What you need to know about Commercial auto insurance

Also known as business auto insurance, a commercial auto policy protects company-owned and used vehicles in the event of damage. Vehicle damage and driver injuries in cars, trucks, and vans used for business purposes are covered under commercial auto policies.

What is the difference between personal and business car insurance?

Suppose you’re commuting to and from work, dropping your kids at camp, heading to the gym, or driving a friend home, and you get into an accident. In that case, your personal auto policy will cover you because individual auto policies cover claims relating to personal use.

But if you’re driving a client, making deliveries, or hauling your inventory or equipment to an event, your personal auto insurance policy may not cover damages from an accident that happens in those circumstances.

Commercial auto insurance typically has higher limits than personal auto insurance because the expected risk is higher.

What is covered under a commercial auto policy?

Your commercial auto policy needs to adhere to the requirements set down in your state, so you should read your state or jurisdiction’s laws carefully to make sure your policy fulfills all criteria, so you don’t end up with legal fees or other expenses.

In general, commercial auto insurance covers:

  • Injuries to you, your employee, or the people adversely affected by the incident in the other car
  • Property damage—yours or someone else’s
  • The damage your vehicle sustains due to an incident.

Make sure you understand the limits of your policy to fully understand what is covered. 

What does commercial auto insurance exclude?

You may find that some of your company’s risks aren’t covered under standard commercial auto insurance.

Intentional acts are typically excluded, as well as high-risk acts. So, if your employee intentionally slashes your company’s tires, that’s not covered. If your employee uses your car in any kind of racing or as part of any kind of war or violent action like an insurrection or rebellion, your commercial auto coverage will not protect you from medical bills, losses, or legal fees associated with that damage.

Other issues you may experience may be handled by other types of insurance. If a worker gets hurt during a vehicle accident, their medical treatment would be covered by worker’s compensation insurance, not your commercial auto insurance policy.

Talk to your insurance agent about the situations you may find yourself in and what kinds of insurance you’ll need to protect you from all angles.

When might I need additional coverage?

Additional coverage is available for vehicles with certain routine functions. Make sure to specify what your commercial vehicle is used for so you can add on extra protections for things like:

  • Carrying people as part of a taxi, limo, or ride-share service
  • Carrying hazardous material or large equipment that could damage surrounding areas during an incident
  • Towing vehicles
  • Delivering products, publications or food,
  • Moving freight and trucking.

 

What types of commercial auto insurance are there?

Commercial auto insurance can be divided up similarly to personal auto insurance.

Collision Coverage

If you or your employee gets into an accident, collision coverage will help pay to replace or repair the vehicle. It will not help to replace or repair the other person’s vehicle.

Comprehensive Coverage

This kind type of commercial auto insurance covers non-accident-related damages, like fire, hail, theft, or vandalism. If a tree falls on your vehicle or you get hit by a deer, comprehensive coverage could help you pay for repairs to the vehicle.

Liability Insurance

If you get into an accident and the person you hit has medical bills, car repair bills, and property damage losses as a result, liability insurance will help you pay for those costs. Liability insurance often is split into two: Bodily injury liability and Property damage liability. Both are there to protect you against the costs associated with damage to another person’s body or property.

Uninsured or Under-insured Motorist Coverage

You can keep you and your employees safe by maintaining auto insurance to repair damages, but not everyone on the road will have enough coverage to pay for damages they do to you. If you’re hit by an uninsured driver, Uninsured Motorist Coverage will help you cover the damages.

Rental Car Coverage

If one of your company’s vehicles is compromised and you need to rent a car to keep business moving, rental car coverage will address the costs of the rental.

 

Do you need commercial auto insurance?

Most states require commercial auto insurance, and even in those states, drivers are responsible for the damages they cause. Having auto insurance means your company won’t sink under the cost of medical bills.

But do you need commercial auto insurance specifically?

Well, do you:

  • Drive back and forth from worksites?
  • Carry employees or clients?
  • Haul equipment, products, or tools used for your work?
  • Use a vehicle specifically tied to your business?
  • Use delivery drivers?

And is your vehicle

  • Registered as a commercial vehicle?
  • Carrying a tag or license plate designating it as a commercial vehicle?

If you’ve answered yes to these questions, you need commercial auto insurance. Talk to your insurance agent about what types of business auto insurance coverage make the most sense for your company. 

How much does commercial auto insurance cost?

Commercial auto insurance costs vary based on things like risk factors, geography, size of company, usage, and foreseeable hazards. You can adjust your cost by tailoring your policy to your exact driving conditions. Maybe you regularly store your vehicles in a garage and never park them on the street. You may need less comprehensive auto insurance than if they routinely sat in a parking lot where they could be affected by the weather. 

If you get into an accident, your insurance company will factor in who was at fault, the total cost of the claim, and what your history indicates your risk level to be. If it was a small fender bender and you haven’t had any accidents in the last five years, your rate may not go up at all. If it was a large claim, but you weren’t at fault, your rate also may not go up.

 

What type of vehicles are covered by commercial auto insurance?

Vehicles that you own, hire, lease or use for business purposes can be covered under commercial auto insurance policies. Typically, this includes cars, vans, pickup trucks, box trucks, service utility trucks, food trucks, semi-trucks, and eighteen-wheelers. In fact, having a good commercial auto insurance policy is imperative for companies that use larger trucks.

Boats and motorcycles have their own specific forms of insurance that pertain solely to them, so if your business owns or operates either of those kinds of vehicle, check with your insurance agent to see exactly what type of vehicle they’ll cover and which you need separate policies for.

 

Ultimately

 

Your insurance company can help you narrow down what your company needs to protect itself. A commercial auto policy is one way to keep your company protected and operational during unexpected events.

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