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Commercial Auto Insurance

Your Guide to Insurance for Commercial Vehicles

If you own a business that requires vehicles for operation, you may need a commercial car insurance policy. This policy is similar to a personal car insurance policy, but it is designed particularly for the vehicles that you use in your business. A commercial car insurance policy typically covers:

  • Company cars
  • Work vans
  • Dump trucks
  • Delivery trucks or vans
  • Food trucks
  • Forklifts or other construction vehicles
  • Box trucks
  • Service utility trucks

The insurance policy may offer both liability coverage and collision coverage. Liability coverage takes into account repairs or medical expenses for the other driver in case of an accident. Collision coverage, on the other hand, pertains to car repair costs or medical fees after the accident.

Why Should You Buy Commercial Auto Insurance

Whether you have a small business that you operate from your home or a large company with a garage full of vehicles, a commercial auto insurance is crucial for your business. Here are the major reasons you should opt for one:

1.      Personal Auto Insurance Would be Insufficient

Personal car insurance policies that insurance firms offer to individuals would not provide substantial coverage and are likely to contain liability limits that are insufficient for business use. As a matter of fact, your insurance provider may void a personal vehicle insurance if it is found that the car in question is being utilized for your business.

If you want to know about car insurance options for young drivers, click here.

2.      Business Deduction

A commercial auto insurance policy would not only be a wise investment for your business but it would even pay for itself. Such as insurance policy can be considered a business expense, and therefore tax deductible. This way, you would not only have proper coverage but also have a possible tax write off.

3.      Comprehensive and Customizable

As compared to a personal car insurance policy, a commercial auto insurance policy provides broader coverage. The majority of commercial vehicles’ insurance plans include coverage for liability, property damage, medical fees, and even cargo coverage. You can even request for a customized vehicle insurance quote with add-ons.

4.      Protection Against Lawsuits

If you or your employee gets involved in an accident that caused harm to a person or property, the victim may file a lawsuit against your company. As opposed to a personal car insurance policy, commercial auto insurance contains almost twice the liability and can pay part of your legal costs in this case. Therefore, with such a policy, your insurance provider can cover the larger share of the lawsuit and save your company money.

5.      Coverage for Employees

A conventional personal auto insurance policy will not take your employees into account if they tend to drive business vehicles. Not only will a commercial car insurance policy offer coverage for employees driving the company vehicles, but also contain additional coverage. Some of these policies can also protect your workers if they use their personal cars for business purposes.

6.      Business Requires High Limits

A business vehicle, such as a box truck, is likely to cause more damage than a standard car. Therefore, business vehicles require higher liability limits and other types of coverage to offset those expenses. A conventional car insurance policy is unlikely to contain an adequate limit to cover damages caused by a commercial vehicle in case of an accident.

7.      Legal Requirement

The laws of the state your business operates in may require you to buy a commercial auto insurance policy for your company vehicles. Even if you live in a state where this is not a legal requirement, you may be required to hold the policy if you drive your business vehicles across other states.

Commercial Auto Insurance Coverage

A commercial auto insurance policy is made for situations specific to a business and its requirements. For instance, you may need non-owned vehicle coverage if your employees drive company vehicles. Here are various kinds of coverage that may be part of your commercial car insurance policy:

Liability Insurance

This takes into account bodily injury to other individuals and damage to another car if you are at fault in an accident. The bodily injury aspect pertains to others’ medical expenses and lost wages and part of the legal costs if a lawsuit is filed against your business.

Collision Insurance

This compensates for damages to your vehicle if it collided with another vehicle, another vehicle hits you, or your car rolls over, no matter who was at fault. Collision coverage is important if your car is leased or financed.

Comprehensive Insurance

Comprehensive coverage takes into account damage to your vehicle due to a factor besides an accident. This may include flood, vandalism, theft, fire, earthquakes, or damage from an animal or bird.

Uninsured Motorist Coverage

This coverage compensates for property damage or injuries if your vehicle was hit by an uninsured or unidentified driver. It can pay for the medical expenses, lost wages, and funeral expenses.

Underinsured Motorist Coverage

In the event of an accident, the insurance policy of the party at fault will be responsible for compensating the injured party – unless you operate in a no-fault state where each driver’s policy only pertains to their own losses. Underinsured motorist coverage offers protection in case the driver at fault does not hold adequate liability insurance to take care of your bills.

Add-Ons

A commercial auto insurance can be customized with the following coverages as add-ons:

1.      Roadside Assistance

Roadside assistance takes into account issues that are not ordinarily covered by a commercial auto policy. Examples include being locked out of the vehicle, flat tires, and dead batteries.

2.      Hired car damage with lack of use coverage

This aspect compensates for collision damage to a rented or leased vehicle, along with other obligations included in the contract to the leasing or rental company.

3.      New vehicle replacement cost coverage

With this option, you can get your new car under a total loss replaced with a new or comparable one. It also includes gap coverage for an amount you happen to owe that is higher than your vehicle’s actual cash value.

4.      Expanded Towing

This offers towing coverage that is beyond the coverage of a regular commercial auto insurance policy. It includes jump starts, towing, and small roadside repairs.

5.      Auto Loan or Lease Coverage

An auto loan or lease coverage bridges the gap between the unpaid amount on the loan or lease and the real cash value of the car. This is applicable when your vehicle is totaled due to an accident.

6.      Rental Reimbursement

You may need a rental car if your own vehicle ceases to be functional after an accident. In this case, your insurance provider would pay for a rental car up to your policy limits.

7.      Medical Costs or Personal Injury Protection

This takes into account your medical fees if your healthcare insurance company or that of the passenger’s fails to cover the costs in case of an accident.

8.      Consumable Cover

Consumable cover offers your business vehicle more protection than usual. It includes the cost of your vehicle’s parts, such as screws, nuts, bolts, engine oil, and grease, in the event of an accident.

9.      Parts Depreciation Protect

Your car and its parts may depreciate in value with time due to wear and tear. Ordinarily, this amount is deducted from insurance claims. This add-on covers the depreciation of all replaceable vehicle parts, such as fiberglass or rubber components.

10.  Engine and Gear Box Protect

This offers coverage if the engine or gear box of your commercial vehicle gets damaged due to an accident and caused oil leakage or water regression. This insurance option compensates for the damages following an accident (but because of it) that are not usually covered in a standard policy, such as damage due to hydrostatic loss.

11.  Loss of Revenue

Commercial vehicles are likely to be essential for smooth business operations. This option pays for the loss of income that may occur when your car is under repair as result of damages.

What’s Not Covered?

While it is vital to understand the coverage and add-ons of a commercial car insurance policy, it is equally important to know which aspects would not be compensated for.

  1. Own Damages for Third-Party Policy Holder: If you have a third-party liability only policy, damage to your own vehicle will not be accounted for.
  2. Drunk Driving: In case the owner or driver of the vehicle involved in an accident is intoxicated or driving without a valid license, a commercial auto insurance policy would not be applicable.
  3. Contributory Negligence: Any damage as a result of contributory negligence on the part of the driver, such as driving during an ongoing flood, will not be covered by the insurance policy.
  4. Consequential Damages: The policy will not take into account damage that is not directly caused by the accident or natural calamity, such as loss of market.

Benefits of Commercial Auto Insurance

As a business owner, you may be wondering what additional benefits are offered by a commercial car insurance policy that are not offered by a standard auto insurance policy. A commercial auto insurance policy provides wide coverage especially for business customers. Here are some of the prime benefits:

Protection of Business Equipment

Your business tools and equipment are likely to be in the car with you as you are driving, such as catering equipment and hydraulic lifts. A commercial auto insurance policy would offer compensation to replace these tools if they are damaged in an accident. A personal car insurance policy, on the other hand, will not take such equipment into account.

Safeguards Employees

As a business owner, you are likely to juggle multiple tasks in a day. Employees make useful stand-ins when it comes to keeping your business afloat. They are vital for many tasks, such as driving the company’s vehicles. A commercial auto insurance policy offers compensation in case an employee meets with an accident while working.

Higher Limits

Every day that you or your employee drive a company vehicle, there is a risk of an accident. Such a car wreck could result in lawsuits. In this case, attorney’s fees, punitive damages, and medical expenses may cost your business dearly. A commercial car insurance policy has high limits that can take into account all company vehicles.

Fulfillment of Lease Requirements

Leases generally require companies to carry a commercial auto insurance policy. It helps protects them from the risk of loss in case of damage to a business vehicle.

During a loan application process, banking and other lending organizations take several factors into account. Other than your income and credit score, they would also consider your insurance coverage. If you are financing a car purchase or your business, the lender is likely to require some sort of insurance coverage.

A commercial car insurance policy can be tailored to offer special protection for your leased vehicles in case of substantial sales losses.

Attracting Customers

These days the market is competitive, and even small plus points are substantial for attracting positive attention. It is important to focus on customer service when potential customers are searching for a place to shop.

Customers want to be assured that they are dealing with a business that is genuinely concerned with their well-being. A valid auto insurance policy is an effective way of showing customers that their property and personal space will be safeguarded against accidents or blunders.

Final Words

If you do not have commercial auto insurance policies for vehicles used by your company, you may have to pay a sufficient amount of money from your pocket in case of an accident. A commercial car insurance policy offers wider coverage and higher limits as compared to a traditional auto insurance policy. It can also help you become a better credit risk and attract more customers.

AC Insurance has been providing top business insurance services since 1991. Click here to get a free quote today!


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