If you own a business, you likely put a lot of effort into serving your customers. This might include spending a lot of time on the road delivering your services. And if you drive during the course of business operations, you need the right auto insurance to protect your company.
It may surprise many business owners to learn that a personal auto insurance policy may not provide adequate coverage to their commercial risks. In fact, some personal auto policies drop coverage when drivers use their vehicles for business. As such, business owners should consider investing in commercial auto insurance for these situations.
Furthermore, many people fail to recognize the difference between personal and commercial auto insurance. The policies might seem similar, but actually have some distinct differences.
Let’s take a closer look at what commercial auto insurance is and whether you need it for your business.
What is Commercial Auto Insurance?
Commercial auto insurance protects vehicles used primarily for business purposes. This coverage might extend to company-owned vehicles or certain vehicle service businesses, such as taxis.
Commercial policies differ in many ways from personal auto policies. They come with optimized coverage that help the meet the needs of business owners.
Business owners have needs that differ from those of the average driver. These might include an increased risk of financial damage in the event of an accident. Commercial auto insurance is better at catering to these concerns for businesses than personal auto insurance is.
How Can Commercial Auto Insurance Protect My Business?
At face value, commercial auto insurance policies often look very similar to personal policies.
However, don’t let that fool you. Commercial auto policies provide coverage for a greater range of categories than personal auto policies do of. They also often feature higher dollar amounts for coverage limits. For example, these policies may come with much higher liability limits, due to heightened accident and property damage risks that some business vehicles might pose.
Who Needs Commercial Auto Insurance?
If you use a vehicle regularly for commercial purposes, you most likely will need commercial auto insurance. While every business is different, this statement rings true.
That said, getting the right coverage for your operation requires a bit of preparation. Before you get a policy, you should examine your business, and the roles vehicles and drivers play in it.
Often, business owners are the primary policyholders for commercial insurance policies. When it comes time to buy commercial auto insurance, the owners should insure all known vehicle risks.
Owners should take stock of vehicle ownership. Are the vehicles owned or leased by the company? Or do individuals own the vehicles? Even if business owners use their personal vehicles for business purposes, this usage may trigger the need for commercial coverage.
Employees also play important roles in commercial auto insurance coverage. Every employee who drives a business vehicle should be covered under a commercial auto insurance policy. Some companies provide individual policies for each driver. However, others cover all of their drivers and vehicles on a single policy. The route a company chooses in this regard often depends on specific functions of the drivers and vehicles.
If an employee uses a personal vehicle for business, they usually need commercial auto insurance coverage. A good example is an employee who works as a consultant or traveling inspector. However, employees may not universally need commercial auto coverage for their personal vehicles. For example, an employee who runs a single errand or makes a single delivery usually does not need this type of coverage.
Self-employed businesspeople often have to consider the benefits of commercial auto insurance. They might not use their vehicles enough to warrant a commercial auto policy. For example, a self-employed person who occasionally drives to business meetings may not need this coverage.
However, commercial auto insurance might be essential for other self-employed workers. For example, an independent realtor who drives long distances for work may need this policy. And an independent shipper likely needs this coverage as well.
Getting a Policy
When it comes time to get a commercial auto insurance policy, factor in the needs of your business and your drivers. Then consider the types of coverage you should purchase.
Standard coverage often has to meet minimum state coverage requirements. But policyholders often have leeway to further adjust their coverage to better meet their needs. They might consider including:
· Collision Coverage: Should a vehicle be involved in an accident while it’s being used for business purposes, this coverage can help repair or replace the vehicle.
· Comprehensive Coverage: A commercial vehicle may face damage from more hazards than just collisions. Fires, theft, vandalism and weather may damage the vehicle. Comprehensive coverage may provide the funds to repair the vehicle and replace lost items.
· Liability Coverage: You might be the at-fault party in an accident that injures someone else or damages their property. This coverage can help you compensate third parties for those damages. It may also help the business combat legal claims.
· Uninsured/Underinsured Coverage: This coverage can help a driver cover losses if they’ve involved in an accident where the at-fault driver doesn’t have adequate coverage.
Your insurance agent can help you get the commercial auto coverage that your business needs. Since every business and driver will need specialized coverage, it is best to work with a professional who can get you the correct policy.