During my 28+ years assisting agents on behalf of the Big “I” state and national associations, one of the most common coverage questions involved insuring personally owned autos on a business auto policy, specifically the ISO BAP. If you are a Big “I” member, go to their Virtual University and search for “personally owned” for several articles. In particular, you’ll find this one which I made public so that a password is not required:
This article gives several different scenarios involving requests to insure personal owned autos on a business’s BAP. Most often, this involves a corporate officer who uses his or her personal auto predominantly for business or a business owner who, for tax or premium reasons, wants to pursue insuring vehicles owned by him or her, spouses, and even children.
Probably the craziest one I’ve come across was an Alabama business owner who wanted to personally lease an auto that his daughter’s college boyfriend could use while working in Atlanta for the summer and insure the exposure on his business auto policy.
Most often, the business owner is trying to save a few dollars in taxes or insurance premiums, including owners who are quite wealthy. This is being pennywise and pound foolish. The most important criterion is what approach provides the best coverage.
It is possible, via endorsement(s), to cover many of these situations on an ISO BAP, but not all carriers use pure ISO forms, so you might very well find coverage loopholes in proprietary forms. One endorsement often used is the ISO CA 99 47 – Employee As Lessor but it may not be sufficient in all situations or the insured could be in a state that does not allow an individual to lease an auto to others without proper credentialed certification. So, here is a suggestion:
ALWAYS ask about auto ownership. If the auto is personally owned, especially if there are other family members who might drive it, insure it on an ISO (or better) PAP. IF the auto is owned by the business, insure it on an ISO (or better) BAP.
Overall, the ISO PAP provides better coverage than the ISO BAP. It also removes any doubt as to underlying coverage if there is (and should be) a personal umbrella policy in place. I strongly encourage you to read the article linked above and, if you are a Big “I” member, to search the VU for related articles, including “Individually Owned Auto Added to BAP” (password needed…if you don’t have one, email firstname.lastname@example.org).
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