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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.

Infographic of Whats Commercial Auto

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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.

Infographic of Commercial Auto applies to any kind of vehicles you use in your business

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.

Infographic of Commecial Auto covers cars for business purposes and your employees

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:

Property Damage Liability Coverage

It is related to the payments for the damages due to property damage to the others that you’re responsible for. In case you happen to be sued, it also covers your court and defense costs.

Bodily Injury Liability Coverage

Pays various damages that are related to the bodily injuries to others that you take responsibility for. Court and defense costs included.

Personal Medical/Injury Payments

Usually, the payments are related to medical/funeral expenses for bodily damage to a covered individual sustained in the accident in your vehicle.

Comprehensive Coverage

Pays for a covered vehicle that is damaged (by causes other than upset or collision) or stolen.

Collision Coverage

Payments are related to the damages caused by an upset or collision with the other object.

Underinsured/Uninsured Motorist Coverage

Pays for the injuries and (in some cases) property damage when you’re caught up in an accident with the other individual who is not insured or whose available limits are less than the ones you select to carry for this very coverage. You won’t believe it when you hear the number of people who carry only minimum limits. Are you willing to have the same coverage you give the other individual?

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, your personal auto insurance will cover that. 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.

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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.

What Does Commercial Auto Insurance Cover

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.

Stadistics of Averange price for Commercial Auto Insurance

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. 

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Pro Tip

If you operate a fleet of vehicles you should review the driving history of you 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 also a good idea of letting you employees know that keeping a clean and driving record is important.

What % of a covered loss would you like to pay?

The deductible is the covered loss portion that is your personal responsibility. Let’s say if you had a $400 deductible, you would have to pay $400 of a covered loss.

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: As we previously said, it provides different coverage, but also, the driving habits of people not driving their own vehicles differ from personal driving habits, and 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.

Stadistics of Is commercial Auto expensive

Commercial 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.

Infographic of Commercial Auto cover multiple drivers and vehicules

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.

How High the Liability Coverage Limits Should be?

It is impossible to give an exact prediction of how much money you would have to pay in case of an accident. Just ask yourself the following question – how much $ would you be willing to pay for any sort of damages that exceed your coverage limits? Remember, the higher the limits on commercial auto insurance, the more likely your policy will have an opportunity to pay damages

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.

Infographic of If you are a business owner you must have commercial auto insurance
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.

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.

Things to know before purchasing your commercial auto insurance

What to ask your insurer before getting your commercial auto insurance.

  1. How many cars and drivers can your commercial auto insurance cover?

    Commercial auto insurance companies usually give a separate coverage types based on how many cars and drivers you need covered. The number of cars is also different with each insurance provider and it also depends on what type of cars you are going to insure. But getting this type of insurance called fleet insurance can be less expensive than getting an a commercial auto insurance for each car since they each have policies.

  2. What is the definition of the policy of using your car for business?

    The policy you use for personal vehicle has the exclusion for coverage for commercial uses while commercial auto insurance will establish a definition for commercial use of the car. That is why you need to make sure that your policy has everything covered for you business vehicles and discuss this with you insurance agent.

  3. Who is covered by your commercial auto insurance?

    A mistake that most people make is to make the main company and not the one leasing the vehicles as the owner written on commercial auto insurance policy. You need to make sure that the listed name of owner on the policy is the one who leased out the vehicles.
    Another thing you can ask your insurer is how you can cut costs on your commercial auto insurance. According to Commercial Auto for Small Business, you can choose to get more deductible so your annual premium won;t be that high.

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