"If there is a sole proprietor with no employees, is there a difference between endorsing their commercial auto policy with hired/non-owned coverage or drive other car? Would there ever be an instance when they would need both?"
Symbols 8 & 9 (hired/nonowned) under the BAP and the DOC endorsement have almost nothing to do with each other. They are two totally different issues with different purposes. We ran this by the VU faculty and got the following explanations:
They are two different things, but you’re better off with the Individual Named Insured endorsement (CA 99 17) than the DOC form and the former is free. Search the VU for “INI vs. DOC” or “individual named insured” for an article on this.
Yes. Hired, non-owned and drive other car are three separate coverages. You could read the forms to educate yourself on what they each do and then reform your question if you still have one.
Assume sole proprietor is Jill Smith.
Situation #1: Jill borrows a friend's car for non-business use.
· Symbol 9 only applies to "...those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business.
· DOC covers.
Situation #2: Jill’s family member rents an auto.
· Symbol 8 only applies to "...those "autos" you lease, hire, rent or borrow."
· DOC covers spouse, kids can be added.
Situation #3: Jill's family member borrows a friend's auto.
· Symbol 9 only applies to "...those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business.
· DOC covers spouse, kids can be added.
Situation #4: DOC can apply to liability, medpay, UM, and physical damage.
There most certainly is a difference between hired/non-owned coverage or drive other car. Let’s break this down….
First, it’s a good idea to become familiar with BAP Symbols and what each Symbol means. In the policy each symbol is listed along with its definition. I recommend you also get the Commercial Auto Program Coverage Guide by Don Malecki, it’s a very worthwhile investment and will help you to under how Business auto policies work!
Symbol 8 Hired Auto is coverage for the business when it leases, hires, rents or borrows a car. Symbol 8 has two parts, liability coverage for these autos and physical damage for these autos.
Symbol 9 NONOWNED Auto is coverage for the business for those autos it does not own, lease, rent or borrow that are used in connection with the named insureds business. Most common examples would be a bookkeeper using his/her personal auto while making deposits or picking up supplies for the business. You say this is a sole proprietor with no employees. The owner could still ask his friend to run an errand or to help in the business by delivering something for the insured. These examples are all non-owned autos being used for the business and as such the business can be sued should these autos be involved in an accident because the autos were being used for the benefit of the business.
The use of hired and nonowned auto coverage has nothing to do with Drive Other Car coverage. Hired and Non Owned auto needs to be added to the business auto policy if the business has exposures to the types of autos listed above.
Now DOC coverage – First off I assume that your Sole Prop businessowner doesn’t have a personal auto policy! If he has a personal auto policy auto then there would be lesser need for DOC coverage because he would have personal auto coverage under his personal auto policy.
DOC coverage is, in general, to grant insurance to a driver of an auto that is NOT owned by either the driver or the named insured. It’s meant for the officer of a corporation that doesn’t have a personal auto policy. Let’s say the officer of the corporation goes on vacation and rents a car in her personal name, DOC would provide liability coverage for the rented auto.
Notice on the above DOC examples I said officer of the corporation? The reason is because when you have a BAP policy written on a sole proprietor and the owner doesn’t have a personal auto policy you actually need to use Individual Named Insured CA 99 17 as the endorsement to get the owner personal auto coverage. This is explained in the Malecki book and I believe there is a VU article on this as well. By reading about these subjects you will start to learn how important they are what exactly what they do!
Not sure I understand the question. You don’t “endorse” the BAP for hired/non-owned coverage. You trigger the liability coverage by using Symbol 1 or Symbols 8 and 9. I’ll have to answer your question by assuming you have a BAP covering owned autos using Symbol 7, and that your question is: What is the difference between hired/non-owned coverage with Symbols 8 and 9 versus Drive Other Car endorsement when the named insured is an individual.
Simple: The DOC covers non-owned vehicles only while they are being “used” by the individual named in the endorsement; presumably in this case, that would be the individual named insured. Symbol 9, on the other hand, would cover the individual named insured (the business owner) for liability arising out of any non-owned auto being used on behalf of the individual’s business, such as an independent contractor’s vehicle.
Going even further than that, I hope you have attached the Individual Named Insured endorsement, which is “free” and even better than the DOC endorsement. If not, at least one of the personally owned vehicles should be insured on a Personal Auto Policy to derive all the benefits provided on the PAP with regard to non-owned autos.
A lot of agents think of Non-Owned Auto Liability as an employee-related coverage. It’s not. Although it covers the situation where employees use their personal cars on company business, it also covers the situation where non-employees use their vehicles on behalf of the company. Check the usual places for examples. DOC is a whole different question—needing it or not needing it has no relationship to the need for non-owned/hired auto liability. The very best answer for every client is a BAP covering “any auto” (Symbol 1) for liability.
The coverages are not the same. Symbol 8 - hired, borrowed, etc. provides coverage for vehicles that are not owned but are hired, borrowed, etc. by the insured. Non-owned - Symbol 9 - provides coverage for the insured If they are held responsible for actions of others driving vehicles on behalf of the business. These others may be employees but non-owned is not specific to only employees driving their own vehicles on behalf of their employer. The DOC provides coverage for the individual and their resident spouse driving a vehicle not owned, hired or borrowed by the named insured. Since this is a sole proprietor, the DOC is not appropriate…the endorsement that should be added is the Individual Named Insured (INI) endorsement to provide PAP equivalent coverage.
A sole proprietor would normally have the CA 99 17 Individual Named Insured endorsement included, if there were an owned auto covered by the policy. The Individual Named Insured takes the place of the Drive Other Car Coverage – Broadened Coverage For Named Individuals on CA 99 10.
The main BAP, however, should still have Symbol 1 coverage if it is available, or Symbols 2, 8, and 9 as the next-best alternative. Symbol 9 is entirely different from what would be covered by either the CA 99 10 or the CA 99 17, because it provides entity protection for autos you don’t own or operate that are used in your business, such as the truck driven by the roofing company you hire to fix your business roof. Symbol 8, which is hired, leased, rented or borrowed autos, differs also from what is provided by either CA 99 10 or CA 99 17.
Since this is a sole proprietorship, think of hiring an auto for your business, and letting either an employee or another permissive used operate the auto. If an accident were to happen, the liability would come up to the sole proprietor, but if the sole proprietor were not operating that auto, the CA 99 10 or CA 99 17 would not respond in any way to the accident. You need the right tools for the job, and a fully featured BAP will protect the sole proprietor, but you need to have all the pieces in place.
Last Updated: May 7, 2015