Business Auto Policy Covered Auto Designation Symbols

Illinois, Arizona, Louisiana, and Vermont have expanded uninsured motorist/underinsured motorist (UM/UIM) coverage to hired and nonowned autos. This influences which covered auto designations should be used.

A subscriber recently posed a question asking what is the correct way in the business auto policy (BAP) to indicate uninsured motorist/underinsured motorist (UM/UIM) bodily injury coverage for hired and nonowned autos in Illinois? Since 2002, as the result of the appellate court decision of Harrington v. American Family Mut. Ins. Co., 332 Ill. App. 3d 385, 773 N.E.2d 98 (2002), Illinois hired and nonowned autos became subject to a compulsory UM law (Arizona, Indiana, Louisiana, and Vermont have similar laws).

Normally, symbol 6 (owned autos subject to a compulsory UM law) is the usual symbol used to denote compulsory UM coverage. However, using symbol 6 presents a twofold "problem": first, symbol 6 applies only to autos the named insured owns or acquires, and, second, symbols 8 (hired autos only) and 9 (nonowned autos only) were not contemplated by Insurance Services Office, Inc., for use with UM/UIM.

However, with the evolution of UM/UIM statutes and case law over the years, UM/UIM coverage is much broader today than when it was initially conceived. It was not originally anticipated that there would be a need for designating hired autos and nonowned autos as covered autos for UM/UIM motorists.

As stated earlier, several states have expanded UM/UIM coverage to hired and nonowned autos. Arizona and Louisiana, for example, require UM/UIM bodily injury coverage for hired and nonowned autos if they are covered for liability coverage under the policy unless it is rejected for all covered autos. Using a combination of symbols 8 (hired autos only) and 9 (nonowned autos only), together with symbol 6, is the correct approach for Illinois, and a combination of symbols 2 (owned autos only), 8, and 9 would be appropriate for Arizona and Louisiana.

Look for more discussion of these matters, especially as respects no-fault coverage, in upcoming supplements to Commercial Auto Insurance.