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  • Writer's picturejoseph retcho

Commercial Auto Insurance Basics

Updated: May 12, 2023

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Commercial auto insurance is a business insurance policy that applies to automobiles owned or used by your company. It protects your company from liability for damages caused by accidents involving your company's automobiles and provides certain compensation to occupants of your company's automobiles who are injured in accidents. If your company has vehicles, a commercial auto insurance coverage can provide essential financial protection to you and your staff while driving a company-owned vehicle, a hired or personally-owned vehicle in the course of business. It is critical to understand that a personal automobile insurance coverage does not often cover automobiles used in the operation of your business.

What Does Business Car Insurance Cover?

Commercial auto insurance typically covers the following: liability damages; collision or comprehensive physical damage loss to your business autos; medical expenses for injury to occupants of your business autos; and damages sustained by occupants of your business autos due to the negligence of an uninsured or underinsured motorist.

The commercial auto policy covers physical damage to vehicles you own, lease, hire, or use in your business, as well as liability coverage for bodily injury and property damage caused to others by your use of the insured business vehicles.

Physical damage coverage for your covered automobiles can be of two types:

  • Collision loss: damage caused by car accidents.

  • Comprehensive loss includes damage caused by weather, theft, and other non-collision reasons.

It also contains two kinds of liability protection:

  • Bodily injury coverage: for injuries to others caused by an accident in which you are at fault.

  • Property damage coverage protects you against accident-related damage to someone else's property, such as a car or house, when you are at fault.

Do I Require Commercial Auto Insurance?

If you own, lease, hire, or use a vehicle for business purposes, you need have at least liability coverage. Most states need it for privately owned vehicles. Furthermore, federal law requires it for businesses that transport products or people across state lines. A commercial truck insurance policy may be required for larger commercial vehicles.

Commercial auto insurance is required for vehicles that:

  • Are employed in business.

  • Keep a commercial license plate or tag on your vehicle.

  • Are registered commercial.

You should also get business auto insurance if you or your staff drive for work-related purposes, such as:

  • Delivering clients to the airport;

  • Making sales calls;

  • Delivering products to a shipper;

  • Purchasing office supplies.

Important information: You may be required to obtain additional coverage if you use vehicles for particular purposes, such as:

  • Delivering food, products, or publications;

  • Serving as a chauffeur, taxi driver, or limo driver;

  • Transporting flammable or hazardous items;

  • Transporting machinery;

  • Vehicle towing;

  • Transporting goods by truck.

How Does Commercial Auto Insurance Work?

Business auto insurance protects both the vehicles used for work and the drivers who operate them.

If you or a driver of your business vehicle causes an accident that injures another person or damages their property, they can submit a claim on your policy and initiate a lawsuit against you or the driver. Your liability insurance will cover the costs of settling the claim up to the policy limit. Any damages in excess of the limit will be borne by you or your company. In addition to the policy limit, your liability insurance will cover the costs of defending you or the driver of your business car in an accident-related lawsuit.

What are the Benefits of a Commercial Auto Insurance Policy?

There are numerous forms of coverage available. Some of the most popular types of coverage are:

  • Collision coverage covers for damage to your covered business vehicle caused by an accident.

  • Comprehensive coverage pays for non-collision damage to your covered business car, such as theft, weather, vandalism, or fire.

  • After an accident damages your covered business car, rental reimbursement pays for a rental vehicle up to a set level.

  • Liability coverage compensates others for bodily harm and property damage if you are at fault, including legal fees if you are sued.

  • Uninsured or underinsured motorist coverage covers for bodily harm or property damage sustained by occupants of your insured business vehicle in the event of an accident caused by an uninsured driver.

  • Personal Injury Insurance covers medical bills and lost income for accident-related injuries sustained by occupants of your insured business cars, regardless of fault.

  • Medical Payments coverage compensates for medical or funeral expenses incurred by occupants of your insured business cars in the event of an accident, regardless of fault.

These coverages are available for vehicles you own and may be available for vehicles you hire or lease, as well as non-owned vehicles (vehicles used in your business that you do not own, rent, or lease). Some of these benefits differ by state. If you keep your vehicles in a garage out of state, make sure you have appropriate coverage for the states where your insured vehicles will be used.

Is a commercial policy applicable to personal use?

A commercial coverage will usually cover personal usage of a business car. Some coverage for family members, on the other hand, is frequently unavailable. Check with insurance agent to see whether you require additional coverage for family members.

How Can I Get Commercial Auto Insurance?

Commercial auto insurance can be obtained from an independent insurance agent. They'll take the time to learn about your company's operations and car usage so they can get the best coverage at the best price. When an incident occurs, your agent will also walk you through the claims process.

Choosing a single agent for all of your business insurance needs may assist guarantee that your company is adequately protected and that you are not paying for unneeded duplicate coverage.

What Is the Insurance Cost?

It all depends. The price is determined by several factors, including:

  • The size of the business;

  • The number and types of cars insured;

  • The number of personnel driving insured vehicles; the cost of the vehicles hired;

  • The business and driving hazards;

  • The amount of coverage.

Retcho Agency can assist you in locating the right coverage.

Are premiums deductible from taxes?

They can sometimes be subtracted when a vehicle is utilized for business purposes. To be certain, consult with your tax advisor.

Need help? Contact us and get your business insurance coverage quote.

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