Deciphering Commercial Auto Policy Symbols

Colored numbers flying through the air
Image courtesy of [Frank Ramspott] / Getty Images.

Most commercial auto policies, including the standard ISO auto policy, utilize a set of numbers to designate the types of autos that are covered. These numbers are called covered auto designation symbols. This article will explain what the numbers mean.

Importance

The numeric symbols are important because they are a key factor in determining whether a claim is covered. An auto claim is covered only if the following criteria are satisfied:

  • The claim results from an auto accident that occurred during the policy period and in the coverage territory. In the loss scenarios described below, we'll assume these conditions have been satisfied.
  • The auto that caused the accident (in a liability claim) or that was damaged (in a physical damage claim) qualifies as a covered auto based on the symbols shown in the declarations.
  • The party responsible for the accident (in a liability claim) or the vehicle owner (in a physical damage claim) qualifies as an insured under the policy.

Covered Auto Designation Symbols

The covered auto designation symbols include the numbers 1 through 9 and 19. Each numeric symbol represents a specific category of autos, such as "owned autos" or "hired autos." Your policy should include a section that explains the meaning of each symbol. This section usually appears on page 1 of the Business Auto Coverage Form. The meaning of each symbol is explained below.

Symbol 1

Of the available 10 symbols, symbol 1 affords the broadest level of coverage. Symbol 1 designates any auto, which includes all of the following:

  • autos you own
  • autos you hire, rent, lease or borrow
  • autos you don't own (non-owned autos)

Note that Symbol 1 is used only to trigger auto liability coverage.

It cannot be used to initiate any other type of coverage. The following examples demonstrate how this symbol works.

Example 1: You, Jack Jones, are the sole owner of a consulting business. You have purchased a commercial auto policy that shows symbol 1 (any auto) for liability coverage. Your company is a corporation, and both you and your business (Jones Inc.) are named insureds on your policy.  One day you are driving a vehicle owned by your company when you inadvertently rear-end another vehicle. The driver of that vehicle is injured and sues you (Jack Jones) for bodily injury. Are you covered for the suit under your policy?

Under the standard commercial auto policy, you (the named insured) are an insured for any covered auto. Symbol 1 designates any auto. At the time of the accident you (Jack Jones) were driving an owned auto. Any auto includes autos owned by a named insured. Because you are an insured, and you were driving a covered auto when the accident occurred, the suit against you is covered.

Example 2 Steve, one of your employees, is running an errand for your company in his personal vehicle when he accidentally sideswipes another auto. The driver of the other vehicle is injured in the accident and sues both your company (Jones Inc.) and Steve for negligence.

Symbol 1 appears next to liability coverage in the commercial auto declarations. As a named insured, Jones Inc. is an insured for accidents involving any covered auto. Steve's vehicle is considered a non-owned auto since it is not owned by you or your company. Any auto includes a non-owned auto. Thus, the vehicle is a covered auto, and the suit against Jones Inc. is covered.

What about Steve? Unfortunately, he is not an insured. Employees are insureds under a commercial auto policy only while driving vehicles owned, hired or borrowed by a named insured. At the time of the accident, Steve was driving a vehicle owned by him personally.

Thus, the claim against him is not covered by your policy.

Symbols 2, 3 and 4

The next three symbols designate owned autos. Symbol 2 triggers coverage for all autos you own. These include both private passenger type autos and commercial vehicles (trucks). Symbol 3 designates private passenger autos only. Symbol 4 triggers coverage for commercial vehicles only.

Symbols 2, 3 and 4 afford automatic coverage for autos you acquire during the policy period. Symbols 2 and 4 automatically afford liability coverage for any trailer you don't own that is attached to a car or truck that you do own.

Symbols 5 and 6

These symbols apply to specific coverages. Symbol 5 is used to provide no-fault coverage for autos you own, when such coverage is required by law. Symbol 6 is used to trigger uninsured motorist coverage for autos you own. This symbol is used only when you are required by law to purchase, and cannot reject, UM coverage.

Symbol 7

Of the 10 available symbols, symbol 7 is the most restrictive. It covers only those vehicles described in the declarations. If symbol 7 is listed for any coverage, that coverage applies only to vehicles scheduled on the policy.

Symbol 7 provides very limited coverage for vehicles you acquire after the policy inception date. Any new vehicle is covered only for coverages that are included on all autos you own.

For example, suppose that you own two autos, both of which are covered for liability and comprehensive coverages. You acquire a new auto during the policy period. All autos you own are covered for liability and comprehensive coverages, so your new auto will be insured for those coverages as well. However, your new vehicle will be afforded these coverages for 30 days only. If you want to insure your new vehicle for liability or physical damage beyond the 30-day period, you must report the new auto to your insurer. You must also pay the applicable premium.

What if the new auto replaces a vehicle you previously owned? In that event, the new vehicle will be provided the same coverages that applied to the previous vehicle. These coverages will expire in 30 days unless you report the new vehicle to your insurer.

As a general rule, you should avoid purchasing a policy that includes symbol 7. Nevertheless, this symbol may be appropriate if you own autos that are insured under another policy. For instance, suppose you own three pickup trucks. You have insured one truck that you use in your business under a commercial auto policy. You lease the other two trucks to another company. Those pickups are insured for liability under the lessee's auto policy, and you don't want to insure them under your policy. Thus, your policy includes Symbol 7 for liability.

Symbol 8

Symbol 8 designates hired autos. This term includes vehicles you hire, rent, lease or borrow. Symbol 8 does not cover any vehicle you hire, rent, lease or borrow from any of your employees, partners or members (if you are a limited liability company) or any members of their households. Symbol 8 may be used to insure hired autos for liability or physical damage coverage.

Symbol 9

Symbol 9 is used to cover non-owned autos. Non-owned autos are vehicles you use in your business but do not own, hire, rent, lease or borrow. Examples are vehicles that are owned by your employees or partners and used in your business.

Symbol 19

Finally, symbol 19 designates mobile equipment that is subject to a compulsory or financial responsibility law. This symbol is rarely needed. Under a commercial auto policy, mobile equipment (such as a bulldozer or forklift) that you are required by law to insure for liability is considered an auto while it is being driven on a public road. Such a vehicle can be covered via any symbol that triggers coverage for commercial autos you own. Examples are symbols 2 and 4.

Symbol 19 may be used if you acquire mobile equipment during the policy period, the vehicle must be insured for liability, and none of the existing symbols are appropriate. For example, suppose that you purchase a commercial auto policy that covers only hired and non-owned autos. Two months after your policy begins you buy a forklift that you are required by law to insure for liability. Symbols 8 and 9 do not apply to owned autos. Thus, symbol 19 can be added to your policy to trigger liability coverage for your forklift when it is driven on a public road.

Premium Audit

Commercial auto policies are subject to an audit that is conducted at the end of the policy period. If your policy includes symbols that provide automatic coverage for new vehicles, you don't have to notify your insurer each time you acquire a vehicle.

For instance, suppose that your policy shows symbol 1 for liability and symbol 2 for physical damage. If you acquire a new auto, you need not notify your insurer. Rather, you should submit a report at the end of the policy period that lists the vehicles you owned when the policy began, and the autos you acquired during the policy period. Your insurer will calculate your final premium based on the report.