Commercial Auto Insurance FAQ
Frequently Asked Questions (FAQs)
Is commercial auto insurance compulsory in all the US states?
Commercial auto insurance is mandatory by law across 48 U.S. states. New Hampshire and Virginia are the only states that do not require commercial vehicles to be insured compulsorily. However, drivers can still be held liable for damages during accidents and collisions in these states.
Also, the minimum coverage requirements set by your state may not suffice your insurance needs. Hence, we recommend all business owners to consult with an insurance expert and get the right coverage for their commercial vehicles.
How much does a commercial auto insurance policy cost?
The cost of a commercial auto insurance policy depends on several different factors. Business owners can purchase a policy that meets the state requirements or choose a higher coverage limit depending on their insurance needs.
The pricing of commercial coverage is affected by factors like:
- Size of your business and type of industry
- Number of automobiles
- Type and model of automobiles
- Risks involved in your business
- Amount and extent of coverage limit
- Claims history
- Deductible Amount
- Number of personnel driving your commercial vehicles
What is the average cost of commercial auto insurance in the United States?
The median cost of commercial auto insurance in the US is $1704 per year ($142 monthly), assuming your policy limit is $1 million.
However, costs may vary greatly depending on the type and commercial purpose of the vehicle. For instance, commercial truck insurance can cost $5000 to $25,000 per year, depending on your coverage.
What does commercial auto insurance cover?
Commercial auto insurance covers liability damages, collisions, comprehensive physical damages to your business vehicles, medical expenses for you and your employees, and uninsured and underinsured motorist coverage.
The coverage included in a standard commercial auto policy are:
- Collision Coverage (accidents and collisions)
- Comprehensive coverage (weather damage, theft, and vandalism)
- Bodily injury liability coverage
- Property damage coverage
- Personal Injury Protection
- Medical expenses
- Uninsured/Underinsured Motorist Coverage
Note: Business owners can buy additional coverage depending on their insurance requirements.
What type of vehicles are covered by commercial auto coverage?
Commercial auto coverage covers all kinds of automobiles that are used for business purposes like:
- Commercial cars
- Business vans
- Pickup trucks
- Food trucks
- Box trucks
- Tractor-trailers, and more.
Does commercial auto insurance cover leased or hired vehicles?
Yes, a commercial auto insurance policy typically covers automobiles that are hired or leased by your business. However, you should consult with an expert to understand the terms and conditions set by carriers more clearly.
Who needs commercial auto insurance?
Business owners that use automobiles for commercial purposes like delivery, freight, and transportation require commercial auto insurance to protect themselves and their employees from liability damages, accident damages, and other unforeseen risks.
Vehicles with a commercial license plate registered as commercial automobiles also require insurance to operate legally.
Does Business Owners’ Policy (BOP) cover commercial vehicles?
No, a Business Owners’ Policy (BOP) does not cover commercial vehicles. Hence, you must purchase commercial auto insurance separately for your business vehicles.
Does commercial auto insurance coverage cover personal use of vehicles as well?
The answer is yes. As long as your business vehicle has commercial auto insurance, damages incurred during personal use will also be covered. However, it is better to consult your insurance carrier to understand their conditions for such situations beforehand.
Moreover, if your insured commercial vehicle is used for personal purposes by your family members, you might also have to get a non-owned vehicle endorsement.
What is Hired and Non-Owned Auto Insurance (HNOA Insurance)?
Hired and non-owned auto insurance (HNOA) covers liability damages involving automobiles that your business uses for commercial purposes but doesn’t own.
HNOA coverage applies to vehicles hired for commercial use and personal vehicles that employees use for work.
For instance, if one of your employees using their personal vehicle to deliver a parcel to a client ends up hitting another car, your business can be sued for liability expenses. HNOA insurance provides coverage in such situations.
Is personal auto insurance sufficient for small businesses with fewer commercial vehicles?
For the most part, personal auto insurance coverage doesn’t cover damages caused when driving for business. Your insurance company may refuse to pay out if your personal car is damaged or destroyed while being used for business purposes. For example, if you get into an accident while delivering items in your car, your personal auto insurance coverage will not cover your losses. You’ll have to bear all the damage costs.
Hence, it is always a safe bet to get commercial auto insurance regardless of the number of vehicles or the scale of your business.
Which are the best commercial auto insurance companies for 2022?
According to Advisor Smith, the best commercial auto insurance companies for 2022 are as follows:
- Progressive Commercial
- Liberty Mutual
- The Hartford
- Erie Insurance
- State Farm
- Cincinnati Financial Group
What is the process for making a commercial auto insurance claim?
To make a commercial auto insurance claim, business owners should immediately contact their insurance agent or insurance carrier. Most policies have a claim period so make sure you file your claim before it expires. Once you file a claim, your insurance carrier will ask for details like:
- Accurate description of the incident
- Insurance policy number
- Information about your business
Your insurer will then review your claim and reimburse your losses
Is commercial auto coverage tax-deductible?
Yes, commercial auto insurance is generally tax-deductible. However, commercial auto insurance qualifies for tax deduction only if you use your vehicle solely for business operations. For instance, the car you use to commute to work is not a tax deduction.
Does a commercial umbrella policy cover commercial auto insurance?
Commercial umbrella insurance will cover owned, hired, and non-owned automobiles if you have the proper underlying policy. For example, a commercial umbrella policy will not cover auto liability damages if you don’t have underlying commercial auto insurance.
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