Commercial auto insurance
Also known as: business auto insurance, business auto coverage form
Commercial auto insurance covers vehicles a business owns, leases, hires, or borrows for work purposes, providing liability and physical damage protection that a personal auto policy excludes. Coverage is defined by numbered symbols that specify exactly which categories of autos are insured.
A personal auto policy is written for individual and family use and generally will not respond to a loss involving a vehicle used in a business. Commercial auto insurance fills that gap. The standard vehicle is the business auto coverage form, with specialized forms for trucking operations and for auto dealers, whose exposures include customer vehicles left in their care.
What distinguishes commercial auto from personal auto is the covered auto symbol system. Rather than listing every vehicle, the declarations assign numbered symbols to each coverage to define the class of autos it applies to: one symbol means any auto, others mean only owned autos, only specifically described autos, only hired autos, or only non-owned autos being used on the business's behalf. The broadest symbol gives liability coverage for any vehicle a business uses, including an employee's own car driven on company business, while a narrow symbol restricts coverage to the vehicles listed on the schedule. Reading the symbols is the first step in determining whether a given loss is covered.
The coverages themselves parallel personal auto. Liability pays for bodily injury and property damage the business becomes legally responsible for. Physical damage divides into collision, comprehensive (referred to as other than collision), and the narrower specified causes of loss option. Medical payments, uninsured and underinsured motorists, and hired and non-owned auto liability round out a typical program. Because business vehicles are driven more, driven by employees, and often carry higher liability exposure, limits are usually written well above personal auto levels, frequently with a combined single limit and with an umbrella policy sitting above.
Property and casualty licensing exams test this material in the casualty section. Both the combined property and casualty exam and the casualty-only exam expect you to identify what the covered auto symbols mean, distinguish hired from non-owned auto coverage, recognize when a personal auto policy would not respond to a business loss, and recall which physical damage option covers which causes of loss.
Key takeaways
- Commercial auto insurance covers vehicles used for business, which a personal auto policy generally excludes.
- Covered auto symbols in the declarations define which categories of vehicles each coverage applies to.
- Hired auto coverage applies to rented or borrowed vehicles; non-owned auto coverage applies to employee vehicles used on company business.
- Physical damage is written as collision, comprehensive, or the narrower specified causes of loss.
- Specialized forms exist for trucking operations and for auto dealers, whose exposures differ from a standard business fleet.