Business Automobile Policy (BAP)

What Is a Business Automobile Policy (BAP)?

A business automobile policy (BAP) provides coverage for a company's use of cars, trucks, vans, and other vehicles in the course of carrying out its business. Coverage may include vehicles owned or leased by the company, hired by the company, or employee-owned vehicles used for business purposes. A BAP covers both liability and damage. A business automobile policy is also known as a business auto coverage form (BACF).

Understanding a Business Automobile Policy (BAP)

A business automobile policy provides coverage for any company use vehicle which drives on public roads. BAP coverage is chosen individually for each vehicle insured, and different transports owned by the same company may carry different amounts and types of coverage.

Businesses should get a business automobile policy even if they do not own vehicles if at any time they may use personal vehicles for business purposes. This coverage is vital in the cases of employees who use their private cars for conducting business duties. In the situation of a severe accident, the employee may not have enough liability coverage to protect the business adequately.

Agents will use the business auto coverage form to create the policy for the business owner. A business coverage policy will identify the number and type of vehicle insured, the causes of and types of damage covered, and the obligations of the insurance provider and the business. 

BAPs cover injuries or property damage sustained in any vehicular accident as well as any costs associated with repairing the damage to the vehicle. Managers should not rely on personal auto insurance as those typically do not cover any damages done in the course of business.

The BAP usually consists of five sections, which are (1) covered autos, (2) liability coverage, (3) physical damage coverage, (4) business auto conditions, and (5) business definitions.

Policyholders should pay careful attention to the numerical symbols listed in the policy declarations, which indicate the autos insured for each various coverage. 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."

Coverage Available in Business Automobile Policies (BAPs)

BAP coverage should include both property damage and liability insurance. Also, in cases where the vehicle is a lease, or the company is making regular payments, specific levels of coverage may be necessary.