Why Do You Need Commercial Auto Insurance?

Dec 12, 2021 | Business Insurance

To carry or not to carry this type of insurance is a business owner’s question especially for those who are just starting up. This greatly depends on the types of vehicles that are used by your employees on their day-to-day and the purpose of using that vehicle. 

Much like personal auto insurance, there are so many similarities that can be found between the two but the one very valuable point that stands out here is that this policy protects not only you but the business as well for the liabilities that are there in case an accident should happen. 

Commercial Auto Insurance for Businesses 

When it comes to your business, commercial vehicle insurance is a must to ensure coverage on any form of vehicle whether it be trucks, cars, or vans that are used in the daily activities of your business. It doesn’t matter if your business is still small, it is just starting up or if you already are established, this is something that you have to talk about with your insurance agent because you need to make sure that you are properly covered by an auto insurance policy.  

  • What is it exactly? 

Since your personal vehicle is probably covered by an insurance policy like collision or comprehensive, when it comes down to your business, commercial vehicle insurance is the one that does it for company-owned and rented cars which cover the damages and liabilities. Business insurance like this can cover a lot of different types of vehicles that may include company cars along with trucks for deliveries etc. 

The different types of vehicles it covers:

  • Service utility trucks like food trucks, work vans, and box trucks
  • Personal vehicles that are regularly used for business purposes

This policy also covers the person using the company vehicle and other equipment that are inside. 

  • Why and when do you need it? 

Business owners or managers need to know that the policies covering their personal vehicles are written and rated differently. That is why the commercial vehicle insurance policy is in place. To determine if your situation requires it, you can discuss it with your insurance provider or you can answer these questions:

  1. Is there a fee involved when you transport goods or people using your vehicle? 
  2. Due to the nature of your work, do you feel that your coverage may not be enough and that you may need a higher limit when it comes to your liability? 
  3. Is there a need for you to haul tools or equipment with considerable weight in conducting your business? 
  4. Do your employees operate the vehicle? 
  5. Is the company owned by a corporation or is it a partnership? 

The Commercial Vehicle Insurance Coverage

When it comes to this type of insurance, it actually provides you with similar coverages like liability, collision, comprehensive, uninsured motorist coverage, and personal injury protection. The differences between commercial and personal auto insurance would be ineligibility, exclusions, definitions, limits, and coverages. 

Provides you with legal defense in case you need it and gives you protection should your vehicle damage another person’s property in an accident. 

  • Bodily Injury Liability

Addresses the cost for bodily injury or death that is a result of an accident that you are involved with and is your fault. This coverage could also provide legal assistance in some cases. 

  • Combined Single Limit or CSL 

Auto insurance policies could have split or combined limits. When you talk of combined single limits, it only means to say that it is the dollar limit applied to a combination of property damage liability and bodily injury compared to a split limit where an amount is distributed across three areas such as per person, per occurrence for injured persons and per occurrence limit for property damages as a result of an accident. 

It doesn’t matter whose fault it was but this coverage pays for the medical expenses of both the driver and the passengers who were in the vehicle at the time of the accident. 

This coverage makes sure that you are taken care of when injured or when the vehicle involved in the accident is damaged by another driver who may have no insurance or very little of it. Hit and run situations are covered in this too. 

  • Comprehensive Physical Damage 

Just like your personal auto insurance, when applied to business vehicles, this covers theft, vandalism, fire, and other natural occurring accidents. 

  • Collision Coverage

This pays for damages that your vehicle incurs when crashing into another object like trees, parking meters, mailboxes, buildings, and fences. 

  • Considerations in getting the policy 

Finding out the type of insurance that you need and how much it is going to cost you can create some confusion. Here are some things that you may want to ask yourself and consider before getting one. 

  • Vehicle ownership
  • The driver
  • Purpose of vehicle use 
  • Type of vehicle 
  • Liability limits

Inside a Commercial Vehicle

Most commercial vehicles like utility vans and trucks carry a lot in their daily grind. Everything that is outside the vehicle in use is not covered under your commercial insurance policy.

This is the combined protection for property and liability risks. When you have this policy, you get the basic coverages bundled up for you and since it is all there, the premium is also higher compared to that of individually selected coverages. 

  • General Liability 

This type of insurance is your protection as a business owner, from claims coming out of bodily injury, property damage, and advertising injury that your business may have caused. 

What qualifies as equipment inside the vehicle? 

Items that are permanently attached to commercial vehicles include cranes, diggers, loaders, drills, and items that are used for the business like shovels are categorized under “mobile equipment” which are all used for road construction and resurfacing. 

Some equipment is also considered mobile even if they cannot move without power coming from other equipment. This includes air compressors, pumps, generators, spraying equipment, welding equipment, and the like. 

More things that matter about your policy 

Who can drive my vehicle? 

The driver is covered by your commercial auto policy which means that this includes any family member or employee who is constantly using the vehicle or on a regular basis. If this person is doing a lot of driving with this vehicle in use, you should definitely add them to the policy. 

I have a trailer, is it covered by this policy? 

The size of your trailer determines whether or not it can be covered. If it is less than 2,000 pounds, it is automatically added to your policy and it will be automatically covered when it comes to liability.  Adding it to your policy means full coverage as well in case of damage or theft. If it goes higher than 2,000 pounds, There is no coverage unless you add it. 

How do I insure my employees? 

A lot of commercial vehicle policies provide coverage for the employees who are added to the policy as drivers. Under these policies, when an employee uses their own vehicles for the business, it would also be covered. This extends to rented vehicles that are used while working. Policies vary with every insurance provider so to make sure that you cover all of your bases, it is best to consult your insurance company about it. 

Other types of coverages

Through your commercial auto insurance, there are some other types of coverage that are sometimes offered at no additional cost. If this is not included in your policy and you are interested, you can inquire about it with your insurance provider. 

  • Physical damage to hired or rented and borrowed vehicles that are being used for the business.
  • Loan gaps and other leases are gaps within the lease or loan that occur when the vehicle used in the business was wrecked and the value of the vehicle is less than the amount owed to a bank or a rental company. 

Much like your personal auto insurance, your auto commercial policy can also be bundled up or each coverage selected individually to protect you and your business against injury, collision, and other liabilities like that from uninsured or underinsured motorists, theft, and natural causes like fire, flood, and hail. Higher policy limits also apply to commercial auto policies that protect your business against lawsuits and other liabilities. It is good to keep this in mind in answering the question of whether you need this type of insurance or not along with who is using the vehicle and how it is being used. It is great to have peace of mind knowing that you have nothing to worry about when the unexpected happens especially with your business. Should there be more questions and options that you are probably weighing in your mind, there is no need to worry because our commercial auto insurance experts can assist you with this and find the best option that is most affordable for your business. Just call us today, toll-free at (855) 973-1202 or (855) 712-6584 so we can help!