Commercial Auto Insurance for Business Use: An Expert Guide

Jan 30, 2023 | Business Insurance

Is your business able to take a hit from an unexpected accident or damage to your vehicle? For many businesses across the United States, spending a total of $46 billion in 2019 alone to eliminate this uncertainty 2019 shows the critical nature of this question. Here is a rundown of facts you need to know about commercial auto insurance for business use:

Defining Commercial Auto Insurance

Commercial auto insurance is a policy covering your business vehicles in the event of an accident. Like other insurance policies, a commercial auto policy looks to protect you from legal claims due to liability. 

In this case, such a policy can help your business from claims due to property damage or bodily harm. Anytime your company vehicle ends up in an accident and causes bodily injury or property damage, you can settle the resulting claims using this policy. 

But what about when you are using a personal car for business purposes? Well, a commercial auto policy does extend this same coverage in such a situation as well. The policy can help pay for repairs, legal fees, and medical expenses that your personal auto insurance won’t foot. 

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When Do You Need Commercial Auto Insurance for Business Use?

As a business owner, you may be tempted to think you don’t need commercial auto insurance. But relying solely on your personal auto cover in certain instances might not help your business. Here are some ways to help determine whether your practice requires this policy.  

1. The Registration

If the car your business relies on is registered under your firm’s name, then a commercial auto policy is critical. However, if you run a sole proprietorship, the vehicle you use most likely is registered under your name. 

If you use such a vehicle for business purposes, then a commercial auto policy is a must. That’s because, after you get into an accident, there will be a limit to the things your personal auto policy will cover. 

2. Business Use

A vehicle that gets regular business use is one that is used for commercial purposes more than three times per month on average. Such a car must operate with a commercial auto policy. 

Some other uses that might call for you to take up a commercial auto insurance policy include:

  • If the car is equipped with snowplows, cranes, and winches for use outside of your private property
  • When you use the vehicle for rural newspaper delivery services
  • If you carry work equipment in your car
  • If you carry flammable or hazardous materials
  • If your car takes part in driver training services
  • If you use the vehicle to deliver goods to your customers

Note on Business Use Cars:

If all your vehicle is doing is taking you to and from work, you may not need a commercial auto policy. Such use falls under commuting, and a standard personal auto policy can be sufficient. 

However, if you use the same vehicle to also travel to job or client sites, a commercial auto policy might come in handy. You should consult your provider to help assess the nature of your work and how often you make the visits to determine if such a policy is necessary for you. 

3. Policy Add-Ons

Do you need to include liability for mobile equipment in your auto policy? How about a waiver of subrogation? Has the need for liability coverage for non-owned or hired cars become essential for you? 

Getting a commercial auto policy can help you access these add-ons for enhanced coverage.

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What Does Commercial Auto Insurance Cover?

A commercial auto policy does more than just fill in the gaps that a personal auto policy misses. Here are some ways commercial auto coverage can give you extra peace of mind.

1. Physical Damage to Vehicles

With a commercial auto policy, you don’t have to fret in case your company car gets damaged due to an accident. The policy also covers any damage such an accident might cause to another vehicle on the road.

2. Medical Charges

Unexpected medical expenses due to an accident can mess with your firm’s finances. A commercial auto policy ensures that any medical costs you or any of your passengers in your vehicle rack up will be catered to. Note that this applies even if you are at fault. 

3. Underinsured or Uninsured Motorist Coverage

Not every driver on the road has adequate (or any) insurance, and when such a motorist hits you, you need to protect your firm. A commercial auto policy ensures that you can take care of any medical or repair expenses when a driver whose insurance falls below the minimum state limits (or has none) hits your car.

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4. Collision Coverage

When your company vehicle overturns or is totaled, a commercial auto insurance policy helps you cover the costs. Additionally, the policy also enables you to pay for damages when your car collides with another object (such as a tree) or vehicle. 

5. Auto Liability

A commercial auto policy pays for any property damage and bodily injury you or employees operating your company vehicle might cause. 

6. Physical Damage 

If vandals damage your practice’s vehicle or if it gets stolen, commercial auto insurance enables you to foot the costs that crop up. Furthermore, the policy also provides coverage when certain weather events damage your vehicle.

7. Roadside Assistance

When your car breaks down, this policy helps you settle the towing and repair costs you will encounter. If you require further assistance to get your vehicle back on the road, the policy can also cover these costs. 

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Protect Your Business With Commercial Auto Insurance for Business Use

An accident or unexpected damage to your company’s vehicle can set you back financially or take down your firm. Thus, auto insurance for business use is a handy tool your practice needs to eliminate any risk exposure due to unforeseen circumstances.

Ready to save money on insurance? Advantage Insurance Solutions has experts who can help you compare car, home, business, and life insurance quotes from top-rated providers. Call or text us at (877) 658-2472 today!

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