Restoration Insurance: Why is "symbol 1" important?
What are “covered auto symbols” on a commercial auto policy (BAP)?
Covered auto symbols allow you to customize the extent that coverage is extended to you, your vehicle, and third parties. The symbol may pertain to either a kind of vehicle (i.e. private passenger) and/or the vehicle’s ownership status (i.e. owned, hired, etc.).
The applicable symbols are numbered 1 through 9, and are found on the declarations page of your business automobile insurance policy corresponding to applicable coverage areas such as liability, uninsured motorist, medical payments, etc.
Symbol 1 – Any auto
Symbol 2 – Owned autos only
Symbol 3 – Owned private passenger autos
Symbol 4 – Owned autos other than private passenger autos
Symbol 5 – Owned autos subject to no-fault benefits
Symbol 6 – Owned autos subject to compulsory uninsured motorists law
Symbol 7 – Specifically described autos only
Symbol 8 – Hired autos (leased, hired, rented, or borrowed)
Symbol 9 – Non-owned autos (owned by employee or partners of the insured)
This article will focus on liability coverage and why symbol 1 is the best possible choice.
Why should you choose symbol 1 for liability coverage on a commercial auto insurance policy?
Symbol 1 provides coverage to any auto that is owned, hired, borrowed, or otherwise utilized by the named insured. Each of the other symbols that can be applied on your business auto policy is limited to certain types of covered autos. For example, symbol 7, another commonly used symbol for liability, provides coverage only for specifically described autos. In other words, only autos that are documented with the insurance carrier will be covered under the policy. But what happens when you purchase a new vehicle? While some policies provide a 30-day grace period of coverage to give time for the insured to report newly acquired autos, some do not. If the insured fails to report the purchase of the new auto to the carrier and an accident occurs, the insured would not be covered. Symbol 1 does not have this limitation. Any auto that the insured acquires during the policy period is automatically covered without reporting to the insurance company.
Because of the breadth of symbol 1 coverage, it can offer peace of mind to the insured who can be assured that even as their fleet of vehicles grows or their auto usage changes they have coverage through their business auto insurance policy.
Can a combination of other symbols be as effective?
A common alternative to Symbol 1 on your auto commercial insurance is a combination of Symbol’s 7, 8 and 9. The benefit of this combination is potentially lower premiums due to coverage extending only to specifically described, hired, and non-owned autos, rather than any auto. This may seem to add up to similar coverage at a lower price however there are a few gaps and other concerns.
First, as described above, newly acquired vehicles need to be reported on a timely basis to the insurance carrier. Failure to report new autos to have them added to your policy would leave the insured with an uncovered exposure.
Second, Symbol 8 does not provide coverage to the named insured if he/she rents the car in his/her personal name rather than the business name, a common mistake. Symbol 8 also specifically states that an employee car borrowed by the named insured is not considered a “hired” vehicle.
Third, Symbol 9 only extends liability protection to the named insured for the employee’s use of their personal vehicle on the named insured’s behalf. Coverage gaps appear when the named insured is a sole proprietor, partner or an LLC. Since these individuals are considered to be the insured and the definition excludes coverage for any insured that borrows an “auto” from an employee, there is no liability coverage under the business automobile policy. Symbol “1” does not have this exclusion.
And finally, Symbol 9 extends coverage to specifically defined non-owned autos “used in connection with your business.” Without a clear definition for what a “connection” entails, this coverage is debatable.