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.

Vehicles held for sale, storage, service, or repair on behalf of others are not eligible for coverage under the Business Auto Coverage Form. Businesses with these exposures generally require a specialized coverage form, such as the Auto Dealers Coverage Form or Garage Coverage Form. Mobile equipment that is subject to compulsory registration or licensing for use on public roads may qualify as a covered auto under the Business Auto Coverage Form. Other types of mobile equipment generally require coverage under a separate policy or coverage form.

The Business Auto Coverage Form is organized into five sections, each addressing a specific component of the policy:

• Section I – Covered Autos: Identifies the categories of autos eligible for coverage through the use of covered auto designation symbols.
• Section II – Covered Autos Liability Coverage: Provides liability coverage for bodily injury, property damage, and certain pollution costs or expenses arising from the ownership, maintenance, or use of covered autos.
• Section III – Physical Damage Coverage: Covers direct and accidental loss to covered autos, subject to the selected coverage options, exclusions, limits, and deductibles.
• Section IV – Business Auto Conditions: Explains the duties, rights, and conditions that apply to the insured and the insurer.
• Section V – Definitions: Defines important terms used throughout the Business Auto Coverage Form.

Section I – Covered Autos

The insured business selects the categories of vehicles to be covered under the Business Auto policy and determines which coverages will apply to each category. The Business Auto Declarations include a schedule in which covered auto designation symbols are entered. Each symbol identifies the types of vehicles that qualify as covered autos for a particular coverage. The covered auto designation symbols are as follows:

Symbol	Description
Symbol 1	Any Auto, if it is used in the insured business, regardless of ownership.
Symbol 2	Owned Autos Only, whether or not specifically listed on the policy.
Symbol 3	Owned Private Passenger Autos Only. This is useful if a business wishes to provide insurance differently for its cars than for its dump trucks or vehicles used for delivery.
Symbol 4	Owned Autos Other Than Private Passenger Autos Only.
Symbol 5	Owned Autos Subject to No-Fault Laws.
Symbol 6	Owned Autos Subject to a Compulsory Uninsured Motorists Law.
Symbol 7	Specifically described vehicles listed on the Declarations page.
Symbol 8	Hired Autos Only. Hired autos are those the insured leases, hires, rents, or borrows, except any auto the insured leases, hires, rents, or borrows from an employee. These vehicles may not be owned by the insured.
Symbol 9	Non-owned Autos Only. Non-owned autos are those the insured does not own, lease, hire, rent, or borrow, and that are used in connection with the insured’s business. This includes autos owned by an employee of the insured or a member of the employee’s household.
Symbol 19	Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law. This activates protection for autos that are otherwise described as mobile equipment, but are required by state law to be licensed and registered to be operated on public roadways. This symbol is necessary because mobile equipment is excluded from the definition of auto on this form.

Coverage may be customized by assigning different coverages to each covered auto designation symbol. For example, autos classified under Symbol 2—Owned Autos Only may be insured for both liability and physical damage coverage, while mobile equipment classified under Symbol 19 may be insured for liability coverage only.

Newly Acquired Autos

Newly acquired autos are automatically covered for the remainder of the policy period when the Declarations show coverage for Symbol 1—Any Auto, one of the owned-auto designations under Symbols 2 through 6, or Symbol 19—Mobile Equipment Subject to Compulsory or Financial Responsibility Law.

When Symbol 7—Specifically Described Autos is shown for a coverage, a newly acquired auto may receive the same coverage if either of the following conditions is met: the insurer already covers all autos the insured owns for that coverage, or the newly acquired auto replaces an owned auto that was previously insured for the same coverage. In either case, the insured must notify the insurer and request coverage within 30 days after acquiring the auto.

Other Covered Vehicles

When the Business Auto policy provides liability coverage, certain vehicles automatically qualify as covered autos:

• Light trailers: Trailers designed for travel on public roads with a load capacity of 2,000 pounds or less.
• Mobile equipment in transit: Mobile equipment while it is being carried or towed by a covered auto.
• Temporary substitute autos: Autos temporarily used in place of a covered owned auto that is unavailable because of breakdown, repair, servicing, loss, or destruction.

Example

Mobile equipment includes vehicles such as backhoes and power cranes. Under the Business Auto Coverage Form, these vehicles are generally classified as mobile equipment rather than autos. When mobile equipment causes bodily injury or property damage while being operated at a jobsite, liability coverage is typically provided by the insured’s Commercial General Liability policy. For example, if a backhoe damages a building while being used on a construction project, the resulting liability would generally fall under the CGL policy. A Commercial Auto endorsement may provide limited liability coverage for certain mobile equipment exposures.

The Business Auto policy may apply when mobile equipment causes a loss while it is being carried or towed by a covered auto. For example, if a piece of equipment falls from the insured’s trailer while in transit and damages another person’s vehicle, the resulting liability may be covered by the Business Auto policy. The transportation of mobile equipment by an auto is generally excluded from CGL coverage.

Coverage for physical damage to the mobile equipment depends on where the loss occurs. Damage occurring while the equipment is located at the insured’s premises may be covered under a Commercial Property policy. When the equipment is away from the premises, separate Inland Marine coverage is generally needed to insure it against physical damage.

Section II – Covered Autos Liability Coverage

Coverage

Section II provides liability coverage for bodily injury or property damage caused by an accident for which the insured is legally responsible. For coverage to apply, the accident must occur within the policy territory and during the policy period, and it must arise from the ownership, maintenance, or use of a covered auto. Section II also includes the insurer’s duty to defend the insured against a suit seeking damages covered by the policy.

Who Is An Insured

Under Section II, the named insured qualifies as an insured for the ownership, maintenance, or use of any covered auto.

Section II also treats as an insured any person who uses a covered auto that the named insured owns, hires, or borrows, provided the person has the named insured’s permission. For example, an employee driving a covered auto for business purposes generally qualifies as an insured. However, the following persons do not qualify as insureds:

• The owner of a hired or borrowed auto, or anyone else from whom the named insured hires or borrows the auto
  • An exception applies to the owner of a hired or borrowed trailer while it is connected to a covered auto owned by the named insured.
• Employees, partners, or members of the named insured while using an auto owned by them or by a member of their household.
• Anyone working in the business of selling, servicing, repairing, parking, or storing autos while using the covered auto
  • This exclusion does not apply when the auto-related business is operated by the named insured.
• Anyone other than the named insured’s employees, partners, members, or lessees while moving property to or from a covered auto.

Any person or organization held legally responsible for the conduct of an insured described in the policy also qualifies as an insured, but only to the extent of that liability.

Except for the limit of liability, the Business Auto policy applies separately to each insured against whom a claim is made or suit is brought. However, treating each insured separately does not increase the policy’s overall liability limit.

Example

T owns a personal vehicle that is used to deliver pizzas for P’s Pizzeria. T maintains a Personal Auto policy, while the restaurant maintains an unendorsed Business Auto policy that includes Symbol 9—Nonowned Autos Only. T is involved in an accident while making a delivery. Whether T’s Personal Auto policy covers the accident depends on the policy language, the insurer’s interpretation, and applicable state law. Under some standard Personal Auto policies, coverage may apply because courts and insurers have sometimes interpreted business-use and public-or-livery-conveyance exclusions as applying primarily to commercial transportation operations rather than ordinary food-delivery activities. When T’s Personal Auto policy covers the accident, it generally applies as primary insurance.

The restaurant’s Business Auto policy provides more limited protection. Symbol 9 covers an employee-owned auto while it is being used in the restaurant’s business. However, under the standard Section II definition of an insured, T generally does not qualify as an insured while driving an auto T owns. Therefore, the policy may protect the restaurant if it is held vicariously liable for bodily injury or property damage caused by T, but it does not ordinarily protect T against personal liability.

After T’s Personal Auto policy responds, the restaurant’s Business Auto policy generally applies on an excess basis to protect the restaurant’s interests. To extend insured status to T under the Business Auto policy, the restaurant would need to add an appropriate endorsement. This protection may be especially important when T’s Personal Auto policy excludes liability coverage for the delivery use of the vehicle.

Supplementary Payments Coverage Extension

Section II provides the following supplementary payments in addition to the policy’s liability limit. These payments do not reduce the amount available to pay covered damages:

• The cost of bail bonds, up to $2,000, and the cost of bonds required to release attachments
• Court costs assessed against the insured, excluding attorney fees and expenses
• Interest that accrues after a judgment has been entered
• Up to $250 per day for loss of earnings when the insured must miss work to assist with the investigation or defense of a claim or suit
• Other reasonable expenses the insured incurs at the insurer’s request

Out-of-State Coverage Extensions

When a covered auto is operated in another state, the Business Auto policy automatically adjusts its liability coverage to satisfy that state’s compulsory insurance or financial responsibility requirements. This adjustment applies only while the covered auto is being used within that jurisdiction and provides the coverage and limits required by its laws.

Exclusions

Section II excludes liability coverage for certain exposures that are commonly excluded under other automobile and commercial liability policies. These exclusions include the following:

Expected or intended injury or damage	War, insurrection, or rebellion	Organized racing or stunting activity
Contractual liability, though this does not apply to insured contracts or liability the insured would have in absence of the contract	Bodily injury covered by Workers’ Compensation or Employers Liability insurance

Section II also contains additional exclusions that address exposures requiring separate insurance or that fall outside the intended scope of the Business Auto policy.

Fellow Employee

Section II does not cover bodily injury sustained by a fellow employee of the insured when the injury arises during the course of employment or while the fellow employee is performing duties related to the insured’s business.

Care, Custody, or Control

Section II does not cover damage to property the insured owns or transports, or to property otherwise in the insured’s care, custody, or control.

Handling of Property

Section II does not cover bodily injury or property damage arising from the handling of property before it is moved from the location where the insured accepts it for loading into a covered auto or after it has been unloaded at the insured’s final delivery location. These premises-related loading and unloading exposures are generally addressed by the insured’s Commercial General Liability policy.

Movement of Property by Mechanical Device

Section II does not cover bodily injury or property damage arising from the movement of property by a mechanical device unless the device is attached to a covered auto.

Operations

Section II does not cover bodily injury or property damage arising from the operation of mobile equipment, such as a power crane. The exclusion also applies when operating machinery or equipment permanently attached to a vehicle, including a cherry picker, air compressor, pump, or generator. Liability arising from the operation of this equipment is generally covered under a Commercial General Liability policy.

Completed Operations

The Business Auto policy does not cover bodily injury or property damage arising from the insured’s work after the work has been completed or abandoned. This completed operations liability exposure is generally covered under a Commercial General Liability policy.

Pollution

Section II does not cover bodily injury or property damage arising from the discharge, release, or escape of pollutants contained in property the insured transports or handles. However, an exception applies when an accident causes the release of pollutants that are necessary for the normal operation of a covered auto, such as fuel or lubricants. In this situation, the insurer may also pay covered expenses resulting from a governmental demand or order to test for, monitor, clean up, remove, contain, treat, or otherwise respond to the pollutants.

An Insurance Story

An employee of The Furniture Company causes a collision while driving a company van insured under the Business Auto Coverage Form. The accident damages the van’s fuel system, causing gasoline to leak. The policy’s liability coverage would apply to covered bodily injury and property damage claims made by the other driver. Because the fuel was necessary for the normal operation of the covered van and was released as a result of the accident, the policy would also cover qualifying costs to contain and clean up the spilled gasoline.

Limit of Insurance

The most the insurer will pay for the total of all bodily injury damages, property damage damages, and covered pollution costs or expenses resulting from any one accident is the combined single limit of liability shown in the Declarations. This per-accident limit does not increase based on the number of:

• Covered autos
• Insureds
• Premiums paid
• Claims made
• Vehicles involved in the accident

Section III – Physical Damage Coverage

Coverage

Section III provides coverage for direct and accidental loss to a covered auto or its equipment when the loss results from an insured peril. The Business Auto policy offers three physical damage coverage options:

• Collision Coverage applies when a covered auto is damaged by colliding with another object or by overturning.
• Comprehensive Coverage applies on an open-perils basis to direct and accidental loss to a covered auto or its equipment from causes other than collision or overturn. For example, comprehensive coverage includes damage caused by contact with a bird or animal, as well as damage caused by falling objects or missiles.

Specified Causes of Loss Coverage provides physical damage protection only when loss to a covered auto or its equipment results from one of the named perils listed in the policy. These covered causes of loss include:

Fire, lightning, or explosion	Theft	Mischief or vandalism
Windstorm, hail, or earthquake	Flood	Sinking, burning, collision, or derailment of a conveyance transporting a covered auto

Towing

The insurer pays covered towing and labor costs each time a covered private passenger-type auto becomes disabled. To qualify for coverage, the labor must be performed at the location where the auto became disabled.

Glass Breakage

Glass breakage is generally covered under Comprehensive Coverage. However, when the glass damage results from a collision, the insured may choose to have the loss treated as a collision loss instead.

Coverage Extensions

Transportation Expenses

When a covered private passenger-type auto is stolen, the policy pays temporary transportation expenses of up to $20 per day, subject to a maximum total payment of $600. Coverage begins 48 hours after the theft and ends when the covered auto is returned to use or when the insurer pays for the loss.

Loss of Use Expenses

When the insured hires an auto without a driver under a written rental contract or agreement, this coverage extension pays covered loss-of-use expenses charged by the rental company when the hired auto is damaged by a covered cause of loss. The insurer will pay up to $20 per day, subject to a maximum total payment of $600.

Exclusions

Physical Damage Coverage does not apply to loss caused by or resulting from any of the following:

• Nuclear hazard, war, or military action
• Professional or organized racing, demolition contests, or stunt activities
• Freezing
• Wear and tear or mechanical or electrical breakdown
• Blowouts, punctures, or other road damage to tires

Physical Damage Coverage does not apply to loss involving tapes, records, discs, portable electronic equipment such as cell phones, or devices designed to detect radar or laser speed-measuring equipment. However, the exclusion does not apply to equipment that is permanently installed in the covered auto and designed solely to reproduce sound.

Limit of Insurance

For any one accident, the insurer will pay no more than the lesser of:

• The actual cash value of the damaged or stolen property; or
• The cost to repair or replace the property with other property of like kind and quality.

Coverage for loss to permanently installed electrical equipment is subject to a maximum limit of $1,000.

Deductible

The Business Auto Declarations show the deductible that applies to each physical damage coverage selected by the insured. The standard deductible for Collision Coverage, Comprehensive Coverage, and Specified Causes of Loss Coverage is $500, although higher or lower deductible options may be available.

The applicable deductible applies separately to each covered auto involved in a loss. However, the Comprehensive Coverage deductible does not apply to losses caused by fire or lightning.

Section IV – Business Auto Conditions

In addition to the Common Policy Conditions, the Business Auto policy contains additional conditions governing the rights and responsibilities of the insured and the insurer. These conditions also apply to other Commercial Auto coverage forms.

Loss Conditions

As with other commercial insurance policies, the Business Auto policy includes the following conditions:

Appraisal for Physical Damage Loss	Legal Action Against Us	Transfer of Rights of Recovery

Loss Payment

At its option, the insurer may pay for, repair, or replace damaged or stolen property. When the insurer pays for the loss, the payment includes any applicable sales tax. If stolen property is recovered and returned to the insured, the insurer must also pay for damage the property sustained as a result of the theft. The insurer may instead take possession of all or part of the damaged or recovered property at its agreed or appraised value.

Duties in the Event of Loss

In the event of a loss, the insured must fulfill certain duties to help the insurer investigate and process the claim. The insured is required to:

• Provide the insurer with prompt notice of the loss.
• Avoid making voluntary payments, assuming obligations, or incurring expenses without the insurer’s consent.
• Immediately forward copies of all legal papers, notices, demands, or other documents received in connection with a claim or lawsuit.
• Cooperate with the insurer during the investigation, settlement, or defense of the claim.
• Authorize the insurer to obtain relevant medical records and other necessary information.
• Submit to medical examinations as often as reasonably required and, when requested, participate in examinations under oath.
• Promptly report theft losses to the police.
• Take reasonable steps to protect the covered auto from additional damage.
• Allow the insurer to inspect the covered auto and evaluate the damage before repairs are made.

General Conditions

As with other commercial insurance policies, the following conditions establish the rights and responsibilities of both the insured and the insurer:

Bankruptcy	Liberalization	Premium Audit
Concealment, Misrepresentation, or Fraud	No Benefit to Bailee, applicable to physical damage coverage

Other Insurance

For covered autos, the Business Auto Policy (BAP) provides primary insurance when the named insured owns the auto. When the covered auto is not owned by the named insured, the BAP generally provides excess insurance over any other collectible insurance.

For covered trailers, liability coverage is primary when the trailer is connected to a covered auto owned by the named insured. When the trailer is connected to an auto the named insured does not own, the liability coverage generally applies on an excess basis.

When other collectible insurance applies on the same basis—either primary or excess—the insurer will pay only its proportionate share of the loss.

Policy Period, Coverage Territory

Coverage applies to accidents and losses that occur during the policy period and within the coverage territory. The coverage territory includes the United States, its territories and possessions, Puerto Rico, and Canada. Limited worldwide coverage also applies to a covered private passenger auto that is leased, hired, rented, or borrowed outside the standard coverage territory for no more than 30 days. This worldwide coverage applies only when the insured does not hire a driver with the auto.

Two or More Coverage Forms or Policies Issued by Us

If the insurer has issued more than one policy or coverage form that applies to the same accident, the insurer’s total payment will not exceed the highest applicable limit of insurance under any one policy or coverage form.

Section V – Definitions

Under Business Auto coverage, an accident includes continuous or repeated exposure to the same conditions when that exposure results in bodily injury or property damage. A loss means direct and accidental loss of or damage to covered property.

Autos and Mobile Equipment

The Business Auto Coverage Form uses the same definitions of auto and mobile equipment as the Commercial General Liability Coverage Form. An auto includes:

• A land motor vehicle, trailer, or semitrailer designed for travel on public roads.
• Any other land vehicle that is subject to a compulsory insurance law or financial responsibility law.
• Certain self-propelled vehicles with permanently attached equipment, including:
  • Equipment used for snow removal, road maintenance, or street cleaning. Equipment used for road construction or resurfacing is not included.
  • Cherry pickers and similar devices designed to raise or lower workers.
  • Air compressors, pumps, and generators.

The definition of auto does not include mobile equipment. Mobile equipment generally refers to vehicles and equipment designed primarily for specialized work rather than ordinary transportation on public roads. Mobile equipment includes:

• Vehicles designed primarily for use away from public roads.
• Vehicles maintained solely for use on or next to premises owned or rented by the insured.
• Vehicles that travel on crawler treads.
• Vehicles used to provide mobility to permanently mounted equipment, such as:
  • Power cranes, loaders, diggers, and drills.
  • Road construction or resurfacing equipment, including graders, scrapers, and rollers.
• Vehicles that are not self-propelled and are used to carry permanently attached equipment, such as:
  • Cherry pickers and similar devices used to raise or lower workers.
  • Air compressors, pumps, and generators.

Example

Under these definitions, company cars, delivery vans, self-propelled street-cleaning vehicles, and dump trucks are generally classified as autos. Power cranes, bulldozers, farm machinery, forklifts, and backhoes are generally classified as mobile equipment.