Understanding Auto Insurance: Decoding The Significance Of Symbol 7

Auto insurance policies use symbols to indicate the type of vehicle covered by the applicable liability or physical damage limit. Symbol 7, also known as Scheduled Vehicles, means that only the autos specifically listed or scheduled on the policy are covered. This means that if a vehicle is not listed on the policy, any claims arising from an accident involving that vehicle will be denied.

Symbol 7 means 'specifically described autos'

Symbol 7 on an auto insurance policy refers to "specifically described autos". This means that only the vehicles specifically listed on the policy are covered. This includes any trailers towed by a listed vehicle. Symbol 7 coverage is extended to a vehicle that the insured acquires after the policy begins if the insurer already insures all vehicles owned by the insured, or if the new vehicle replaces one that was previously covered. The insured must request this coverage within 30 days of acquiring the new vehicle. Symbol 7 also covers non-owned trailers or semi-trailers while they are attached to any power unit described in the declarations.

Symbol 7 is often used for liability coverage. It is one of the most commonly used symbols for this purpose, along with Symbols 1, 8 and 9. Symbol 7 is particularly relevant for certain industries with specific vehicle requirements and frequent use of independent contractors, such as trucking, couriers, ambulance services and public livery exposures.

The use of Symbol 7 can present challenges if new vehicles are not reported to the insurance company in a timely manner. If the insured fails to report a new vehicle within the policy's reporting window, usually 30 days, they could have an uncovered loss with that vehicle. This is a significant consideration for businesses with growing or changing fleets, as Symbol 7 does not provide the same level of flexibility as Symbol 1, which covers any auto.

It is important to note that the specific definitions and applications of these symbols may vary among different insurance companies and policies. Therefore, it is crucial to carefully review the terms and conditions of your specific auto insurance policy to fully understand the extent of your coverage.

It only covers autos that are listed on the policy

Symbol 7 on an auto liability policy means that only the autos scheduled on the policy are covered. This means that only the "autos" and trailers listed on the policy are covered. This is in contrast to Symbol 1, which covers "any auto", or Symbol 8, which covers autos that are leased, hired, rented, or borrowed.

With Symbol 7, if the insured fails to report a new vehicle within the policy's reporting window—usually 30 days—or if the insured borrows or hires a vehicle, they could have an uncovered loss with that vehicle. This means that the insured would be responsible for any damages or losses incurred while driving the new or borrowed vehicle.

There are certain industries where Symbol 7-only coverage is the norm, such as trucking, couriers, ambulance services, and public livery exposures. This is usually due to federal filing requirements and the frequent use of independent contractors in these industries.

It's important to understand the symbols and language on your auto insurance policy to know how you're protected. Symbol 7 means that only the specific autos and trailers listed on the policy are covered, so it's important to keep your policy up-to-date and ensure that all vehicles you drive are listed to avoid any uncovered losses.

It is not desirable to risk managers, insurance agents and brokers

Risk managers, insurance agents, and brokers should be aware that Symbol 7 on auto liability policies is not desirable. This is because Symbol 7 means that only the vehicles explicitly listed on the policy are covered. This can lead to issues if the insured fails to report a new vehicle within the policy's reporting window, which is typically 30 days. If the insured borrows or rents a vehicle that is not listed on the policy, they may not be covered in the event of a loss. This can result in significant financial exposure for both the insured and the agent or broker.

To illustrate this, consider a scenario where an employee of a company with Symbol 7 coverage rents a car in their personal name and subsequently causes severe injury to a third party. In this case, the injured party's legal representative would likely sue the rental agency, the employee, and the employer. While the rental agency's insurance and the employee's personal auto policy would respond, the employer would be the only uninsured party, potentially facing substantial financial consequences.

Furthermore, Symbol 7 coverage can also lead to errors and omissions (E&O) exposure for the agency or broker. If Symbol 1 or other alternative coverages, such as Symbol 8 (hired autos) or Symbol 9 (non-owned autos), are available and not offered to the client, the agent or broker may face E&O issues. It is essential for agents and brokers to identify these exposures and offer their clients appropriate coverage options to mitigate potential risks.

Additionally, Symbol 7 coverage may not be suitable for businesses with a dynamic vehicle fleet. If a company frequently acquires new vehicles, the process of reporting each new vehicle within the policy's reporting window can be cumbersome and prone to errors. Symbol 1 coverage, which provides protection for any auto, can be a more comprehensive and convenient alternative in such cases.

In conclusion, risk managers, insurance agents, and brokers should be cautious about relying solely on Symbol 7 coverage. While it may be suitable for certain industries with specific requirements, such as trucking or ambulance services, it can lead to financial exposures and legal complications for both the insured and the agent or broker. Offering alternative coverages, such as Symbol 1 or a combination of Symbols 7, 8, and 9, can provide more comprehensive protection and reduce potential risks.

It is the most common type of coverage purchased for business auto

Auto insurance policies can be confusing, and business auto insurance is no exception. Business owners often want certain vehicles protected differently from others, and understanding how coverage is adjusted is key to understanding a business auto insurance policy.

Business auto insurance policies use symbols to identify which vehicles receive which types of coverages. These symbols are called covered auto designation symbols, and they represent the type of vehicle that is protected by the applicable liability or physical damage insurance limit. The symbols are numbered, and the most common types of coverage are represented by the numbers 1 through 9.

Symbol 7 is another commonly used symbol for liability coverage. It provides coverage only for specifically described autos. In other words, only autos that are documented with the insurance carrier will be covered under the policy. This means that if a business purchases a new vehicle, it must be reported to the insurance carrier within the policy's reporting window, usually 30 days, for it to be covered.

While Symbol 7 is a common choice for liability coverage, it is important to note that it may not be the best option for all businesses. If a business frequently acquires new vehicles, Symbol 1 may be a better choice as it provides coverage for any auto, including those acquired after the policy begins. Additionally, Symbol 7 does not cover vehicles rented by the insured in their personal name rather than the business name, which is a common mistake.

Despite these considerations, Symbol 7 is still the most common type of coverage purchased for business auto insurance. This is because, in certain industries, Symbol 7-only coverage is the norm. These industries include trucking, couriers, ambulance services, and public livery exposures. The reasons for this norm vary but are usually due to federal filing requirements and the frequent use of independent contractors.

It is not usually chosen by insurance companies

Symbol 7 auto insurance is not usually chosen by insurance companies because it presents a large errors and omissions (E&O) exposure for the agency or broker. If an agent or broker fails to offer Symbol 1, or Symbols 7, 8, or 9 as options to the client, E&O problems may arise.

Symbol 7 is not a desirable option for insurance companies because it only covers autos that are specifically listed on the policy. This means that if the insured fails to report a new vehicle within the policy's reporting window—usually 30 days—or if they borrow or hire a vehicle, they may not be covered in the event of an accident with that vehicle. This can result in uncovered losses for the insured and potential financial liabilities for the insurance company.

Additionally, Symbol 7 policies are more common in certain industries, such as trucking, couriers, ambulance services, and public livery exposures. These industries often have federal filing requirements and frequently use independent contractors, which can expand the exposures under an auto policy.

Insurance companies prefer to offer Symbol 1, which is the broadest coverage option and includes scheduled, hired, and non-owned autos, providing more comprehensive protection for the insured. While Symbol 7 can result in lower premiums due to its limited coverage, it has several gaps and concerns that make it less favourable for insurance companies. For example, newly acquired vehicles must be reported promptly, and Symbol 7 does not cover rented vehicles under the insured's personal name or those borrowed from employees.

In summary, Symbol 7 auto insurance is not typically chosen by insurance companies due to the increased risk and exposure associated with its limited coverage. Insurance companies prefer to offer broader coverage options like Symbol 1 to provide more comprehensive protection for their clients and reduce potential financial liabilities.

Frequently asked questions