Business Auto Coverage Form

What Is a Business Auto Coverage Form?

A business auto coverage form is a form that describes the key elements of a business auto policy (BAP). These policies are a common form of insurance used by companies who operate fleets of company-owned vehicles. The business auto coverage form lays out key information such as which vehicles are covered by the policy, and which legal entities are insured under the policy. It is therefore an important document for insurers and policyholders alike.

How Business Auto Coverage Forms Work

Business auto coverage forms are divided into five core sections. Collectively, they describe the types of vehicles being insured, the causes and types of damages covered by the policy, and the obligations of both the insurer and the insured. As with all insurance contracts, the purpose of the business auto coverage form is to make the terms and conditions of the agreement as clear and complete as possible in order to reduce the risk of any future litigation.

The business auto coverage form includes two types of coverage: auto liability and physical damage. Additional forms of coverage may also be added by using so-called “broadening endorsements,” which are a type of coverage enhancement that can be added to an insurance contract.

By carefully reviewing the business auto coverage form, the policyholder can choose whether or not to ensure different kinds of vehicles, while also modifying the extent of the coverage assigned to each vehicle type. For example, a logistics business that operates large freight trucks might choose to insure those vehicles more extensively than smaller vehicles that are driven less frequently.

Potential policyholders must pay careful attention to the numerical symbols listed in the policy declarations to signal which autos are insured for the various coverages. These symbols, called covered auto designation symbols, include the numbers 1 through 9 plus 19. Each symbol represents a category of covered autos. For instance, symbol 1 means "any auto" while symbol 2 means "owned autos only."

Example of a Business Auto Coverage Form

Marko is the general manager of a mid-size trucking company. With a fleet of 25 trucks, Marko’s employees spend a lot of time on the road, meaning that vehicular accidents are a major potential risk to the business.

To protect against this risk, Marko purchases commercial auto insurance, the terms of which are laid out in the business auto coverage form. On this form, each of Marko’s 25 trucks are identified, giving him the opportunity to specify the level of coverage assignable to each vehicle.

Through the business auto coverage form, Marko can clearly identify what types of risks are covered by the policy, and what the level of coverage would be if such accidents occur. If the standard coverage provided by his insurer is not adequate to meet his company’s needs, he can broaden that coverage by opting to include additional endorsements.