When 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. This question is especially for those who are just starting up. This depends on the types of vehicles that your employees use in their day-to-day and the purpose of using that vehicle. In this article, we will be discussing commercial auto insurance.

Much like personal auto insurance, there are so many similarities that can you can find 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 of any form of vehicle. For example, whether it be trucks, cars, or vans that you use in the daily activities of your business. Whether, 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 your auto insurance policy properly covers you.

What is Commercial Auto Insurance exactly? 

Since your policy covers your personal vehicle, this is probably 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. 

Commercial Vehicles Covered:

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

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

Why and when do you need it? 

Business owners or managers need to know that the policies covering their personal vehicles have different rates. 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 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

This 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. It also 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 were in with and was 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. Combined single limits are the dollar limit applied to a combination of property damage liability. We also have 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 makes sure that you are protected when you obtain injuries or when the vehicle in the accident gets damaged by another driver who may have no insurance or very little of it. Hit and run situations are part of the coverage too. 

  • Comprehensive Physical Damage 

This covers theft, vandalism, fire, and other natural occurring accidents. 

  • Collision Coverage

This pays for damages that your vehicle incurs when crashing into 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 part of the coverage.

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. 

We also consider some 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 part of 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 part of this policy? 

The size of your trailer determines whether or not it can be part of the coverage. If it is less than 2,000 pounds, it is automatically in your policy and it will be automatically part of the coverage 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 in the policy as drivers. Under these policies, when an employee uses their own vehicles for the business, it would also be part of the coverage. 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 Commercial Auto Insurance Coverages

Through your commercial auto insurance, there are some other types of coverage that we sometimes offer at no additional cost. If this is not in your policy and you take an interest, 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 you use in the business wrecks and the value of the vehicle is less than the amount owed to a bank or a rental company. 

How to Save with Commercial Auto Insurance

You can also bundle your personal auto insurance with your auto commercial policy or each coverage selected individually to protect you and your business against:

  • injury
  • collision
  • uninsured or underinsured motorists
  • theft
  • fire
  • flood
  • 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 you use it. It is great to have peace of mind knowing that you have nothing to worry about when the unexpected happens especially with your business.

Team AIS Can Find The Best Coverage For You!

Still wondering if you have the right coverage? Our commercial auto insurance experts in Denver, CO can assist you with this and find the best value for your business.