What Is Commercial Auto Insurance?


What Is Commercial Auto Insurance?

Commercial auto insurance is a policy that protects businesses from liability and physical damage. It’s often used for business-owned vehicles, including cars, light trucks and vans. A business vehicle is a crucial part of your operations, so it’s important to have the right coverage for your needs. GEICO has a commercial auto insurance policy for businesses like yours, as well as a variety of other policies that can protect your business in case of an accident or other type of mishap.

Liability Coverage

Commercial auto insurance is an important business-related policy that provides liability and physical damage protection for cars, vans, trucks and other vehicles used for work purposes. Often, it’s required by state laws for businesses that use a car to conduct their business. Vehicles such as taxis, limousines, ridesharing cars and non-emergency medical transportation (NEMT) vehicles may also need commercial coverage. This is especially true if you run an Uber or Lyft business or are driving for a delivery service like Amazon Flex or Grubhub. Personal auto policies don’t cover business use. This includes transporting people or goods for money, or traveling to different job sites or retail locations. Many business owners don’t realize that their vehicles aren’t covered by a personal auto policy. They may be able to get away with a smaller policy limit for commuting to and from work, but they’re not likely to have enough insurance to pay for an accident lawsuit.

This is why it’s essential to make sure your commercial auto policy includes enough coverage. If you don’t have enough, you could be left with a lot of unpaid bills after an accident. Liability coverage is the most basic type of commercial auto insurance coverage. It covers injuries to others, their property and any pollution cleanup costs after an accident involving your vehicle.

Some insurers offer additional coverage options to help protect you against specific risky circumstances. These options can include hired auto & employer’s non-owned auto, collision and comprehensive insurance, and uninsured/underinsured motorist coverage. In most states, these types of policies are called Business Auto Coverage Forms (BACF). They list the number of covered autos and their designation as a rented, owned or hired auto under the policy declarations. While these policies are similar to personal auto policies, they have some significant differences. Those differences include coverage limits, who is covered and the exclusions you can’t claim under your policy.

In addition, a business auto policy will usually include a higher deductible than a personal auto policy. This is because it’s more likely that you or your employees will be involved in an accident and need to file a claim.

Physical Damage Coverage

If your business relies on company-owned or leased vehicles to conduct its operations, it’s important to protect those vehicles against unexpected damage. Even a minor repair bill or a totaled car can have a significant impact on your bottom line. Commercial Auto Physical Damage Insurance covers the costs of repairs or replacements for your owned and leased cars, trucks and tractors in case they are damaged in an accident. It also pays to replace them when they’re stolen, vandalized or damaged by natural disasters.  The type of coverage you need depends on a number of factors, including your vehicle’s age and condition, its features and the amount of permanent equipment that’s attached to it. It’s also helpful to consider whether you need comprehensive or collision coverage.

Collision Coverage – This is the most common type of physical damage coverage, and it pays for the costs of repairing or replacing your vehicle after it’s hit another object, such as a tree, pole or the ground when your car rolls over. Investopedia notes that this is often paired with comprehensive coverage, which covers other losses such as fire and theft. Comprehensive Insurance – This is the most comprehensive form of physical damage coverage, and it’s often paired with fire and theft with CAC (combined additional coverage) to provide blanket protection for a variety of loss events. It can also reimburse you for the cost of your truck’s rental if it’s stolen or destroyed by a natural disaster.

Combined Physical Damage Policy – This is a type of commercial auto policy that combines the collision and comprehensive portions of a conventional policy into one. It reimburses you for costs of repairing or replacing your own vehicle, but it doesn’t cover damages to other people’s vehicles or injuries that occur in an accident. If you have a financed or leased vehicle, it’s likely your lender will require you to carry this type of coverage. In this case, you’ll need to decide whether or not it’s worth the extra money you’d pay in premiums for this type of policy.

Uninsured/Underinsured Motorist Coverage

Uninsured/Underinsured Motorist Coverage is an important part of a comprehensive commercial auto insurance policy. An estimated one-eighth of drivers don’t carry liability insurance, making this coverage an essential piece of your business’s protection plan. UM/UIM covers bodily injury and property damage that you, your employees or family members may suffer when the at-fault driver doesn’t have liability insurance. This coverage can be added to your commercial auto policy as an endorsement or as a separate policy, depending on your state’s requirements.  For example, let’s say an employee makes deliveries in a company car and is hit by a motorist who does not have any insurance. Without UM/UIM, your employee could end up paying out-of-pocket for his medical expenses and repairs to the car.

However, if he did have coverage, it would likely only cover the bare minimum, such as $15,000 per person and $30,000 per accident for injuries. This isn’t enough to cover the cost of his medical bills or for the repair or replacement of his vehicle. In addition, if the other driver’s insurance limits are too low to cover all of your costs, UM/UIM will step in and help pay those out-of-pocket expenses. This type of coverage isn’t always available to businesses that don’t have the cash to pay out-of-pocket, but it is definitely worth looking into if you’re able to afford it.

Whether you’re a small business owner or a large corporation, talk with your agent about adding UM/UIM coverage to your commercial auto policy. They will be able to help you choose the best options for your business’s protection needs. A common mistake that many people make is not considering the possibility of an uninsured driver hitting their vehicle. Fortunately, this is something you can easily avoid by purchasing the right types of liability and uninsured/underinsured motorist coverage. This coverage is available to businesses in most states and can be purchased as an endorsement or separately, depending on your needs. The amount you’ll need will depend on how much insurance your business has and how many employees drive for work. It’s a wise investment that will protect your business from unexpected financial losses.

Additional Coverage Options

There is more to commercial auto insurance than bodily injury and property damage. The best way to determine your exact coverage needs is to talk with an experienced independent insurance agent who can help you find the coverage that’s right for you and your business. Most commercial auto insurers will provide you with a comprehensive policy that includes the standard protections plus additional features. Some of these extras include telematics, which uses GPS to track your vehicles and improve driver safety. They also offer optional perks, such as towing and rental car coverage, that are designed to help you recover after an accident or a stolen vehicle. A good rule of thumb is to consider your risk level and then choose an insurer that offers the most cost-effective options for your particular circumstances. Your mileage is another factor to consider – commercial vehicles that frequently travel long distances tend to be more expensive to insure than those used for short trips.

The best way to find out exactly what your commercial auto insurance needs are is to speak with an experienced agent who can provide you with a free quote. They will take the time to learn about your business and the types of vehicles that you drive so they can find the optimal coverage for you at a price you can afford.


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