What is Commercial Auto Insurance?
Commercial auto insurance is a type of car insurance designed for vehicles used for business purposes. It’s a contract between you and your insurance company that outlines how your insurance company compensates you for financial losses if a business vehicle is involved in an accident or other covered problems.
Types of Vehicles Covered
Business vehicles covered by commercial auto insurance include:
- Box trucks
- Company cars
- Commercial trucks and vans
- Food trucks
- For-hire livery
- Tow trucks
How Commercial Auto Insurance Works
A commercial auto insurance policy works similarly to a personal car insurance policy but covers work vehicles such as delivery vans, trucks, and company cars. It pays for injuries and property damage to others if you or an employee cause an accident while driving a work vehicle. Additional coverage types like collision and comprehensive insurance can also repair or replace your work vehicle.
Coverage Types
- Bodily Injury Liability Insurance: Covers others’ injuries and legal costs if you’re sued.
- Property Damage Liability Insurance: Pays for damage to another person’s property and legal costs.
- Combined Single Limit (CSL): Provides one overall limit for bodily injury and property damage claims.
- Personal Injury Protection (PIP): Covers medical expenses and lost wages for you and your passengers.
- Collision Insurance: Pays to repair or replace your work vehicle after an accident.
- Comprehensive Insurance: Covers problems like theft, vandalism, and natural disasters.
What Isn’t Covered
Commercial auto insurance doesn’t cover personal vehicles used for work or unattached tools and equipment in commercial trucks or vans. Customer vehicles are also not covered, but garagekeepers insurance can cover damage to customers’ cars due to severe weather or vandalism.
Why You Need Commercial Auto Insurance
Without commercial auto insurance, you risk paying for damages and injuries involving company vehicles out of pocket. This includes medical bills, legal fees, and damages to other vehicles and property. Personal car insurance won’t cover accidents that occur while driving for business.
Tips for Buying Commercial Auto Insurance
- Get Enough Coverage: Ensure you have enough liability coverage to protect your business in case of a lawsuit. Consider at least $500,000 in liability coverage per vehicle.
- Talk to an Agent: An insurance agent can help identify the right policy for your business.
- Add Uninsured/Underinsured Motorists Coverage: This covers medical bills if you’re hit by someone without sufficient liability insurance.
- Research the Insurance Company: Compare coverages and check reviews for multiple companies.
Frequently Asked Questions
- Who is covered to drive my commercial vehicle?: Licensed employees listed on the policy.
- Is my trailer automatically covered?: It may be if it’s under a certain weight limit; check with your agent.
- Are there other types of business insurance I may need?: Yes, consider a Business Owners Policy (BOP) for broader coverage.
