage to mobile equipment but only in states where such equipment is subject to registration and/or licensing laws.

 

Example: Best Kept Secrets, Inc. provides security services to an exclusive gated beachfront property. It uses an ATV to patrol the beachfront areas and to keep unauthorized boats from landing. Because ATVs must be registered in the state, using Symbol 19 on its auto policy provides coverage on the ATV.

 

Note: In some cases, more than one symbol may be used.

Example: Mega Lumber Supply insures its vehicles using the Business Auto Coverage Form. Mega wants to have liability insurance for all of its private passenger vehicles, as well as for any hired or non-owned vehicles. For this reason, Symbols 3, 8 and 9 appear in the space next to liability coverage on Mega's declarations.

Manuscript Symbol

An additional manuscript symbol not mentioned in the Business Auto Coverage Form is available by adding endorsement CA 99 54–Covered Auto Designation Symbol. Symbol 10 is available for the Business Auto Coverage Form and the autos to be covered must be listed and described on the endorsement.

Example: The insured wants liability coverage for all owned vehicles and physical damage coverage on all owned vehicles except one. It also owns a high-value antique automobile. Physical damage coverage on the antique automobile is written on a separate policy in a specialty market. Symbol 2 designates the covered autos for liability coverage. Symbol 10 designates the covered autos for comprehensive and collision coverages. The definition for symbol 10 is: All Owned Autos except the 1959 Classic Rolls Royce.

Insurers and brokers that provide coverage on a variety of difficult business auto or trucking situations, such as racing activities, should refer to the Automobiles, Trucks or Recreational Vehicles section in The Insurance Marketplace, a publication of The Rough Notes Company, Inc.

B. Owned Autos You Acquire After The Policy Begins

1. If Symbols 1–Any Auto, 2–Owned Autos Only, 3–Owned Private Passenger Autos Only, 4–Owned Autos Other Than Private Passenger Autos Only, 5–Owned Autos Subject To No-Fault, 6–Owned Autos Subject To A Compulsory Uninsured Motorists Law or 19–Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law Only are used for coverages indicated on the declarations, autos of the type described by such symbols that the named insured acquires during the policy period are also covered.

Example: If Symbol 3–Owned Private Passenger Autos Only is used, coverage automatically applies to a new private passenger vehicle the named insured acquires to use to make sales calls during the policy period. However, there is no automatic coverage if symbol 4–Owned Autos Other Than Private Passenger Autos Only is used and the insured purchases the same private passenger vehicle for sales purposes. The insured must specifically request that coverage for this vehicle be added and change the symbol.

2. When symbol 7–Specifically Described Autos is used, new autos acquired during the policy period are covered if the insurance company either covers all vehicles the named insured already owns or if the new vehicle replaces a vehicle already scheduled. However, the named insured must inform the insurance company of the acquisition within 30 days of the date it was acquired.

C. Certain Trailers, Mobile Equipment And Temporary Substitute Autos

When liability coverage is selected based on entries on the declarations, several additional categories of vehicles are added as covered vehicles.

1. Utility trailers having a load capacity of 2,000 pounds or less and designed for travel on public roads are covered while being pulled by a covered auto.

Note: A semi-trailer is not covered.

2. Mobile Equipment is covered while being carried or pulled by a covered auto.

Example: A bulldozer Real Landscaping owns is transported on a flatbed towed by a pickup Real Landscaping owns. The driver turns suddenly and the bulldozer overturns onto another vehicle. Real Landscaping's Business Auto Coverage Form responds to the damage caused by the bulldozer.

3. If the named insured's covered, owned auto is temporarily out of service for repair or service or due to breakdown, loss or destruction, a non-owned, temporary substitute for it is covered but only if the named insured uses it with the owner's permission.

Example: Refer to the Symbol 8 example above. Instead of Perry using his wife's car out of convenience, he uses it because his car would not start and he needed to get to work. In that case, First-Up's Business Auto Coverage Form responds to the accident because the vehicle was used as a temporary substitute vehicle.