OWNED AUTO

Owned Auto – Vehicles Titled to the Business

In plain language: The term 'owned auto' refers to any vehicle that a business owns and officially has the title for. An example of this would be a delivery truck owned by a restaurant for delivering food to customers. 

Technical definition: In insurance terms, 'owned auto' is any automobile that is titled under the name of the business and is therefore legally owned by the business. This term typically appears in commercial auto insurance policies and is central to determining which vehicles are covered under the policy. It's most commonly associated with standard auto liability coverages, medical payments, uninsured motorist, and physical damage coverages found in business auto policies. 

Despite maintenance efforts, a used car the business owns experiences engine problems. There was no fuel odor or trace of radiator fluid indicating potential repairs. The most unexpected situations can lead to sharp turns in the business operation! 

TL;DR

An 'owned auto' is any vehicle that a business legally owns and uses for its operations. 

It's essential in understanding which vehicles are covered under a commercial auto insurance policy. 

Common error: Businesses sometimes assume that all their used vehicles are covered, not just the ones they legally own. 

Best practice: Always update your insurance policy when you acquire or dispose of vehicles, ensuring all your owned autos are appropriately covered. 

What Is Owned Auto in Insurance?

'Owned auto' in insurance refers to any vehicle that the business legally owns and uses for business operations. This term is key to comprehensive commercial auto policies offered by insurance companies. 

The vehicles may vary from passenger cars to heavy trucks or trailers – as long as the vehicle's title (ownership document) is in the business's name, it qualifies as 'owned auto.' This term sets the scope for which autos the insurance policy will cover for legal liability or physical damages. It's most likely to be found in the declarations page of the policy. 

For instance, if a business's owned auto was involved in a major accident, the commercial auto policy would step in to cover the damages if such coverage was purchased. However, features like the automatic transmission, shock absorbers, or spark plugs are not recognized as separate insurable items but as part of the whole vehicle. 

Complexities might arise when a business holds a title jointly with a private party or when a car is leased under a contract that requires the business to bear responsibility for loss – making it a part of 'owned' autos by insurance definition. 

Key Related Terms to Know

Commercial Auto Policy – An insurance policy that covers businesses for liability and physical damage costs related to their owned autos. 

Private Passenger Auto – A term for personal vehicles that are not used for commercial purposes. 

Business Use – Using owned autos for a trade, job, or profession. 

Leased Auto – An auto that the company is using under the terms of a leasing agreement. 

Non-Owned Auto – Any vehicle that is not owned, leased, hired, or borrowed by the business, but is used for business operations. 

Common Questions About Owned Auto

How does the insurance company determine if my vehicle is an 'owned auto'? 

The insurance company primarily checks the vehicle title to determine if it's an 'owned auto'. If the business is the legal owner on the vehicle title, the vehicle is considered an 'owned auto' for insurance purposes. 

What happens if an 'owned auto' is declared a total loss after an accident? 

If an 'owned auto' is declared a total loss, the insurance company will pay the actual cash value of the vehicle at the time of the accident, less any deductible. The business can then use this money to replace the vehicle. 

Does a regular maintenance like oil dipstick check or wheel alignment impact my auto insurance? 

Regular maintenance on an 'owned auto' like checking the oil dipstick or wheel alignment doesn't directly impact your auto coverage. However, good maintenance practices can prevent accidents, indirectly affecting your insurance rates over time. 

What if I'm using my vehicle for business, and it fails an emission test? 

If your 'owned auto' fails an emission test, it doesn't directly impact your auto insurance coverage. However, to avoid running the vehicle at hotter than the usual operating temperature, it will need repairs to meet emission standards, maintaining its roadworthiness and thereby your insurance coverage. 

Owned Auto vs. Non-Owned Auto

While an 'owned auto' is legally owned by the business, a 'non-owned auto' is any automobile not owned, leased, rented, or borrowed by the business but used for business operations. 
 

Real Claim Examples Involving Owned Auto

Scenario 1: A plumbing company's 'owned auto', a large van carrying equipment, was hit by another vehicle causing significant damage beyond repair. As the van was listed under the business's commercial auto policy, the insurer considered it a total loss and compensated based on its actual cash value. 

Scenario 2: A small bakery uses a used car for delivering orders. One day, due to low brake fluid level, the vehicle fails to halt at a traffic signal resulting in a collision. Since the used car was an 'owned auto' under their commercial auto policy, the biscuit company was covered for liability and damage expenses. 

Scenario 3: A tech-company had its owned autos routinely serviced, including transmission fluid changes. Still, a sudden engine breakdown on the way to a client caused the car to be towed. The company had to arrange alternate transport for employees and cover repair costs because their commercial auto policy denied coverage stating maintenance issues are not covered. 

Limitations and Common Mistakes

Purchased autos are not automatically insured; they need to be specifically listed on the commercial auto policy. 

Personal use of the 'owned auto' may not be covered under the commercial auto policy. 

Hired, rented, or employee-owned vehicles used for business purposes are not considered 'owned autos'. 

Not recognizing a total loss early on can lead to prolonged, unnecessary claims process. 

How to Explain Owned Auto to Clients

Personal Lines client: Think of 'owned auto' like your car which is registered under your name. In business terms, any vehicle a company owns and uses for its work is called an 'owned auto.' 

Small Business owner: You know how you own your delivery van? In insurance language, we call this an 'owned auto,' as it's titled to your business and used for its operations. It means your commercial auto policy covers it for liabilities and physical damages. 

CFO or Risk Manager: 'Owned auto' refers to any vehicle that's titled to the business and used for its operations. From an insurance standpoint, these are the vehicles that our commercial auto policy will primarily cover for liability and physical damage.