What Is Commercial Auto Insurance?

What Is Commercial Auto Insurance?

Commercial auto insurance secures the financial interests of a business owner relating to the operation of a company’s vehicles from potential liability. Such assets can include box trucks making deliveries, as well as food trucks located on the roadside or a car used to run business errands. If you own a company vehicle, commercial auto insurance is highly recommended.

Most commercial auto insurance policies allow you to customize your insurance coverage. Customized business auto insurance coverage can vary depending on the requirements of the business, and some coverage can be adjusted mid-term to account for seasonal fluctuations. Just like personal auto, what exposures are covered and how much would be compensated for a claim is determined by the specifics of your business auto policy, including the deductible and maximum liability limits you purchased.

Commercial auto insurance is one of many types of commercial insurance, and every client has various requirements for coverage. While an umbrella insurance policy may include automobile coverage, you can have a plan that is designed specifically for your commercial auto requirements.

Your insurance advisor should be knowledgeable and. provide you advice on insurance policies that are relevant to your business as a whole, including operations and automotive use. With Insurance Advisor, you can have the assurance that your business is financially protected in the aftermath of a liability claim without over-insuring or overpaying.

What Does Commercial Auto Insurance Cover?

As with personal vehicle insurance, commercial vehicle insurance can provide these coverages:

Medical liability: Provides financial protection for your company in cases where the driver operating the company's vehicle is found at fault in an automobile accident. Liability insurance includes medical care-related expenses or property losses for any person who was in the accident other than your own driver and passengers. You are able to get your defense costs covered should your company be sued by a person who is wounded in the crash. Most states have minimum requirements for medical liability, but you'll want to fully research all policies with your Insurance Advisor agent.

Property damage liability: Another financial safety measure is available to your company if your driver is deemed to be at fault in an accident. Usually required by the state, it includes coverage for damage done to property besides your own.

Collision: You can receive financial protection through this coverage if your insurance policy includes this which covers your vehicle’s damage in the event of a single-vehicle rollover or an accident with another vehicle or an object.

Comprehensive: To pay if your insured car is damaged as a result of something other than a collision, this endorsement can help you pay for the damage. Loss or damage from theft, bad weather or earthquakes are examples.

Medical expenses (on your side): Depending on the circumstances, medical expenses will be compensated for injuries sustained in an automobile accident for the driver and any passengers in your insured vehicle. With an insurance agent’s assistance, you'll be able to select a per-person maximum compensation limit.

Uninsured or underinsured motorist: If an accident occurs between your company's driver and an at-fault driver with inadequate or no car insurance, your company will be protected against such an incident.

Coverage is not limited to just these, they may also include coverage for damage, vandalism, theft and other losses depending on what you decide to purchase in order to protect your business from unforeseen circumstances. Your insurance advisor can help you craft the best policy for your enterprise and the areas you operate in.

What Doesn’t Commercial Auto Insurance Cover?

Your business car insurance does not automatically cover borrowed or rental vehicles, unless specifically endorsed on your policy. For other vehicles you use for work-related purposes, if any accidents happen with a personally owned vehicle used for business purposes, your business could be responsible for any property damage, repairs or medical liability for both your personal vehicle and the ones involved at the scene of the accident. Businesses should add hired and non-owned auto liability to the business auto policy when personal vehicles, such as a food delivery driver’s car, is used for the business.

Standard commercial vehicle insurance also generally doesn't include vehicles used by large corporations (like Semi Trucks and Trailers, , rental companies and taxi services). Commercial Fleet protection might be looked into by such enterprises. Contact your insurance advisor agent for more details.

Why Do I Need Commercial Auto Insurance?

Every driver takes considerable risk when getting behind the wheel, and commercial drivers tend to drive a lot more often than anyone else. Think about how many people use their personal vehicles to go to the exact same workplace over and over, whereas ‘driving’ is the livelihood for commercial drivers. Higher utilization of commercial vehicles means more risks as well as higher coverage limits and premiums.

Examples of legal businesses that are eligible for commercial auto insurance include:

  • Contractors like painters, roofers, carpenters, etc.
  • Electricians, plumbers, appliance repair technicians, and HVAC professionals
  • Lawn care and landscaping businesses
  • Caterers and food vendors
  • Sales, real estate, and other businesses where employees drive to meet with clients

 

Does Commercial Auto Insurance Cover Personal Use?

Occasionally, the company-owned vehicle is also used for personal use. Ordinarily, the personal use is covered by a commercial auto insurance policy; however, if an employee is using a personal vehicle for professional use, even every now and then, then you have to obtain enough coverage under a personal policy or have to purchase a commercial policy.

Details regarding commercial auto insurance coverage vary with each plan. If you're driving a car for business purposes, your insurance advisor will assist you with choosing a policy based on your specific needs.

Will Commercial Auto Insurance Cover Me if I’m a Gig Driver?

The insurance considerations for the gig economy in recent years have often been a subject of intense dispute, especially with the growth in popularity of ride-hailing services. A driver that uses their vehicle for a rideshare or delivery service is usually not covered under their own personal insurance policy on the road, as it is considered as a commercial use of the vehicle. Corporations that drivers work for may offer commercial auto insurance, but, because drivers are classified as independent contractors rather than employees, the policy will provide coverage for as long as it's for a driver on his or her route at regulated times.

For example, rideshare companies such as Uber, Lyft, and Via will insure the driver's ride after they have accepted a trip and picked a passenger; they will also cover for miles driven after a passenger has been picked up until they are dropped off. Nonetheless, ridesharing programs frequently do not pay for drivers who have recently turned on their apps but are waiting for a request from a customer to be picked up. That period won’t even be covered by personal insurance policies because the vehicle is considered to be used for commercial reasons at that time.

However, several insurance companies now provide customers with rideshare protection in the form of included coverage in their auto policies or as a supplemental policy or endorsement. Hybrid policies that incorporate both ridesharing and vehicle insurance are also available. If you are using your personal vehicle for business use, you will need gap-filler solutions to cover commercial and personal car insurance voids.

If you're uncertain whether you need personal, commercial, or a hybrid type of auto insurance, your insurance agent can help you choose a policy that works for your situation.

Is Commercial Auto Insurance Required?

Different states will have different requirements for commercial vehicle insurance, but every state requires some minimal level of coverage. Without commercial auto insurance, a business must pay for damages, injuries, and lawsuits entirely on its own. While the price of a car insurance policy is comparatively nominal, the consequences of a car accident can be extreme.

How Do I Get Commercial Auto Insurance?

Your insurance agent can give you great insurance coverage options based upon your own company's requirements. Your representative in the field will have a great understanding of the insurance requirements for your state and help you identify a policy that will work well for you and your company. Insurance agents are additionally included in the business of choosing between multiple insurance plans for you, so you get the most reasonable rates and protection for your circumstances and needs.

How Much Does Commercial Auto Insurance Cost?

Commercial auto insurance is costlier than personal auto insurance because of the greater risks presented by commercial driving. If your business vehicle overlaps the lines between personal and commercial, it can be tempting to go with the more affordable alternative (or drop coverage completely). But it's important to remember that If your vehicle is used for business purposes, your personal auto insurance usually will not cover the damage your vehicle sustained during business hours. And even if a claim is covered, the liability amount will be minimal compared to your business policy limits. In the end, the cost that you'll incur for loss or damage caused by your business is not worth the risk.

Inform yourself about the range of commercial auto insurance rates per state. There are lots of factors involved, including your location. Others are:

  • The deductible and coverage limits you chose for the policy
  • The number of vehicles your policy will cover
  • The types and value of the insured vehicles
  • Level of risk for your business
  • Your claims history
  • Employee driving records

 

It can be challenging to choose the right coverage at the right price that suits you. An insurance agent can assist you by offering the most competitive quote.

Is Commercial Auto Insurance Tax Deductible?

Many businesses can deduct commercial insurance premiums from their taxes by filing the Schedule C form with the IRS. Self-employed business owners may be able to deduct commercial auto insurance costs from their taxes using the Schedule C form for self-employed singles. Employees who don't get mileage or expense reimbursement for their work can use Form 2106 to subtract their own business expenses. Consult a tax adviser with any further questions you may have.