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Business Automobile Policy (BAP) Definition & Overview

Updated: February 6, 2023

A business automobile policy will reimburse you for any business-related expenses you incur. So, don’t worry about extra costs such as mileage and parking fees. These are all covered.

But, what if you’re not sure if you need a business automobile policy? Don’t worry. Here’s a guide to help you understand the ins and outs of business automobile policies, and if you need one.

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    • Your business may need commercial auto insurance if it uses vehicles.
    • Your company can get sued for any injuries or property damage alleged to have been from an auto accident.
    • Business owners should not rely on personal insurance to protect vehicles used for business purposes.

    What Is Business Automobile Policy?

    Your business may need commercial auto insurance if it uses vehicles. Your company’s auto policy covers financial losses resulting from an auto accident. Your company can get sued for any injuries or property damage alleged to have been from an auto accident. It also covers the costs of repairing physical damage to your vehicles.

    Business owners should not rely on personal insurance to protect vehicles used for business purposes. Personal policies cover people and their families, not businesses. Most policies have exclusions that exclude coverage for many business-related risks.

    Policy declarations are important to learn. You want to be certain about what your coverage for autos entails. Do you need liability insurance? Or should you opt for comprehensive coverage? 

    Your coverage for autos will likely depend on your business model. You might need additional coverage for employees. Or you may need an at-fault coverage insurance policy.

    If you already have commercial auto coverage, it may need to be updated to comply with any recent changes. You can make coverage amendments if this is the case. So be sure to speak with your insurance company.

    With the right plan, you can be sure to have coverage on losses incurred. Your level of coverage is vital to your financial health. The wrong types of coverage could result in you paying out of pocket for damages.

    You want every insured business driver on your team safe when driving. Your insured drivers will feel more confident on the road. And you can be sure to protect your company at the same time.

    If there is a bodily injury and you need to file an auto liability claim, you can trust that you’re covered. 

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    How Does BAP Work?

    Many auto insurance companies offer policies based on the standard forms published by ISO. The Business Auto Policy (BAP) is the ISO commercial auto policy. The BAP can be for many ways. The BAP can be used to cover many different types of businesses in a variety of industries. The BAP usually consists of the business auto coverage form, declarations, and endorsements.

    Some insurances issue policies using proprietary auto forms that they have developed rather than ISO forms. Some use both ISOforms and their own endorsements.

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    What’s Covered?

    Section I describes the meaning of “covered automobiles.” One or more numeric symbols indicate which types of autos are covered. These symbols are covered automobile designation symbols.

    It’s important to understand covered auto designation symbols. The broad coverage can be hard to learn in one sitting. But take the time to understand the basic auto coverage form to ensure a good understanding.

    This BAP uses the numbers 1 through 9. Each number is a type of covered auto. For example, symbol 2 denotes “owned auto only,” while symbol 3 denotes “private passenger cars only.”

    Section II offers commercial auto insurance. This covers third-party damages resulting from accidents involving vehicles used by your business. These claims can be extremely costly.

    Your business should have liability coverage in case it uses vehicles owned by others. Your business exposure to risks from employee-owned and rental vehicles.

    Your company may be responsible for injuries suffered by third parties if a rental vehicle or employee-owned car is in an accident.


    Business automobile policies are unique for businesses. Especially for those who operate in the field of business. Whether you’re a sole proprietor or a large company, you need to make sure you’re covered by a business automobile policy.

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    Frequently Asked Questions about BAP

    Can anyone drive business insurance?

    It doesn’t matter if you own a small or large business. Allowing others to drive the company’s vehicles is dangerous. When an employer permits them to drive, most commercial auto insurance does not cover spouses, friends, or other family members.

    What does contractually liable mean?

    Contractual liability refers to the financial consequences of liability. Not the assumption by the indemnitee of its liability. Contracts often contain a common clause. This states that one party will hold the other party harmless for any injuries or accidents that may occur during the contract’s term.

    Can I use my business vehicle for personal use?

    All company cars are considered personal use under IRS rules unless an employee records the business use. The employee is generally liable for taxable wages if they use a company vehicle for personal purposes.

    Who is not covered under a business auto policy?

    Your auto policy does not cover claims made by employees against your business for injuries suffered on the job. These claims are not covered by your workers’ compensation policy’s Employers Liability section.

    Can a named driver use a car for business?

    Your vehicle can be used occasionally by any named driver. They shouldn’t be the primary driver or use the car regularly, such as to drive to work. Fronting is when someone is listed as an additional driver but has the main use of a car.


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