Understanding Commercial Auto Insurance

Any business with a vehicle registered in its name must have commercial auto insurance in 48 of the 50 U.S. states. Learn how your auto insurance policy protects you and your company from financial loss when an accident occurs.

Have you ever sent an employee on an errand in their personal vehicle? You might assume that you don’t need commercial auto insurance in this scenario. However, if the other driver’s insurance company discovers that your employee was working when the accident occurred, you can be found partially liable for damages.

When Does a Business Need Commercial Auto Insurance?

Depending on where you live, it could be against the law to operate company vehicles without a commercial auto insurance policy. Whether you legally need insurance or not, operating a motor vehicle always poses a risk to your company’s financial security. A bad accident could leave your business liable for hundreds of thousands of dollars worth of medical bills or property damage, which could be devastating without insurance.

Commercial auto insurance, also referred to as commercial fleet insurance if a company owns two or more vehicles, covers more than a personal auto policy. Limits are typically higher to account for additional vehicles or risks unique to business auto use, such as employees transporting clients. Even if you own a small business with no vehicles registered in its name, it is still necessary to protect your business if you use a vehicle in any capacity during the scope of your work.

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Our seasoned team of auto insurance experts can help determine your auto risks and find the best coverage for your business.

What Does Commercial Auto Insurance Cover?

Like a personal auto policy, commercial auto insurance policies cover liability, medical payments, bodily injury, uninsured and underinsured motorists coverage, and property damage. Similar to a commercial general liability policy, when you or an employee are involved in an accident, you might be held financially responsible for others’ injuries or property damage to their vehicles. Unlike most personal auto policies, business auto policies often include hired and non-owned auto coverage, which covers personal vehicles used for business use, as well as cars rented for business purposes.

Your commercial auto insurance policy usually contains a combined single limit that dictates the maximum payment made in the event of a single claim. In some instances, your policy may include “split limits” that cap the payments made for each aspect of a claim, like property damage or bodily injury.

Personal Injury Protection and Medical Payments Coverage

Medical payments coverage will pay for you, your employees, and their passengers’ medical expenses in the event of an accident up to the policy limit. Some states have “no-fault” laws that require insurance companies to pay for their own customer’s damages, regardless of who caused the accident. Personal injury protection coverage is required in these states and covers personal expenses related to medical care and rehabilitation.

Uninsured and Underinsured Motorists Coverage

Uninsured and underinsured motorists coverage kicks in if you or your employee are not at fault for an accident, but the at-fault driver cannot pay for the loss. They may not have insurance at all, carry limits that are lower than the state minimum, or have insufficient limits to cover your injuries and property damage. This coverage provides an extra layer of protection if you are adequately insured, not at fault for an accident, but still financially on the hook for damages.

Comprehensive and Collision Coverage

Accidents with other cars are not the only cause of vehicle damage. Comprehensive coverage pays for damages caused by natural disasters, vandalism, or falling objects. This coverage is especially important in commercial fleet insurance because a single natural disaster such as a fire or flood could damage multiple company vehicles, resulting in thousands of dollars worth of damage. On the other hand, collision coverage pays for repairs needed after an accident with another vehicle or object, such as a tree or median.

What To Consider When Purchasing Commercial Fleet Insurance

Whether your business is small or large, you likely have risks that require commercial auto or fleet insurance coverage. Luckily, insurance companies can add business auto coverage to a commercial package policy to ensure that all of your business insurance needs are met. Our industry professionals at Southpoint Insurance are always available to help you identify your auto risks, what limits you need, and the insurance carrier that is right for you. We get quotes from multiple carriers to provide you with a wide array of coverage and premium options so you can feel confident in the coverage you choose.

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