Commercial Auto Insurance

What Is It?

Commercial Auto Insurance can cover vehicles your business owns. If your insured vehicle is involved in an accident, this policy can pay for the other person's bodily injuries and property damage. It can also pay to repair your car when it's damaged by theft, weather events, and vandalism.  

Skipping this coverage can cost a business big time. According to the Federal Motor Carrier Safety Administration [PDF], accidents involving a commercial vehicle cost Americans $87 billion in 2011.

Even if you and your employees are safe drivers, you're sharing the road with everyone else. That's why it's important to protect your business with Commercial Auto Insurance. Let's learn more about the policy.

What Does Commercial Auto Insurance Cover?

A Commercial Car Insurance policy usually covers accidental damage or bodily injury costs that happen while driving a company vehicle for business purposes. This policy may offer…

• Auto liability coverage for damage you cause to another person or their property.
• Medical payment coverage for bodily injuries you sustain in a crash.
• Physical damage and collision coverage for repairs to your vehicle.
• Uninsured motorist coverage to pay for damage caused by drivers who don't have insurance.

Let's take a look at each of these in more detail.

Auto Liability Coverage

Commercial Auto Insurance's liability coverage can help pay for damages in an accident you cause, including…

• Repair costs for the other person's damaged vehicle or property.
• Legal expenses if you're sued over the other driver's injuries.

Say you're driving to meet a client in your company car when you rear-end a fancy sports car. The accident is your fault, and it's not cheap.

How not-cheap? A 2015 study conducted by insurance company The Hartford found that small business commercial vehicle accident claims cost an average of $45,000. That makes them the second-most-expensive type of claim small businesses face.

Good thing Commercial Auto Insurance can pay to repair that brand-new sports car and the driver's medical expenses for injuries caused by the crash.

Medical Payment Coverage

If your Commercial Auto Insurance offers medical payment coverage, it can help pay for:

• Your medical expenses if you're injured in a car accident.
• Medical expenses for occupants in your vehicle.

This coverage is available regardless of who caused the accident.

Physical Damage & Collision Coverage

Commercial Automobile Insurance can also protect your vehicle when it's damaged by:

• Theft.
• Vandalism.
• Certain weather events.
• Impact with another object.

For example, let's say a major storm hits your town. Several trees are uprooted, including one that lands on your business truck. Your Commercial Car Insurance can pay for the necessary repairs.

Uninsured Motorist Coverage

About one in seven drivers in the United States are uninsured, according to the Insurance Research Council [PDF]. When they cause accidents, they might not be able to pay for the damages. Your policy's uninsured motorist coverage makes sure you don't have to pick up the slack.

It can help pay for:

• Your bodily injuries.
• Damage to your car (depending on your policy and state).

For example, say you're on your way to meet a client. A driver in an old Ford Mustang convertible runs a stop sign and slams into the side of your car. As you exchange insurance information, the driver realizes he doesn't have insurance for his vehicle, which he only drives during the warm months.

In this case, your Commercial Auto Insurance policy may pay for the damage the uninsured driver caused to your vehicle.

What Commercial Auto Insurance Can't Cover

Your Commercial Automobile Insurance cannot cover damage caused by an employee driving their personal vehicle for business errands. However, your business may still be held accountable for the damage your employee causes.

If your employees regularly drive their own cars for work, you may want to purchase Hired and Non-Owned Auto Insurance to protect your business.

Who Needs Commercial Auto Insurance?

Business owners usually require Commercial Car Insurance if they have vehicles titled to their business, including cars, trucks, vans, tow trucks, and more.

Your personal auto insurance might restrict coverage for certain types of "business driving," so you may need a commercial policy if you use your personal vehicle to:

• Drive to and from worksites.
• Carry tools or other equipment that you use for work.
• Transport clients or employees.

If you use your personal vehicle to drive between worksites, you may benefit from Commercial Auto Insurance.

A Commercial Car Insurance policy can cover most business uses for a vehicle. Keep in mind, though, not all business driving is created equal:

• Transportation companies and food delivery services are sometimes harder to insure. The amount of time you or your employees spend behind the wheel usually puts you in a higher risk bracket. However, we work with insurance carriers that offer policies at competitive rates. Talk to your agent to learn more about your options.
• Rideshare drivers for companies like Uber or Lyft may have coverage gaps. Rideshare companies offer only some liability coverage for their drivers and don't cover the driver's vehicle damage. Plus, most personal auto policies may not cover damage or injuries that occur while driving for fares. In fact, your personal auto insurance carrier may cancel your policy over your ridesharing activities.

Ridesharing is still a relatively new business model, so many commercial insurance companies don't offer rideshare coverage yet. Insureon does not currently work with insurance carriers that provide Commercial Auto Insurance for rideshare drivers, but that may change in the future. Stay tuned!

Commercial Auto Insurance: Further Reading