How to Pick the Best
Commercial Auto Insurance
TLTR: Commercial auto insurance is a liability and damage protection coverage for vehicles owned by a company or organization. Read on and learn more about the best commercial auto insurance policies and where to get them.
What do personal auto insurance and a big juicy steak have in common? Neither are of use if your business auto gets damaged!
It isn’t a good idea to rely on your business owners policy (BOP) to safeguard your company’s vehicles either. A standard BOP only includes property coverage, business interruption insurance, and liability coverage. In the event of damage to your vehicles on the road, it falls short, leaving you to repair your auto with the company’s funds.
To properly cover a business vehicle, you need commercial auto insurance.
In this blog
- What Is Commercial Auto Insurance Coverage?
- Who Needs Commercial Auto Insurance?
- What Does It Cover?
- Exclusions to Commercial Auto Insurance
- What Is the Difference Between Commercial and Personal Auto Insurance?
- Tips on Buying Commercial Auto Insurance
- How Much Does Commercial Auto Insurance Cost?
- Top Commercial Auto Insurance Companies
- In Conclusion
What Is Commercial Auto Insurance Coverage?
Commercial auto insurance is a type of specialized business insurance that covers your business’s trucks, buses, cars, and vans in case of theft, vandalism, accidents, and natural disasters. If the success of your business relies on the smooth operation of your automobiles, then commercial auto insurance is a necessity.
For instance, you might deliver food using your personal car for eight hours a day. Even though you have a personal auto policy, don’t expect it to kick in right away if your car gets damaged while you’re making deliveries. This coverage gap left unfilled could put a serious hurting on your wallet. But with commercial auto insurance, you wouldn’t have any need to worry.
Or if you run a bakery for which you need to make daily deliveries, you’d likely rely heavily on your vans. If one of them hits another car, commercial auto insurance will take care of any physical damage or medical payments. Commercial auto insurance makes sure your bakery’s vehicles are protected on or off the road so your business can run smoothly.
Perhaps the biggest plus for businesses opting for a commercial auto policy is that it covers rented and leased vehicles. Suppose your company leased a truck for moving equipment or raw materials to a site. A commercial auto policy covers damage to your leased vehicle as well as the equipment it carries.
Who Needs Commercial Auto Insurance?
According to Statista, the U.S. produced approximately 6.9 million commercial vehicles in 2020. And commercial vehicle insurance is necessary for all of them. You need to purchase this policy if you fall into one of these categories:
- You use your personal vehicles for ridesharing or food delivery purposes.
- Your company owns, leases, or rents vehicles.
- You or your employees drive the company’s vehicles.
- You or your employees drive their own vehicles for your business.
Typically, food truck companies, truck companies, Uber drivers, Lyft drivers, forklifts, delivery vans, and service utility trucks require a commercial auto insurance policy. The best commercial auto insurance policies usually allow you to make endorsements according to your business needs.
What Does Commercial Auto Insurance Cover?
A standard commercial auto insurance policy covers a vast number of perils. For instance:
When you allow your employees to drive your vehicles, you’re liable for any accidents they may cause. And, unfortunately, mishaps on the road are not uncommon. A crash statistics report released by the Federal Motor Carrier Safety Administration states that, in 2020, 165,969 vehicles were involved in accidents, with over 4,000 fatalities.
If your employees are at fault in an accident while driving one of your vehicles, you’re liable for medical payments and property damage. Your commercial auto insurance policy provides the liability coverage that will help pay for the resulting expenses.
Repairpal reports that the annual repair cost of a commercial van is approximately $963. If your company owns multiple vehicles, the maintenance, repair, and refurbishing of your fleet may put a serious dent in your wallet.
Let’s say that while delivering flowers a florist wrecks her van. She might worry that she won’t be able to pay for the immediate repair costs. But her agent reminds her that her commercial auto insurance will provide coverage for the resulting expenses.
The policy covers property damage caused to the insured’s covered auto, as well as third party’s in case of a collision.
Medical costs for bodily injuries
Medical costs for bodily injuries (including third-party injuries) caused by the covered autos in an accident are covered. That includes personal injury protection.
According to the Insurance Research Council (IRC), one in eight drivers were uninsured in 2021. The study was based on the ratio of uninsured motorist claims to bodily injury claims.
A commercial auto insurance policy pays when the policyholder meets with an accident and sustains injuries due to the fault of someone who does not have insurance. It covers the cost of bodily injuries as well as property damage. Hit-and-run drivers are also regarded as uninsured motorists.
Commercial auto insurance provides coverage for the cost of legal defenses when a third party files a lawsuit against the policyholder for injury or damage sustained in an accident.
When a third party is injured or suffers severe damage, commercial automobiles tend to be targeted for lawsuits. The insurance pays for the cost of defending the company when there is a liability claim.
The National Insurance Crime Bureau found an estimated 873,080 incidents of vehicle theft in the U.S. in 2020. It’s an all-too-common occurrence. But comprehensive coverage includes protection against vehicle theft as well as robbery.
Comprehensive commercial auto insurance also covers acts of vandalism that cause unexpected financial losses to a business.
The policy pays for the damages caused by the crash, such as colliding with an animal or object. It will also cover the cost of damage caused to your automobile if you hit a vehicle, another vehicle hits you, or your automobile rolls over.
Here’s something to be aware of. A study by the Federal Motor Carrier Safety Administration found the top 10 causes of commercial automobile crashes:
- Brake problems
- Traveling too fast for conditions
- Unfamiliarity with the roadway
- Roadway problems
- Over-the-counter drug use
- Inadequate surveillance
- Felt pressure from carrier
- Illegal maneuver
What Does Commercial Auto Insurance Not Cover?
Commercial auto liability insurance can be tailor-made to cover any perils to your commercial vehicle that you may be vulnerable to. However, there are a few instances where commercial auto insurance carriers will flatly deny your claims. Here are some of those instances:
- Any intentional bodily injury or property damage. If the commercial car insurance company finds that you or your employees were racing on the road or intentionally colliding into other vehicles, they will deny you coverage.
- Any liability assumed under a contractual agreement cannot be covered by commercial auto insurance. In these cases, it’s recommended that you buy a contractual liability insurance policy.
- If you or your employees use company vehicles for illegal purposes, the insurance providers will deny all claims.
- Commercial vehicle insurance doesn’t cover personal vehicles by default.
What Is the Difference Between Commercial and Personal Auto Insurance?
Contrary to popular belief, your personal auto coverage simply won’t cover your car while you’re using it for commercial purposes. Business auto insurance, in turn, also doesn’t cover you if you’re driving your company’s car for personal use.
Personal car insurance covers perils that occur while you’re using your vehicle for personal use—going to stores, taking long drives, commuting to and from work, etc. If you’re using your vehicle to take a work trip, you will need to purchase commercial coverage.
Tips on Buying Commercial Auto Insurance
If you’re looking to purchase commercial auto insurance or simply want to switch providers, here’s a handy guide for you:
- Only hire trained, responsible, and reliable employees to operate your vehicles. Ask to see their driving records and driver’s licenses.
- Although auto insurance is mandatory in almost all states, most people only purchase the minimum coverage. Bad idea. Make sure to cover all the risks that you’re most vulnerable to.
- Local insurance agents understand your needs and the insurance market. Hire and consult with experienced agents so that you can get the right policies and know if you qualify for discounts.
- If you increase your deductibles, you will lower your premium payments considerably.
- Most insurance providers will offer special discounts to those who have installed dashcams, anti-theft devices, airbags, and other safety tech.
Contact your insurance agent for more information on getting affordable and comprehensive auto insurance coverage.
How Much Does Commercial Auto Insurance Cost?
Fit Small Business states that commercial vehicle insurance on average for one vehicle will cost a small business around $600 to $2,400 annually. Many factors affect the cost of your premium. Some of these include:
- Type of vehicles
- Number of vehicles
- Coverage limits
- Cargo type
- Credit score
- Claims history
If your business insures smaller cars and delivery vans, your premiums will range lower than if you insure large trucks. Insurance companies will also look into your drivers’ licenses and history so make sure to hire employees with clean driving records.
Top Commercial Auto Insurance Companies
Let’s look at three of the most popular commercial car insurance companies as reported by Investopedia:
Investopedia rates Progressive as the best overall option for those seeking commercial auto policies. The monthly rate offered is $188 on average. The advantage of choosing Progressive is that it’s available in all states and offers numerous discounts. It also has coverage options for a wide range of vehicle types and great customer service.
State Farm is known for stellar customer service and for holding an A++ financial strength rating from AM Best. It also offers coverage in all 50 states. However, State Farm only houses limited policy options.
If you own five or more company-owned vehicles, The Hartford is your best friend. With special rates for fleet owners, it also holds an A+ rating from the Better Business Bureau and A+ financial strength rating from AM Best. It provides coverage in all 50 states.
Commercial auto insurance is the first step in shielding your business from unwanted expenses and losses. Every business is unique and is exposed to a lot of different risks. Insurance isn’t a one-size-fits-all solution. Talk to insurance experts before you purchase policies. Get in touch with our experts, find an agent today.
How much will my insurance go up if I’m involved in an accident with my commercial vehicle?
Not all instances of accidents can hike up your insurance rates. If you’re at fault, however, prepare to pay for higher premium rates going forward. Premium hikes vary by state and insurance providers. Bankrate reports that the amount of rate increase can range from $165 to $850.
On the other hand, insurance companies reward responsible drivers by offering discounts and lower premiums. Drive safe!
When does personal auto require commercial insurance?
If you’re using your personal vehicles for commercial use, you should get commercial car insurance. Delivering food, making rideshare trips, and taking business trips on your personal auto are some of the instances of using personal vehicles for commercial purposes. In case of accidents or losses during these times, personal insurance won’t cover you because it excludes business use.
Rideshare insurance can help you cover any gaps if you’re driving for Uber, Lyft, or other such companies.
Is commercial auto insurance required by law?
Yes, commercial vehicle insurance is mandatory in all states excluding New Hampshire and Virginia. Insurance requirements can vary by state or federal law. Meeting minimum requirements of insurance will save you ticket money or even jail time, but in the event of perils not covered by your policy, you will pay hefty amounts on your own. It’s always a good idea to talk to insurance agents and figure out what exactly you need.
Is commercial auto insurance cheaper than personal insurance?
No, commercial auto insurance is more expensive. However, personal insurance cannot cover you against losses and damage occurred to your vehicles during commercial use. Commercial coverage for larger trucks, tow trucks, delivery vans specifically require commercial policies.
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