Business auto policy (BAP)

Most states require commercial auto insurance for businesses that own vehicles. Commercial auto insurance covers business vehicles, but it doesn’t cover personal vehicles owned by yourself or your employees.

Some business owners buy hired and non-owned auto insurance (HNOA), which covers rented, leased, and personal vehicles during business use (which personal auto insurance is unlikely to cover in a work-related accident).

A business auto policy covers all these bases. BAP coverage includes auto liability insurance and auto physical damage, with the option to include additional coverage. It can cover commercial vehicles that the business owns or leases, as well as employee-owned vehicles used for business purposes.

If there’s an accident involving an employee-owned vehicle, the employee’s personal auto insurance might not have enough liability coverage or the insurance company could reject the claim for being work-related.

A BAP gives you and your employees financial protection by making sure you’re fully covered, no matter which types of vehicles your business uses.

As with other types of auto insurance, you can customize a business auto policy to fit your business's needs. BAP coverage options include:

• Collision coverage for damage from accidents
• Comprehensive coverage for non-collision damage, such as weather, vandalism, and theft
• Medical payments (MedPay) coverage for expenses from accidents where you’re at fault
• Personal injury protection (PIP) for medical bills regardless of who is at fault
• Property damage to someone else’s property (vehicle, building, etc.) if you’re at fault
• Uninsured motorist coverage, in case someone without insurance is at fault for damaging your vehicle
• Towing fees

When buying a BAP, coverage must be purchased individually for each vehicle. This allows you to cover vehicles with different types of auto insurance coverage, different coverage limits, and different deductibles for each vehicle, depending on their level of risk and replacement cost.

Business auto policies will typically distinguish coverage between vehicles that are considered "autos" and those that are considered "mobile equipment". Vehicles that have been designed for regular use on public roads are typically considered "mobile equipment" if they are "maintained for use solely on the premises that you own or rent," such as a truck used on your business property.

Vans, dump trucks, and tow trucks may all fall under the category of "mobile equipment" and could be added to a liability policy with a mobile equipment endorsement.

A business auto insurance policy will typically cover many things for your small business, provided they have been accounted for when your purchase your policy.

Newly purchased vehicles for your business that are not listed on your commercial car insurance policy will typically only be covered for the first 30 days, or until the purchase is reported to your insurance company.

However, any auto liability coverage provides a temporary expansion of your commercial auto insurance policy to cover recently purchased vehicles until your policy renewal date, which is useful in the event you suddenly find yourself needing to rent a vehicle for work or replace a current one.

If you hire a new sub-contractor for your business that isn't listed on your auto insurance policy, they would not be provided coverage if they drive any of your work vehicles. You would be able to add them as an additional insured on your policy in order to extend your coverage to them while they are working with your business.

Any business that relies on personal use vehicles or business-owned vehicles could benefit from a business auto policy. Being underinsured in an auto accident could put you in a financial bind and leave you without a company car.

If a florist or bakery uses the owner’s vehicle for work, or has employees drive their own cars when making deliveries, a BAP would make sure they’re fully covered in case of an accident. Their personal auto insurance policy is unlikely to cover them for a work-related mishap.

Many Realtors use their own vehicles to visit customers and drive them to and from showings. A BAP can give real estate agents financial protection from accidents involving vehicle damage, medical bills, and lawsuits.

Landscapers and those in the building trades may use a business vehicle, personal vehicle, and rent a truck on occasion to bring supplies and equipment to a worksite. Having a BAP for each vehicle would limit any financial damage due to an accident.

Complete Insureon’s easy online application today to compare insurance quotes from top-rated U.S. carriers. You can get commercial auto insurance quotes and also consult with an insurance agent on your business insurance needs. Once you find the right types of coverage for your small business, you can begin coverage in less than 24 hours.