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Blog Articles: Commercial Vehicle Insurance 101

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What is commercial auto insurance?

Commercial auto insurance provides protection against both property damage and liability for any vehicle designated for business use.

Whether you drive a vehicle that is for dedicated business use or drive a personal vehicle for business, it is important to have commercial auto insurance, because your vehicle won't be covered under a personal auto policy.

An independent agent in your area can help you get the business vehicle insurance you need to protect your company assets. Contact a local agent in your area today.

What does commercial auto insurance cover?

Commercial auto insurance covers a variety of situations. Options and terms vary from one insurance company to another, so be sure you fully understand what is included in the policy.

You can work with an independent agent to create a completely customized policy that matches your business needs, complete with all available discounts.

Several types of coverage may be included in your commercial auto policy; others are options that you can purchase separately. You will also need to choose the coverage amounts (limits) and deductibles. Typical coverage available includes:

  • Property damage liability
  • Liability for bodily injury to others
  • Optional bodily injury coverage for injuries that occur outside of the state in which you reside
  • Personal injury to you, your employed drivers or passengers, including medical expenses and lost wages
  • Collision coverage for costs associated with an accident, regardless of who is at fault
  • Comprehensive coverage for damage other than collision
  • Medical payments coverage for the cost of hospitalization, treatment and funeral expenses
  • Uninsured and underinsured motorist coverage
  • Non-owned auto coverage for when you or your employees drive a rented or borrowed vehicle
  • Loading and unloading liability
  • Substitution transportation when your commercial vehicle is being repaired and you use a loaner from the repair shop
  • Towing and labor costs

How does commercial auto insurance work?

Commercial auto insurance provides insurance coverage for any vehicle that you use for business purposes, and for your commercial drivers. As a business owner, you can get commercial vehicle coverage for a single vehicle or a fleet of vehicles.

A commercial auto policy can include several different types of optional coverage, allowing you to adjust the policy coverage to your particular business circumstances and the use of your vehicles.

In the event of an incident, such as damage to one of your commercial vehicles from weather, an accident, or some other incident, you can file a claim and receive compensation that will help to cover the cost of repairs.

If you or one of your drivers is at fault in an accident that injures another person or damages their property, that person can file a claim with your insurance company. In this case, your commercial vehicle liability insurance will cover the costs of the claim, up to the limit of your policy.

Many business owners choose to buy a commercial umbrella policy to cover the costs of large liability claims that exceed the limits of the vehicle liability policy.

This strategy can provide much higher limits, in $1 million dollar increments, to cover the costs of liability claims and lawsuits and protect the business financially.

When do I need commercial auto insurance?

You need commercial auto insurance for any vehicle that your company uses for business purposes, any vehicle that has a commercial license plate or tag, and any vehicle that is registered as a commercial auto.

You must also get commercial auto coverage if your employees will be driving or using vehicles in the course of doing business, whether making deliveries, driving people to the airport, or running errands on behalf of the business.

If you use your vehicle for any of the following functions, you may also be required to get commercial coverage:

  • Using the vehicle to carry equipment
  • Transporting flammable or hazardous material
  • Transporting housekeeping equipment for business use
  • Using, carrying or transporting cranes, winches or plows
  • Hiring your vehicle out to tow other vehicles
  • Delivering any goods, such as pizza, or any types of wholesale or retail products
  • Delivering newspapers
  • Trucking and freight transportation
  • Transporting people as a chauffeur, limousine service or taxi service

Some situations and certain occupations may be covered under standard auto policies, but you should always ask your insurance agent if your vehicle use warrants a commercial policy.

Why do I need commercial auto insurance?

You need commercial auto insurance for any automobile, taxi, van, limo, bus or small truck that you use for business, because a personal auto policy will not cover your vehicles used for business.

Your commercial vehicle coverage will protect you and your business from the costs of property damage, injury and liability claims that you may incur while using your commercial vehicles.

For larger commercial vehicles such as tow trucks, cement trucks, construction vehicles, tractor trailers or semi-trucks, you will need a commercial truck insurance policy. Not only is your commercial vehicle policy critical for protecting your business financially, but it is also required by law.

Where can I get commercial auto insurance?

There are several ways to get commercial auto insurance policies, such as shopping for quotes online, but you may not necessarily find the best coverage or rates through the internet. You also may not have the reassurance that your coverage matches your real needs.

One of the best ways to get commercial auto insurance is through an independent insurance agent. Here are some advantages of working with these agents:

  1. Independent agents work with multiple insurance companies and can shop for the best rates for you.
  2. Your agent is local, available to meet in person, and can answer all of your questions so that you can make an informed decision about your coverage.
  3. Your agent will get to know you, your business, and your vehicle use, and will be able to help ensure that your coverage is the right type and amount to protect you and your company in the event of an accident.
  4. Your independent agent can meet all of your commercial insurance needs, and can package up the different policies you may need so that you get all of your coverage from one office.

How much does commercial auto insurance cost?

The cost of auto insurance depends on a number of things, including the size of your business, the types of vehicles and number of vehicles you need to insure, your risks, and the amount of coverage you need.

Generally, a passenger auto vehicle will cost much less to insure than a heavy duty vehicle such as a dump truck. However, insurance carriers also offer fleet insurance, and these policies are typically available at a bulk discount.

The cost of insurance also depends on the driving records of the drivers who will be using your commercial vehicles.

Employees who have bad driving records will cost you more to insure, so it is always important to perform a driving record background check on prospective employees. Drivers who are between the ages of 30 and 65 are typically given better insurance rates.

In terms of the cost for the type of vehicle being insured, rates are generally the least expensive for vehicles used in construction and farming. Vehicles used as passenger vehicles and for small deliveries are slightly more expensive.

The most expensive vehicles to insure include heavy duty cargo vehicles that transport loads of more than 10,000 pounds.

Is commercial auto insurance tax-deductible?

Yes, your commercial auto coverage is tax-deductible. There are many situations that allow you to deduct the cost of commercial auto insurance for tax purposes when you use your vehicle for commercial or business use.

If you are self-employed, you may be able to deduct your commercial auto insurance premium under Schedule C. If you are an employee and do not receive mileage or expense reimbursement, you can use Form 2106 (Employee Business Expenses). Your best bet is to contact the IRS or a tax adviser for clarification.

Does commercial auto insurance cover personal use?

Personal use will be covered for a company-owned vehicle providing the company has commercial auto coverage. If you are driving your own vehicle to and from work without using it for commercial purposes, then it will be covered under your personal auto policy.

If you are using your personal vehicle occasionally for commercial purposes, you will need to have sufficient liability coverage under your personal auto policy, or purchase commercial auto insurance.

The best option will depend on the circumstances. If you are using your vehicle for any kind of business purpose, be sure to talk with your agent. The business may be required to get a non-owned business liability endorsement for these situations.

If your personal vehicle is insured as a commercial vehicle and other members of your family use the vehicle for personal purposes, then you may have to get a non-owned vehicle endorsement. Ask your agent about what is required for these situations.

Do I need commercial auto insurance to deliver pizza?

If you use your own vehicle to deliver pizza, there are several options you can consider:

  • Buy a commercial lines policy.
  • Get non-owner coverage from the pizza business owner. This will give you liability coverage for injuries and property damage to others, but will not cover property damage to your own vehicle.
  • Obtain coverage from insurance companies that offer policies specifically tailored for personal vehicles used for delivery situations. The insurance company may even discount the rates if you use the vehicle for seasonal use, such as a summer job.

One of the best ways to find a commercial auto policy to suit your individual commercial vehicle insurance requirements is to speak with an independent agent who specializes in business insurance. These agents can compare policies and rates so you can find a policy you can afford.

If you use your vehicle for commercial purposes or plan to do so in the near future, contact an agent today to find the commercial vehicle coverage you need so that both you and your business are protected.

Written by Trusted Choice

2021-02-23 15:18:04