Commercial, or business auto, insurance differs greatly from personal auto insurance.
Business auto insurance forms provide business owners with a few more options when it comes to choosing particular coverage types for specific vehicles they own.
These options are referred to as “coverage symbols,” which are numeric symbols that demonstrate exactly what coverage applies to which vehicles.
They also represent which vehicles, either owned or not, are covered.
The symbols are listed on the policy form next to the vehicle for which coverage is extended.
These symbols are used to convey liability, physical damage and medical payments coverage for vehicles used in operations for the business.
Some vehicles may or may not require physical damage or medical payments coverage to be provided by your business; vehicles you rent or do not otherwise own for example.
Let’s take a look at each coverage symbol:
Symbol 1 – Any Auto
This is the most comprehensive symbol available to an insured on the business auto coverage form.
Symbol 1 dictates that coverage is provided for any auto used for business operations; including vehicles the insured owns, doesn’t own, and hires for their day-to-day operations.
Insurance companies are often hesitant to offer this coverage, as it puts them in a position to cover multiple vehicles they may not be aware the insured is using.
It makes it difficult to charge an accurate insurance premium based on the amount of risk they are actually insuring against.
Picture this: the insurer writes a policy with symbol 1 coverage for a company that owns only one vehicle, and the insured then rents 25 vehicles to drive around the U.S. making deliveries, right after the policy is issued.
The insurer has a much higher chance of paying out claims for 25 vehicles they may not even be aware they are insuring!
Symbol 2 – Owned Autos Only
This symbol is designed to cover exactly what it says…only those vehicles owned by the insured. The real distinction here is the coverage for physical damage.
For example, an insured may want to purchase liability coverage for hired and non-owned vehicles.
But would not be purchasing physical damage coverage for those vehicles, as the individual or entity that owns the vehicles would likely already have coverage in place for those autos.
This symbol does not provide coverage for hired and non-owned vehicles, which are covered under symbols discussed further down the list.
Symbol 3 – Owned Private Passenger Vehicles
No surprises here. This symbol is intended to provide coverage only for private passenger autos and excludes coverage for trucks, buses and other similar vehicles.
Again, there is no coverage for hired and non-owned vehicles provided by this symbol. Perhaps a company who uses a few private passenger vehicles for a sales team would request this coverage.
Symbol 4 – Owned Autos, Not Private Passenger
You don’t need a rocket science degree to recognize this is the alternative to the trucks and buses that would not be covered under symbol 3.
This would not offer coverage for any owned personal auto vehicles and does not offer coverage for hired and non-owned vehicles.
Symbol 5 – Owned Autos – PIP Coverage
Personal injury protection is not a necessary coverage in all states or on every owned vehicle in particular states.
However, in states where it is mandatory (no-fault states), this symbol is added to provide the necessary PIP for those vehicles.
Symbol 6 – Owned Autos – Uninsured Motorist Coverage
Keep your rocket science degree framed on the wall again for this one.
Similar to the PIP laws in no-fault states, uninsured motorist coverage is not mandatory on all owned vehicles in every state.
Symbol 6 would be applied to any autos that require this coverage in a particular state.
Symbol 7 – Specified Auto Coverage
This is the most commonly used symbol on a business or commercial auto insurance policy.
Symbol 7 is designed to provide coverage to autos specifically listed on the policy (similar to a personal auto policy). You would simply list the vehicles you own (with the VIN) and pay a premium to cover those vehicles only.
One of the main reasons this coverage symbol is most prevalent is that it is usually the most cost effective coverage option.
Symbols 1, 2, 3 and 4 do not require you to list every vehicle you own on a policy as they are added (and subtracted).
Therefore, you can expect to pay a higher premium for insurance, as the insurance company may charge a higher premium in order to protect themselves against paying claims for vehicles they are not aware they are insuring.
For the record, liability coverage is available on this symbol for non-owned trailers while they are attached to the owned vehicles listed on the declarations page of your policy.
There is no coverage for hired and non-owned vehicles here, but the following symbols cover those.
Symbol 8 – Hired Auto Coverage
Symbol 8 only provides coverage for vehicles that are rented, leased, borrowed or hired for use in your business.
For example, if you’re in the flower business and your delivery vehicle is out of commission, you’d likely “hire” a vehicle to make your regularly scheduled deliveries.
Symbol 8 would cover you for liability associated with operating this vehicle, which is certainly not listed on your policy under Symbol 7 as a vehicle you own.
Just note that this symbol DOES NOT provide coverage for vehicles that are rented leased, borrowed or hired from a family member or any other “member” of your organization.
Symbol 9 – Non-owned Auto Coverage
Symbol 9 is the coverage answer to the gaps in Symbol 8…Coverage is provided only for those vehicles you do not own, rent, lease borrow or hire, BUT are used for your business.
For example, if you send your employee to the post office to mail documents for your business (while driving their own car), and the employee causes an accident, your business could very well be named a negligent party to a lawsuit.
Don’t roll your eyes at this one…it is far more common than you may think.