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9 Commercial Auto Classifications Every Business Owner Should Know

February 3, 2013

Insurance companies categorize automobiles into different classifications for insurance rating purposes. The first step in the process is to distinguish between “commercial” and “personal” automobiles. From there, vehicles are further classified by weight, type, use, and other factors adopted by different insurance companies and state laws.

Needless to say, auto policy rating processes are diverse and complicated. However, certain standardized practices have been widely accepted in the insurance industry in order to simplify policy rating for commercial autos.

This week, we would like to discuss nine standard policy classifications known as Covered Auto Symbols.  A numeric system is used to dictate how a commercial auto policy might extend coverage to vehicles in a business’s fleet. This system has become part of the widely accepted ACORD application forms developed by the Association for Cooperative Operations Research, an insurance standards association.

Because you will likely encounter an ACORD application when you shop for commercial auto insurance, knowledge of these classifications is useful in understanding the many coverage options available to businesses operating lots of vehicles.  It is also important because the associated Covered Auto Symbol coverage options become part of the commercial auto policy once the policy is issued.

The nine standard ACORD Covered Auto Symbol classifications are as follows:

Symbol 1 – Any Auto
Means the insurance application will apply to any vehicle used by the business, regardless of ownership. This is the broadest classification of coverage and is not widely used. Usable for: Liability Coverage.

Symbol 2 – All Owned Autos
Means the insurance on the application will apply to all vehicles owned by the business. This level of coverage can be helpful for businesses possessing large fleets that are likely to gain and lose vehicles on a regular basis. Usable for: Liability, Medical Payments, Uninsured Motorist and Physical Damage Coverages (Comprehensive and Collision).

Symbol 3 – Owned Private Passenger Autos
Refers to all “owned private passenger autos.” This is a limited subset of coverage provided by Symbol 2 and is useful for businesses with fleets that include many different types of vehicles. If you want different types of vehicles to be insured differently, you can use Symbol 3 to limit policy coverage to smaller passenger vehicles, as opposed to larger work trucks or other vehicles. Usable for: Same as Symbol 2 plus Towing and Labor Coverage.

Symbol 4 – Owned Autos Other Than Private Passenger
Compliments the subset of Symbol 3. It provides coverage to all vehicles owned by a business except private passenger vehicles. Symbol 4 is meant to cover your larger working vehicles like dump trucks, tow trucks or heavier vans used to transport equipment. Usable for: Same as Symbol 2. No Towing or Labor Coverage.

Symbol 5 – All Owned Autos Which Require No Fault Coverage
Applies only in no-fault insurance states. It is used to supply no-fault coverage to a business’s vehicles that require it under state law. Usable for: No-Fault Coverage or, as it’s called in some states, Personal Injury Protection (PIP) Coverage.

Symbol 6 – Owned Autos Subject to Compulsory Uninsured Motorist Laws
Some states require vehicles to carry a minimum amount of Uninsured Motorist coverage. Symbol 6 is used to extend the necessary Uninsured Motorist insurance to vehicles in those states. Usable for: Uninsured Motorist Coverage.

Symbol 7 – Autos Specified on Schedule
Deals with “autos specified on schedule,” meaning a list of vehicles submitted to the insurance company with the application. If the application is accepted, the commercial auto policy will extend coverage to vehicles specifically listed on the policy. This means any additions to or removals from the fleet must be reported to the insurance company so that the policy can be modified. Symbol 7 is widely used in the insurance industry owing to its versatility and the options it provides business owners in allocating coverage. Usable for: All available coverages.

Symbol 8 – Hired Autos
Extends coverage to any un-owned vehicles a business hires for work purposes. Examples of hired, un-owned vehicles might include taxis, delivery vehicles or catering trucks. Usable for: All policies except Uninsured Motorist.

Symbol 9 – Non-Owned Autos
Extends coverage to non-owned autos. It is commonly used to insure against liability issues that might arise when employees cause an accident driving their own vehicles on company business. Usable for: Liability Coverage.

For more information on Commercial Auto Insurance and other insurance topics of interest to small business owners, subscribe to the Avanti Reader via email or RSS. You can also follow Avanti Business and Insurance Services on Facebook or Twitter (@AvantiInsurance) to receive automatic notification of future posts. Thanks for reading!

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