11.0 Commercial Auto Coverage
Learning Objectives
11.1 Business Auto Coverage Form
The Business Auto Coverage Form, commonly referred to as the Business Auto Policy (BAP), is designed to insure automobiles that a business owns or uses in its operations. Depending on the covered auto designation symbols selected, coverage may apply to owned, leased, hired, rented, or borrowed vehicles, including private passenger autos, utility vehicles, trucks, trailers, and semitrailers. The policy may also cover nonowned autos, such as an employee’s personal vehicle, when the vehicle is used in the course of the named insured’s business. For example, an employee’s personal auto may qualify as a nonowned auto while the employee is using it to perform work-related duties on behalf of the business.
11.2 Business Auto Physical Damage Coverage Form
The physical damage coverage provided in Section III of the Business Auto Coverage Form is also available as a separate coverage form known as the Business Auto Physical Damage (BAPD) Coverage Form. The BAPD Coverage Form may be added to a Commercial Package Policy (CPP) when a business needs physical damage coverage for covered autos but does not need business auto liability coverage under that form. This coverage form provides only physical damage coverage.
11.3 Garage Coverage Form
Neither the Business Auto Coverage Form nor the Commercial General Liability Coverage Form is designed to provide the specialized coverage needed by automobile-related businesses that accept customers’ autos into their care, custody, or control. Examples include auto dealerships, repair shops, service stations, and similar operations. A Commercial General Liability policy generally excludes automobile exposures, while the Business Auto Coverage Form has limitations for non-owned autos, especially when those autos are not being operated in the business of the insured. Because of these gaps, automobile businesses need specialized coverage forms designed for their particular exposures.
11.4 Auto Dealers Coverage Form
Historically, the Garage Coverage Form was used to insure businesses that sell, service, repair, park, or store customers’ autos. However, auto dealerships face liability exposures that may differ from those of repair shops and other automotive service businesses that do not sell vehicles. To address these dealership-specific risks, the Auto Dealers Coverage Form was developed. This form provides auto liability coverage similar to the coverage included in the Garage Coverage Form. It also offers broader general liability protection for the dealership’s business operations and errors and omissions coverage for certain professional mistakes made by the dealer.
11.5 Truckers and Motor Carrier Coverage Forms
The Truckers Coverage Form and the Motor Carrier Coverage Form are designed to address the specialized automobile liability and physical damage exposures faced by common carriers and contract carriers engaged in transporting people or property.
11.6 Selected Commercial Auto Endorsements
The following endorsements may be added to Commercial Auto coverage forms to modify, broaden, or restrict the coverage provided by the policy.
Recap of Chapter Eleven
Commercial Auto insurance provides liability and physical damage coverage options for autos used in business operations. Additional coverages, such as auto medical payments and uninsured motorists coverage, are generally added by endorsement. For coverage purposes, an auto includes a land motor vehicle, trailer, or semitrailer designed for travel on public roads, as well as any other vehicle subject to compulsory insurance or financial responsibility laws. The definition also includes certain self-propelled vehicles with permanently attached equipment, such as snow removal equipment, cherry pickers, air compressors, and generators.