Commercial auto insurance is liability and physical damage protection for vehicles, such as cars, trucks, and vans, that are used solely for business. Commercial vehicles require a separate policy because they’re, for the most part, exposed to more risk than personal vehicles.
This type of auto insurance protects your business and its assets, you, your employees, and other drivers such as contractors you hire to drive the car for running business errands, and the risks related with driving a commercial vehicle.
Types of Coverages Commercial Vehicle Insurance Includes
Commercial vehicle insurance also offers the following types of coverage to people who use cars for business purposes:
- Trailer Interchange Insurance covers trailers you do not own and haul under a trailer interchange agreement.
- Rental Reimbursement with Downtime covers the expenses you incur to replace an inoperable car with another car for a short-term.
- Any Auto Liability Insurance extends the liability insurance you have on your current commercial cars to any new cars you buy as well as for cars you hire and not own.
- Individual Named Insurance enables you to extend your current commercial vehicle insurance to protect you when you operate the car you do not own.
- Single Deductible Options is applicable if you haul a trailer or operate other specialized and most probably costly equipment for work, you can extend its coverage to protect those items, paying your deductible one time for claims you make on both your car and trailer.
- Non-owned Vehicle Insurance protects both you and your employees while operating the cars you do not own.
Let’s See If You Require Commercial Vehicle Insurance
You require commercial vehicle insurance if one or more of the following statements are true for you:
- You use your cars for pickup or delivery of goods such as supplies, food items, materials, or messenger services
- You use your cars as a taxi service, limo, or other types of transportation
- You have leased your cars to a partnership or corporation
- You have sold your cars to partnership or corporation
- You have registered or titled your cars to a business, partnership, corporation, or Doing Business As (DBA)
- Your employees or drivers you have not listed drive your cars on daily or occasionally
- You have rented or leased your cars to another person
- You use your cars as a van, pickup, or utility car with the total weight exceeding 10,000 pounds or a rated loaded capacity of more than 2,000 pounds
- You have equipped your cars with cooking or catering equipment, snowplowing equipment, bathrooms, hydraulic lifts, altered suspensions, or racing equipment
- You have installed equipment such as ladder racks or toolboxes that use you to operate your business on your cars
Two Incidents that Businesses Often Tend to Overlook
Whether you operate a small or big business, you need to look into obtaining commercial vehicle insurance. Some business owners may neglect taking out commercial vehicle insurance, thinking that it does not pertain to them, as they only ask their employee to deposit their check in the bank or rent a car for one of their employees traveling to another state for business. Here’s why these two scenarios should not be overlooked by businesses:
Depositing a Company’s Check in the Bank
Most businesses ask their employees to visit the bank to deposit their check. For this reason, business owners do not think it is necessary for them to obtain commercial vehicle insurance. Here’s why they are wrong:
- Your employee accidently runs a red light, causing them to hit the car in front of them
- The police arrive to the scene, asking their employee where they were headed to which the employee answers to the bank to deposit the company’s check
- This exposes the company to potential costs that may incur due to the car accident
- The severity of the injuries and damages caused by the car accident may increase the costs, which may exceed the employee’s personal insurance limits, thus providing them with insufficient coverage
- Therefore, the business would be responsible for paying the additional costs not covered by their employee’s personal insurance coverage
If the business had taken out commercial vehicle insurance, it would have covered them for the additional expenses that occurred due to the auto accident.
Renting a Car for Business Purposes
Some businesses may ask their employees to rent a car to visit another city or state for a meeting, conference, or training session. Therefore, they do not think about obtaining commercial vehicle insurance, as they see no need for it. Here’s why they are wrong:
- To rent a car, the employee may have used the business credit card, which may offer them with primary rental car insurance
- In doing so, the employee declined the coverage the rental car company offered them
- If the following aforementioned points were not true, meaning the credit card did not provide them with any such coverage or the coverage it did provide them with was insufficient to cover the costs of an auto accident and for the sake of this scenario, the employee driving the rental car was at fault, but still declined to pay the additional costs for obtaining auto insurance offered to them via the rental car company
In short, if everything we just mentioned was true, the business may have to pay for the damages, unless they have commercial vehicle insurance. If they have commercial vehicle insurance, they would not have to pay from their own pockets, as the policy would kick in.
Even though the probability of these two scenarios occurring may be less, it still does not mean they cannot occur. For this reason, it is important for people running a business, whether based out of home or from a location, to obtain commercial vehicle insurance if they use their own cars for business related activities.
Questions? We’re here to help!
We hope you found this article helpful. If you need to speak with an agent, please feel free to use the chat feature in the bottom left-hand corner or contact us at 203-481-8898. If you’d like to get a free commercial vehicle insurance quote please visit our Commercial Vehicle Insurance page for more information about how we found the insurance policies for our clients for over 30 years.
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