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Commercial Vehicle Insurance For All Types Business

If you own any business that involves the use of vehicles you should obtain a Commercial Vehicle Insurance policy for your business.  Just to clear things up, the name Commercial Auto Insurance is sometimes used even though these policies cover more than autos.  At FarmerBrown.Com we are able to provide expert advice based on our years of experience. Below you will find a simple and comprehensive explanation of Commercial Vehicle Insurance for all types of commercial enterprises. There will also be a number of PRO TIPS gleaned from our many years of dealing with helping businesses like yours. So keep reading to learn these secrets.


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What Is Commercial Auto Insurance?

Commercial Auto Insurance is specialized insurance that covers vehicles that are used for your business. Commercial vehicle insurance policies cover property damage and liability coverage. The coverage amounts and types of usage are for situations not covered by a personal auto insurance policy. It covers many types of commercial vehicles such as cars used for business purposes, to every other variety of commercial trucks and vehicles that you can imagine being used in the operation of a business. Keep reading to find out what makes Commercial Auto and Personal Auto different.


PRO TIP: You might think that keeping your personal auto insurance is cheaper to purchase. However, in most instances, it is cheaper to purchase a Commercial Auto Policy in the long run. This is a result of being able to write off the cost of Commercial Auto Insurance on your taxes. This can help your savings quite a bit especially if you are self-employed. You also do not run the risk of having your claim denied if you are using your personal vehicle for your business.

What Vehicles Are Covered By Commercial Auto Insurance?

Cars, Box trucks, food trucks, work vans, and dump trucks are just a few examples of commercial vehicles. All of these will require Commercial Auto Insurance. They include coverage for employees operating the vehicle. In most instances, the equipment inside will also be covered from loss. This coverage has been called many different names such as commercial auto insurance, commercial car insurance, truck insurance, or Commercial Vehicle Insurance. Do not think that this coverage only applies to large vehicles. Cars and SUVs will also require a commercial auto policy if they are used for income-generating purposes.

See below for a little-known strategy that may lower your commercial auto premiums by as much as 50%!!!  

What Does Commercial Auto Insurance Cover

Commercial Auto Insurance is a type of car insurance meant for cars and any other motorized vehicles that are used for business purposes. Commercial Auto Insurance includes most of the same coverage as standard auto insurance. Commercial Auto Insurance also includes coverage specific to the needs of people who use their cars or trucks or other vehicles in the operation of a business.
Semi Truck, box trucks, and dump trucks are all obviously commercial vehicles, and they need Commercial Auto Insurance.
What is not so obvious is if you use your car or truck for work, you will need a commercial auto insurance policy to cover you while you are using it for business-related purposes.
This coverage is also available to cover your employees. It can even cover you when they are driving their personal vehicles

Commercial Auto Insurance is more expensive than personal car insurance. There are ways you can qualify for discounts just like with your regular personal policy

Commercial auto insurance includes many of the same coverage components as personal car insurance. Liability coverage protects you from damage you cause in your vehicle, and collision coverage and comprehensive coverage protect your vehicle itself, no matter who caused the damage.

It also provides coverage like non-owned vehicle coverage, which extends the coverage when your employees use their vehicles for your business purposes.

If you simply drive to and from work you do not need commercial auto insurance, that will be covered by your personal auto insurance. However if you are a home care provider who drives clients to appointments, or a painter who drives a truck filled with tools and supplies, you will need a commercial auto policy to protect you. 



PRO TIP: You might think that keeping your personal auto insurance is cheaper. However, in most instances it is cheaper purchase a Commercial Auto Policy in the long run. This is a result of being able to write off the cost of a Commercial Auto Insurance on your taxes. This can be quite a savings especially if you are self employed. You also do not run the risk of having your claim denied if you are using your personal vehicle for your business.

How Much Does Commercial Auto Insurance Cost

Here is a large range in the cost of  Commercial Auto Insurance policies and factors that influence the cost. The following are the main factors

Number of Vehicles: The more vehicles that your policy will cover drives up the cost. This is because of the increased risk of loss with more vehicles on the road.
Type of Vehicles: The bigger and heavier the vehicle the higher the cost. For example, a drywall company would have a much lower rate than a large excavating company that operates heavy equipment. This is because there is a much greater probability of a greater loss when a dump truck is involved in an accident as opposed to an accident with a van.
Number of Employees: The more employees you have working increases the chances of having claims.
Amount of Revenue: The more business you do increases the likelihood of claims no matter how careful you are.
Location of Business: Where you are located makes a big difference. The rates for a New York roofing company that does work in the 5 Burroughs of New York or New Jersey can be 2 to 3 times what the same business would pay if they were located in Texas.
Driving Records: You will be required to provide driver’s license numbers of all employees that will be operating vehicles. Just like personal auto insurance the more tickets and accidents, the higher the premium.

commercial Auto Average Price Chart

For a policy limit of $1 million, the cost of Commercial Auto Insurance for most businesses is $125 per month or $1,500 per year. 

PRO TIP: If you operate a fleet of vehicles you should review the driving history of your employees. For example upon reviewing the history it shows that Jack Daniel has 2 DUIs on his record and Mario Andretti has numerous moving violations. By assigning them other duties that do not include driving a large fleet operator can see their premiums decrease as much as $50,000 a year. It is also a good idea of letting your employees know that keeping a clean driving record is important.

What is Hired and Non-Owned Auto Coverage

Hired Auto Coverage

This coverage protects you against claims from the use of leased, rented, or borrowed vehicles by you or your employees that are used for business purposes

Non-Owned Auto Coverage

This covers employees or others who use their vehicles for your business, such as going to pick up supplies or going out and picking up food for the crew. 

Is Commercial Auto Insurance Expensive?

When shopping for a Commercial Car Insurance policy, you will see it is more expensive than a personal car insurance policy. There are many reasons for this. Commercial vehicles are often larger and more expensive. The driving habits of people not driving their own vehicles differ from personal driving habits. The amount of risk an insurance company assumes when insuring a business is greater than the amount of risk involved when insuring an individual driver.

Commercial Auto InsuranceCommercial vehicles are more expensive than personal vehicles as well. Most commercial vehicles are late-model versions that must carry full coverage insurance. With a personal auto policy, older vehicles often will have only liability coverage. Specialty vehicles also make commercial car insurance more expensive. Some businesses require modifications to vehicles that can make them expensive to insure. Depending on the business you might need to take into consideration what is being transported and over what distance. All of these factors contribute to the higher price of Commercial Auto Insurance.

Commercial Auto Insurance covers multiple drivers. Personal car insurance policy premiums are set by your personal driving history and habits. With a Commercial Auto Insurance policy, there are multiple drivers that need to be covered under the policy. Not all of these drivers will have a clean driving record. Other factors such as the age and experience of drivers add to the cost of commercial insurance coverage. The fact that drivers might be driving various vehicles also adds an amount of risk because of the adjustments that must be made when driving a different or unfamiliar vehicle.

Business owners must also have larger limits of liability coverage. If you are doing work for certain companies the contract may call for specified limits. In any case, a business must be very careful to protect its assets from the litigation that might result from a driving mishap. While this may result in an increased cost, it also brings increased protection.

A Commercial Auto Insurance policy does cost more than a personal car insurance policy. In the long run, it is still a good value because it covers multiple vehicles, multiple drivers per vehicle, and the increased liability that a business can face. 

Who Needs Commercial Auto Insurance?

As a business owner, you need the same kinds of insurance coverages for the car you use in your business as you do with a car used for personal purposes. These include liability, collision and comprehensive, and coverage for uninsured motorists. Many small business owners use the same vehicle for both business and personal use. If is important to have Commercial Auto Insurance in this instance.

If you have a personal umbrella liability policy most contain an exclusion for liability from income-generating activities.  So you need to make sure you have sufficient Commercial Auto Liability coverage.


PRO TIP: If  your vehicle is owned by the business, make sure the name of the business appears on the policy as the “principal insured” rather than your name. This will give your personal assets additional protection if a claim is filed against against the vehicle.

Commercial Auto Insurance For Contractors

Contractors and construction professionals rely on their vehicles for their livelihood. If you are a smaller contractor that just has one van used for business and pleasure or a large contractor with a fleet of vehicles you need to have Commercial Auto Insurance. This will give you the peace of mind that the assets you worked so hard to get are protected from loss.


Do You Need Commercial Auto Insurance?

 Contractors who use their personal vehicles for work should realize their personal auto policies will not cover any accidents, damage, or injuries that occur as a result of any income-producing activities. If you use your vehicle primarily for work purposes and only have personal auto insurance you could be personally on the hook in the event of an accident.

Ask yourself these simple questions:

  • Are the vehicles owned or leased by your business?
  • Do any of your vehicles have any modifications or other equipment installed used in your business activities?  
  • Do you use your vehicle for work purposes such as transporting equipment or supplies?
  • Do your employees use any of your vehicles on a regular basis?

If you answered yes to any of the questions above you may need to consider commercial auto coverage.

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