Commercial auto insurance covers legal bills, medical expenses, and property damage if a business vehicle is involved in an accident.
If your company owns a car, you will very likely need commercial auto insurance. Nearly every state requires commercial auto insurance coverage for business-owned vehicles.
You can rely on commercial auto insurance for financial protection if you or an employee needs medical care or faces legal expenses due to an automobile accident. If you don’t carry commercial vehicle insurance, your business will be responsible for any medical bills and legal fees, which can get expensive.
Even when business auto insurance coverage isn’t required, it’s still a smart choice. Without it, you could end up paying thousands of dollars in medical bills and other costs.
Commercial auto insurance helps cover medical payments and property damage related to an accident. This coverage includes legal expenses if you’re sued. A policy may also cover vehicle theft, vandalism, and other losses and damages.
Specifically, commercial auto insurance coverage includes:
Commercial auto insurance includes property damage liability coverage that helps pay for damages in an accident you caused. That could include:
Commercial auto insurance policies that include medical payments, or bodily injury liability, coverage can pay for:
This coverage is available regardless of who caused the accident.
About one in eight 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 damages.
Your policy's uninsured motorist coverage makes sure your business doesn’t have to pay for the resulting medical expenses or vehicle repairs.
Commercial auto insurance benefits a variety of industries that utilize business vehicles. It is designed for both businesses and independent contractors that need a company vehicle in order to operate their business.
However, there are a few specific professions who need commercial auto coverage options more often than others, including:
A HVAC installation employee rear-ends a sports car while driving your construction or installation business’s truck. The accident is the employee’s fault. Your business’s commercial auto insurance policy can cover the cost of repairing the sports car. It can also cover the other driver’s medical expenses for injuries sustained in the crash.
A consultant at your IT consulting company is driving to a client’s home when another driver runs a stop sign and hits your company car. The other driver accidentally let his insurance policy lapse and is not insured. Your company car policy can pay for the damage to your car caused by the uninsured driver.
A janitor gets into an accident while driving a cleaning company's van to a client's office. No one is seriously injured, but the janitor is brought by ambulance to a local hospital and given X-rays. The cleaning company's commercial auto insurance policy pays for the ambulance ride and medical treatment.
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I deliver pastries, and pastry-like items. All these cupcakes aren't going to deliver themselves.
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Commercial auto insurance does not cover leased or personal vehicles used for business purposes. However, your business can still be held accountable if an employee gets into an accident in a personal or leased vehicle.
Hired and non-owned auto insurance is the appropriate policy for vehicles that your business uses but does not own. This policy will provide protection for employees who drive their own or leased cars for work purposes.
In addition, lease gap insurance is an endorsement you can add to your commercial auto policy that covers the total loss of a leased or financed vehicle. Another endorsement to consider is drive other car insurance, which covers non-owned vehicles that employees or executives may rent or borrow.
If you purchase a business vehicle and it's not yet covered by your commercial auto insurance policy, you would be responsible for any liabilities that may occur to the vehicle.
In order to protect any recently purchased business vehicles, you should get any auto liability insurance, which offers a temporary extension of your commercial auto coverage. It can also cover any hired and non-owned vehicles that you use for your business.
If your business is storing or performing service on a customer's vehicle, it would be not covered under your commercial auto insurance. If something were to happen to your customer's vehicle, such as damage from a break in, you would be responsible for repair and other related expenses.
If you have a garage-based or auto service business, your commercial auto insurance policy does not protect against common garage operation risks, such as a customer slipping and falling on leaked motor oil.
Garage liability insurance is a type of general liability insurance that covers the many risks associated with automotive business operations. This includes customer injuries and legal costs from lawsuits.
While both policies offer personal injury protection, commercial auto insurance policies are designed for company cars that cover a lot of ground. Policies typically have higher coverage limits to account for the increased risk.
Personal auto insurance policies only cover claims related to personal use, including your commute and travel unrelated to work. They have lower limits and usually cost less.
If you’re involved in an accident while driving your personal car for work, your insurance company might refuse your claim. That’s why independent contractors or sole proprietors who own a car used for work should consider commercial auto insurance or HNOA.
If you’re uncertain which policy you need, check with an insurance agent.
Read more about the difference between personal and commercial auto insurance.
If you want to learn more about this policy, you can find additional answers in our frequently asked questions about commercial auto insurance.
If there are any additional questions you have about coverage or other types of business insurance such as a business owner’s policy (BOP) or professional liability policy, you can also contact an Insureon agent.
An important policy that many small businesses need is commercial auto insurance. However, it can get costly depending on your driving history, the amount of coverage needed, and more. Learn how you can pay less for auto insurance and still get the protection your business needs.