Business Auto Policy (BAP) Overview
Commercial Auto Coverage for Business Use
The Business Auto Policy (BAP) provides liability and physical damage coverage for vehicles used in business operations. It's similar to the PAP but designed for commercial use.
Key Difference from PAP:
BAP uses numbered symbols to designate which vehicles are covered. The PAP covers specific vehicles by description; the BAP uses a flexible symbol system.
Covered Auto Designation Symbols
The Heart of the BAP
Symbols 1-9 determine WHICH autos are covered. Different symbols can be selected for different coverages (liability vs physical damage).
Any Auto
Broadest coverage - covers ANY auto, including owned, hired, nonowned, and borrowed
Owned Autos Only
Only autos YOU own (includes newly acquired autos)
Owned Private Passenger Autos Only
Only owned private passenger-type autos
Owned Autos Other Than Private Passenger
Only owned autos that are NOT private passenger (trucks, vans, etc.)
Owned Autos Subject to No-Fault
Only owned autos required to have Personal Injury Protection (PIP)
Owned Autos Subject to Compulsory UM Law
Only owned autos required to have uninsured motorist coverage
Specifically Described Autos
Only specific vehicles listed in the declarations
Hired Autos Only
Only autos you lease, hire, rent, or borrow (NOT from employees or family)
Nonowned Autos Only
Only autos you don't own, hire, or borrow that are used in your business (includes employee-owned vehicles used for business)
Exam Tip: Memorize Symbols 1, 7, 8, 9
- 1 = ANY Auto (broadest)
- 7 = Specifically Described (narrowest)
- 8 = Hired (rented/leased from non-employees)
- 9 = Nonowned (includes employee cars)
Symbol Quick Reference
| Symbol | Description | Best For |
|---|---|---|
| 1 | Any Auto | Maximum liability protection |
| 2 | Owned Autos Only | Small fleets, known vehicles |
| 7 | Specifically Described Autos | Listed vehicles only |
| 8 | Hired Autos | Rentals, borrowed vehicles |
| 9 | Nonowned Autos | Employee personal cars |
Proper Symbol Combinations
CORRECT: Different Symbols for Different Coverages
It's common and PROPER to use different symbols for liability vs physical damage:
Symbol 1 (Any Auto) for Liability
Broadest protection - covers liability from ANY auto used in your business
Symbol 2 (Owned Autos Only) for Physical Damage
Covers damage to YOUR owned vehicles only (saves premium on hired/nonowned)
Why This Works: You want broad liability protection (Symbol 1) but only need physical damage coverage on vehicles you own (Symbol 2). This is a smart, cost-effective approach.
Watch Out: Coverage Gaps
PROBLEM: Wrong Symbol Creates Gap
The Setup:
- - Business has Symbol 2 (Owned Autos Only) for Liability
- - Employee rents a car for a business trip
- - Employee causes accident while driving rental car
The Problem:
NO COVERAGE - The rental car is not an "owned auto" so Symbol 2 doesn't cover it!
The Solution:
Should have used Symbol 1 (Any Auto) or Symbol 8 (Hired Autos) for liability coverage
BAP Coverages
Liability Coverage
Covers BI and PD you become legally obligated to pay because of an accident arising out of a covered auto.
Physical Damage
Collision and Comprehensive (same as PAP Part D) for covered autos.
Medical Payments
Pays medical expenses for occupants of covered autos (optional).
Uninsured/Underinsured Motorist
Protects against at-fault drivers without adequate insurance (optional/required by state).
Who Is an Insured Under BAP Liability?
1. The Named Insured
For any covered auto
2. Permissive Users
Anyone using a covered auto you own, hire, or borrow with your permission
3. Anyone Liable for Covered Person's Conduct
Anyone legally responsible for the acts of insureds described above (vicarious liability)
Employees as Insureds
Employees are insureds while using a covered auto you own, hire, or borrow in your business. They're also covered for autos they don't own if using them in your business.
Loading and Unloading
Definition of "Use" Includes Loading/Unloading
The BAP defines "use" of a covered auto to include loading and unloading.
Example: An employee drops a heavy box while unloading a delivery truck, injuring a customer. This is covered under BAP liability because loading/unloading is part of "use."
Exam Trap Alerts
Symbol 1 = Any Auto: This is the broadest coverage. Everything is covered.
Symbol 8 vs 9: Hired (8) = rented from non-employees. Nonowned (9) = includes employee vehicles used for business.
Loading/unloading: Included in the definition of "use" - injuries during loading/unloading are covered.
Employees are insureds: When using covered autos in your business.