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Commercial Auto Insurance


Commercial auto insurance policies provide financial protection for a business owner and employees who drive and operate company vehicles. Business owners must determine the need for commercial auto insurance as their personal policies may provide adequate coverage. However, if a business meets certain key criteria concerning how vehicles are utilized, purchasing commercial auto insurance is necessary.

  1. Function

    • Commercial auto insurance policies are offered to individuals who utilize cars or trucks for business purposes. Commercial auto insurance provides a business owner financial protection should an employee become involved in an accident while driving a vehicle during working hours.

    Types

    • Commercial auto insurance is designed and crafted similar to personal automobile policies. Policies are tailored to meet the specific needs of a business owner. Comprehensive and collision riders are optional, but cover damage incurred in accidents or factors outside of the driver's control. General liability (including bodily injury liability and property damage liability) is offered in addition to work loss and personal injury protection (PIP) riders.

    Considerations

    • Individuals considering purchasing commercial auto insurance should closely examine their business model before spending thousands of dollars on a policy they might not require. This is true if the business is owned by one person, and that person is the only driver of any vehicles used, according to the Car Insurance.com website. However, owners must determine if their personal auto coverage liability limits are high enough to protect their business from expensive claims.

    Key Criteria

    • Commercial auto coverage is needed when certain key criteria are met. Business owners who drive a vehicle--or send employees--to pick up goods or people should consider commercial auto policies. It is also a good idea to purchase commercial coverage when business-related equipment is attached to the car or truck.

    Warning

    • The Insurance Information Institute website notes that umbrella liability riders (covering thresholds of more than $1 million in claims) on personal auto insurance coverage can exclude business-related liabilities. The website notes that a vehicle should be registered in the legal name of the business to avoid problems if an insurance claim is filed. Check with your agent on local laws governing business and personal use of autos before purchasing a policy.

    Costs

    • Commercial auto insurance rates vary from state-to-state and are dependent on the amount of liability required, deductible levels, vehicle safety features and driver accident records. Business owners should recognize that collision and comprehensive riders account for about 50 percent of the total premium. Liability claim thresholds begin at $10,000 and can go up to and above $1 million, with premiums priced accordingly. Business owners should shop around for the best deal possible.


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