The description highlights a number of key points. The coverage "includes" autos owned by employees or partners or members of their households, but is not limited to them. For example, if an employee drives any auto not owned, hired, or borrowed by the named insured, perhaps the car of an employee's neighbor, and an accident results in a claim against the employer, the nonownership liability coverage will apply to the named insured-employer. Similarly, coverage for the named insured is not restricted to liability resulting from an employee's use of a nonowned auto, although that is the usual case. If, for example, a friend of the insured agrees to run a minor errand for the insured — drop off a package at the post office, make a bank deposit, etc. — the insured's nonownership liability coverage will protect the insured against liability resulting from the friend's negligence. Likewise, many nonprofit organizations purchase nonownership liability coverage to protect themselves against the liability that might result from volunteers' — not employees' — use of their own autos. Note too that the coverage as to employee-owned autos applies to nonowned autos used in either the business or the personal affairs of the named insured.

Another point deals with the issue of when the named insured is a partnership. An automobile used in conducting the business of a partnership may be titled in the name of an individual partner rather than in the name of the partnership. The partner's auto then, because it is not owned by the named insured (the partnership), cannot qualify as an owned auto. Consequently, the named insured's liability for claims resulting from a partner's use of his or her individually owned automobile must be insured as a nonownership exposure. And, the same can be said of limited liability companies if the autos are owned by the members of the company and not the company itself.

Another important point is that the coverage applies on a "blanket" basis. There is no requirement, as there is for symbol "7″, that restricts coverage to autos specifically described in the policy or to newly acquired autos under certain conditions; any auto fitting the general description under symbol "9″ is a covered auto under the BAP.

As to types of autos covered, the description of "nonowned autos" is subject to the overall policy definition of "auto": "a land motor vehicle, trailer or semitrailer designed for travel on public roads but . . . not . . . mobile equipment." (For the definition of "mobile equipment" see Business Auto Definitions). While the usual exposure to nonownership liability involves private passenger types, the coverage can apply to any other type of nonowned vehicle that fits the definition of "auto".

Anyone using a covered auto owned, hired, or borrowed by the named insured is considered an insured while using that covered auto with the permission of the named insured, with some exceptions. Since employees are mentioned in the exceptions, there are some scenarios worth discussing here.

If the named insured hires or borrows an auto owned by an employee, the named insured is an insured, provided the correct symbol designating a covered auto is used. But, how can the employee become an insured under the employer's BAP? The answer is found in endorsements to the BAP.

For example, CA 99 47 (employee as lessor) states that the auto described in the schedule will be considered a covered auto that the named insured owns and not one hired, borrowed, or leased; the endorsement goes on to make the employee from whom the auto is leased an insured under the named insured employer's auto policy. As another example, CA 99 16 (hired autos specified as covered autos you own) does the same thing except that the "employee" is not singled out here. The owner or anyone else from whom the named insured rents or leases an auto and is named in the schedule of the endorsement is considered an insured. However, these people are insureds only for BI or PD resulting from the acts or omissions by the named insured, employees or agents of the named insured, or any person operating an auto with the permission of the named insured or its employees.

In another scenario, when an employee runs an errand in his or her own car for the named insured, the car is obviously not owned by the named insured, and the car cannot be said, as an automatic matter of course, to be hired or borrowed by the named insured, since the named insured has not really taken possession of the car or directly paid the employee for its use. Although the car will qualify as a covered auto by way of either symbol "1″ or symbol "9″, only the named insured will be an insured with respect to that covered auto. So, how does the employee-owner of the car become an insured under the named insured's BAP?

Coverage can be arranged for employees by endorsement. Endorsement CA 99 33, entitled "employees as insureds," insures any employee for liability coverage while he or she is using any covered auto not owned, hired, or borrowed by the named insured on the named insured's business or personal affairs. The charge for this coverage is an additional 25 percent of the named insured's nonownership liability premium. If an employee driving his or her own car is covered by this endorsement, the coverage applies in excess of whatever liability insurance the employee carries on his personal auto. If the employee carries no insurance, the employer's auto coverage form would then become primary.

As noted earlier, nonownership liability coverage (symbol 9) does not extend to autos hired by the named insured. An employee may in some emergency and in the course of employment hire a car or may make a practice of doing this. In such case, is the automobile hired by the employer-named insured? The position of many insurers is that they will consider the car to be hired by the named insured if it is secured in the employer's name. If the employee hires it in his own name and on his responsibility, then most insurers do not regard this as a "hired car" and the employer would be covered through symbol "9″, nonownership coverage. Coverage under symbol "1″, or a combination of symbols including "8″ and "9″, eliminates any uncertainty of coverage in these circumstances. As for the employee, endorsement CA 99 33 makes the employee an insured while using a covered auto that is not owned, hired, or borrowed by the named insured.

Under forms of nonownership liability insurance predating the auto form, executive officers of a corporation were given separate treatment from that of ordinary employees. Officers were protected if sued for their business use of automobiles they did not own, or for directing employees' operation of nonowned automobiles. This coverage feature was not carried directly forward into the auto coverage form. This is of interest since the current CGL form does makes a clear distinction between employees and executive officers, going so far as to give each entity its own definition on the CGL form.

The BAP treats executive officers as "anyone else" other than the named insured and therefore all that has been said so far about the coverage of employees applies also to executive officers. Under business auto coverage, an executive officer can get insurance protection for driving nonowned autos on company business through his or her own auto insurance, the employee extension already described, or both of these methods, but not automatically through the provisions of the BAP.

Having said that, it should be noted that there is a somewhat grey area under the "who is an insured" provisions that could extend the BAP's coverage to an executive officer. The BAP considers as an insured "anyone liable for the conduct of an insured … but only to the extent of that liability". There is at least one scenario under which this part of the "who is an insured" provisions would apply to an executive officer. If the named insured is a corporation, it cannot act except through its executive officers and employees; and thus, if an executive officer is adjudged liable for the conduct of his or her faceless, noncorporeal employer-corporation, the BAP would adjudge the executive officer an insured.

A final point. Unaware of the provisions in the BAP, employees who drive their own cars on company business may have the mistaken belief that they are automatically covered under their employer's policy at such times. Likewise, many people do not realize that the employee is often primarily responsible for an accident involving the use of his or her own auto on business. If the employer and the employee are sued jointly (as is often the case) the nonownership coverage will protect only the employer. Moreover, a court may find that under the particular circumstances the employee was not on the employer's business at the time of the accident and so dismiss the suit as to the employer and allow a judgment to stand against the employee.

Not only is the employee not protected by nonownership coverage carried by the employer, but there is the distinct possibility that, if it wishes, the insurance company can get a judgment against the employee causing the accident for money paid out for the employer's benefit, and collect if the employee has a home or other assets. Indeed, this principle was upheld in Smart v. Morard, 124 N.Y.S.2d 634 (1953) where the court permitted the employer to set up a cross complaint seeking indemnity from an employee for any judgment the injured party might be able to recover against the employer. The reason for this is that, although the law permits an injured third party to collect from an employer, it does not relieve the employee of primary liability, nor of the legal duty to reimburse the employer for money paid out because of the employee's fault. The subrogation provision of the auto coverage form gives the insurance company the right to step into the employer's shoes and to enforce this liability.

For some insureds, particularly clubs, stores, hotels, theaters, and restaurants, a major nonownership automobile exposure is the driving of automobiles of members, customers, and other members of the public to and from garages or parking places. The usual nonownership liability coverage will, of course, take care of this exposure as to bodily injury and damage to property of others not in the care, custody, or control of the insured. The exposure may also be partly covered through a standard premises and operations liability insurance policy (the CGL form) that covers the insured's liability for the parking of an automobile not owned by or rented or loaned to any insured on the premises owned or rented by the named insured, or on the ways next to such premises.

However, liability for damage to customers' cars is excluded by the care, custody, or control exclusion in both the BAP and general liability policy. If the insured wishes to insure property damage to autos in its custody, it should purchase garagekeepers insurance, either as a separate policy (see Garage Liability Section III) or as an endorsement (CA 99 37 03 10). Of course, the insured could also seek to cover this physical damage exposure by scheduling symbol "9″ (or symbol "1″, any auto, for that matter) next to the physical damage coverages on the BAP declarations page. The physical damage coverage under the BAP is for loss to a covered auto and if the covered auto is identified as a nonowned auto, there is no exclusion on the auto form that would apply. However, the insured must find an insurer willing to write such an exposure and underwriters of commercial auto insurance have in common practice shied away from extending physical damage insurance to nonowned autos; the reasoning for this being that since a commercial vehicle can be anything from an old pickup truck to a rig costing a great deal of money, the underwriter could never know for sure prior to a loss the limits of the exposure. Besides, even though coverage under the BAP for a nonowned auto is excess over any other collectible insurance, the insurer of the nonowner-user would not want to take a chance that the owner of the auto would drop physical damage coverage from his or her policy, thereby making the nonownership coverage primary.

It can also be noted here that there is no automatic physical damage coverage under the business auto form for an auto used as a temporary substitute for a covered auto that is out of service due to repair or service work. For example, if an employee allows an employer to use his auto to make a delivery while the employer's auto is being repaired, and the employer wrecks the car, the employer's BAP does not provide automatic coverage to repair the employee's car. The employer may feel guilty about the damage to the employee's auto and may want to pay for the repairs, but the BAP won't step up and pay the bill. Liability coverage is available, of course, on the temporary substitute, but only that; physical damage coverage on the substitute auto itself is not provided unless symbol "1″ or symbol "9″ is noted in the appropriate boxes on the declarations page and, as implied above, that is unlikely to be acceptable to a company underwriter.

Nonownership liability coverage is considered as being excess over any other collectible insurance. For example, if an employee carries valid and collectible auto insurance and the employer is confronted by a claim as the result of the use of the employee's car, the employee's policy will protect the employer to the extent of the limits of that policy. If, and only if, these limits are exhausted, the nonownership coverage will apply as excess insurance.

Nonownership liability is a blanket coverage applying to any automobile fitting the description of covered autos under symbol "9″ (or symbol "1″) in the declarations. For rating purposes, Item 5 of the declarations lists as the rating basis, the number of employees and the number of partners (active and inactive). This is for the business of the named insured that is other than a garage service operations and other than a social service agency. If the business of the named insured is a garage service operations, the rating basis is the number of employees whose principal duties involve the operation of autos and the number of partners (active and inactive). The commercial lines manual contains rules for determining premium for nonownership liability, which are to be used if 50 percent or less of the insureds employees regularly operate their own cars in the insured's business. Insureds having a higher percentage of employees using their own cars are to be referred to the insurance company for rating.

The nonownership liability rule indicates that unless there is a substantial change in exposures during the policy period, for example, a substantial increase or decrease in the number of employees, the advance premium is the earned premium. The insurance company, of course, has the right to request a report of the number of employees from the insured or to make an actual audit to determine whether or not revision of the advance premium is warranted.

The nonownership liability rule contains a separate rating method for social service agency risks as defined in the public automobile section of the manual. A "social service agency automobile" is defined as "an automobile used by a government entity, civic, charitable or social service organization to provide transportation to clients incident to the social services sponsored by the organization, including special trips and outings." When an employee or a volunteer of a social service agency uses his or her own car in the agency work, it is often to drive clients to different locations — stores, medical facilities, day-care centers, or any number of activities. The nonownership liability exposure presented by such public uses of volunteers' cars has traditionally caused insurance companies to increase usual manual rates for such agencies' nonownership liability coverage. The separate nonownership liability premium rule for social service agencies, therefore, was introduced to provide for a premium that reflects the increased risk.

The nonownership liability premium for a social service agency uses as a rating basis, the number of employees, the number of volunteers who regularly use autos to transport clients, and the number of partners (active and inactive).

If nonownership liability coverage is to be extended to cover employees of a social service agency, the rules pertaining to all other types of insureds are followed. If coverage is extended to volunteers, an additional premium per volunteer is charged, and endorsement CA 99 34 is added to the policy.