Insurance Services Office's (ISO's) Business Auto Coverage (BAC) form protects the named insured (the "you") against the financial consequences of its legal liability for bodily injury or property damaged not excluded by the policy and arising out of the ownership, maintenance or use of a "covered auto." This makes the covered auto symbols the key to the business auto policy. Each symbol grants insured auto status to a different class of vehicle.

Nine pre-defined coverage symbols (1-9) trigger protection to a progressively narrowing definition of insured vehicles. For example, Symbol "1" extends protection to "Any Auto," while Symbol "7" provides coverage for only "Specifically Described Autos." (See the BAP for each symbol's definition.) The ability to add "special instruction" symbols (10, 11, etc) exist beyond the nine specifically defined symbols. A relatively recent edition to the list of covered auto symbols is "19," which extends coverage for "mobile equipment" that, for whatever reason, must be registered for use on public roads.

The agents' goal is (or should be) to use the broadest symbol allowed to extend coverage to the greatest number of vehicle classes (owned, hired or borrowed).

Symbol "1" - Any Auto

"Any," as provided in Symbol "1," contains NO limitations; it means exactly what it says. Regardless of the "auto's" status as owned, non-owned, hired, borrowed or whatever, it is covered. The only limitations on an "Any Auto," auto are the policy exclusions. Essentially, if the named insured (the "You") or "automatic insured" (subject to five exceptions) are held legally liable for injury arising out of the ownership, maintenance or non-excluded use of AN auto, the BAC provides coverage.

Symbol "1" is almost exclusively a liability coverage symbol. It is unlikely to find it used with any other auto policy coverage type (medical payments, uninsured & underinsured motorist or physical damage as examples).

Due to the breadth of insured vehicle status granted by Symbol "1" (owned, non-owned and hired), it should be used to trigger liability coverage whenever possible. However, use of Symbol "1" may not always be appropriate. Specifics of inappropriate Symbol "1" usage are outside the scope of this article, but generally flow from unique risk characteristics of a particular insured.

Equaling Symbol "1"

Beyond the rare cases of inappropriate Symbol "1" usage, there are occasions when underwriters simply will not entertain extending liability protection to "Any Auto." Such refusal might be class-based or due simply to the carrier's underwriting philosophy not to provide Symbol "1."

Accomplishing the goal of providing the broadest definition of insured vehicle without the ability to use Symbol "1" requires a combination of three covered auto symbols: "2" (Owned Autos Only), "8" (Hired Autos) and "9" (Non-Owned Autos). Using Symbols "2," "8" and "9" appear to cover the full range of insured vehicle definitions; but do they? Does 2+8+9=1?

Judging the effectiveness of this option's ability to accomplish the goal, each covered auto symbol requires review.

Descriptions of Symbols "2," "8" and "9"

Each symbol definition contains clues as to this combination's ability to meet the breadth of covered vehicle definition offered by Symbol "1." Following are the applicable definitions found in ISO's Business Auto Coverage Form.

  • Symbol "2" (Owned "Autos" Only): Only those "autos" you own (and for Liability Coverage any "trailers" you don't own while attached to power units you own). This includes those "autos" you acquire ownership of after the policy begins.
  • Symbol "8" (Hired "Autos" Only): Only those "autos" you lease, hire, rent or borrow. This does not include any "auto" you lease, hire, rent, or borrow from any of your "employees", partners (if you are a partnership), members (if you are a limited liability company) or members of their households.
  • Symbol "9" (Nonowned "Autos" Only): Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your "employees", partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs. (Note: Essentially, Symbol "9" extends vicarious liability protection to the named insured (the "you") for bodily injury or property damage to a third party caused by someone operating a covered vehicle on the named insured's behalf or for their benefit.)

Two important terms must be considered when comparing the breadth of inclusion offered by the amalgamation of these three symbols compared to Symbol "1": "You" (the named insured) and "covered auto" (as defined by each symbol above).

Why "You" Matters

Liability insurance forms always extend the greatest amount of protection to the policy's "You" (also known as the named insured); the BAP is no exception. The definitions of Symbols "2," "8" and "9" refer to the policy's "You" where Symbol "1" does not. This is the first clue that these two options are not equal in breadth of protection.

Who "you" is differs based on the insured's legal structure as a sole proprietor, partner, limited liability company (LLC) or corporation as follows:

  • Sole proprietor: The individually named owner is the policy's "you." So the individual must own, hire or borrow the vehicle. For non-owned coverage to apply, the owner of the non-owned vehicle must be doing something to further the proprietor's business.
  • Partnerships: Like sole proprietors, the partners are the "you" of the policy. Essentially the same provisions apply to partnerships as sole proprietors.
  • Limited liability companies (LLC's): The LLC is the named insured (subject to some state laws), but the policy treats the members of the LLC the same as partners.
  • Corporations (any type): The corporation is the "you" in the policy making everyone else "employees;" including the "owner" of the corporation.

These differing assignments of "You" status leads to gaps in coverage when Symbols "2," "8" and "9" are used in place of "1." Symbols "8" and "9" are where the gaps reside.

Symbol "1" - Still the Best

Use of the triune symbol options provide nearly the same breadth of coverage as Symbol "1;" but not completely. At least two coverage gaps keep the "Any Auto" option the preferred choice.

Automobile rental. Symbol "8" does not provide coverage to the named insured (the "you") or the employee if he rents the car in his personal name rather than the business name. Symbol "1" would provide coverage to the named insured but not the employee. However, both gaps can be filled by attachment of CA 20 54 (Employee Hired Autos) which extends coverage to employees who lease autos in their personal name.

Borrowing an employee's car. Symbol "8" specifically states that a car "you" (the named insured) borrow from an employee is not a "hired" vehicle. And Symbol "9" only extends vicarious liability protection to the named insured for the employee's use of their personal vehicle on the named insured's account. Coverage gaps are created when the named insured is a sole proprietor, partner and possibly an LLC. Since these individuals are considered the "you" and the definition specifically excludes coverage for any "your" that borrows an "auto" from an employee (etc.), there is no coverage under the BAP for bodily injury or property damage caused by the use of that borrowed "auto." Symbol "1" contains no such exclusion; the insured entity would still be protected by the policy.

Vicarious Liability

Symbol "9" extends a certain level of vicarious liability to the named insured for the actions of the owners of a non-owned auto. But the "degrees of separation" protected by the use of this symbol are not crystal clear.

Protection extended by Symbol "9" is limited to specifically-defined non-owned autos "used in connection with your business." There exists no definition in the policy for "connection." Does the insured (the "you") have to directly benefit from the use of the vehicle for coverage to apply; or is only a casual, indirect connection required?

Without a clear directive regarding the extent of coverage, this produces a possible third gap between the use of Symbol "1" and the three replacement symbols.

Finish Line

If Symbol "1" is not available for whatever reason, use "2," "8" and "9;" the combination does not completely provide the same breadth of protection, but it is very close. Using multiple symbols to provide auto protection can be compared to trying to create an "all risk" policy (a bad term) by lengthening the list of covered named perils. The two will never provide the same breadth of protection.

(Ending Note: If Symbol "2" is unavailable, try using Symbols "3," "4," "8" and "9." Symbol "3" is owned private passenger autos; and Symbol "4" is owned autos other than private passenger. Essentially 3+4=2.)