A Primer On Commercial Auto Insurance

The commercial auto insurance market size in the United States stands at USD 51.5 billion in 2021. This market is growing faster than the overall economy. Obviously, with millions of commercial vehicles sold every year, vehicle owners need to enroll in a commercial auto insurance plan. These vehicles include commercial trucks, vans, food trucks, and other vehicles used for business activities. This blog is for those about to buy or renew such an insurance policy.

You know that Commercial Auto Insurance is the type of insurance covering damages and losses to a commercial vehicle.

What does it cover?

A typical commercial auto insurance policy covers the following:

  • Collision Insurance: The policy covers the damage to the vehicle if it is hit by another vehicle irrespective of who is at fault.
  • Property damage liability covers the damage caused to another person’s property. It also includes the cost of the legal defense if another party decides to sue the vehicle owner.
  • Bodily injury liability covers the medical costs for injuries resulting from a collision with another person.
  • Motorist coverage: This coverage is further classified into two categories as underinsured motorist coverage and uninsured motorist coverage. The former covers the damages if the other driver is at fault but does not have insurance to cover the losses. The latter comes into the picture if the commercial vehicle is hit by an uninsured driver.
  • Comprehensive insurance coverages the damage to the commercial vehicle from fire, flood, vandalism, and losses due to similar issues.

Some Add-Ons

There are several add-ons that are possible to, well, add into commercial auto insurance policies. Personal injury protection, for instance, is a common add-on in a commercial auto insurance policy. This covers the medical expenses for the driver and the passengers in the vehicle due to the accident. It is necessary in many no-fault insurance states. Rental reimbursement can also be a significant add-on in the policy and it pays for a rental car if one is needed to cover the damaged vehicle. Lease and rental coverage further cover the damage due to an accident to a rented or leased vehicle.

Roadside assistance is another popular add-on in personal as well as commercial auto insurance. It includes assistance with being locked out along with the necessary repairs, flat tire assistance, and likewise.

Towing coverage is an add-on benefit for the businesses involved in the transportation of goods and materials to longer distances. It is not something usually offered in the standard commercial auto insurance policy.

Another useful add-on is the hired and non-owned auto insurance. Businesses often rent vehicles to transport their products from one place to the other. Hired auto insurance covers damages if such vehicles are involved in collisions. Non-owned auto insurance covers damages if the employee of an organization driving a personal vehicle for business purposes gets into a collision resulting in injury to a person or damage to the property.

Useful Tips

The lack of an adequate commercial auto insurance policy can lead to massive losses for a business.

Here are a few tips to ensure there are no loopholes in the policy.

  • Needs analysis: Every business has specific requirements from commercial auto insurance. Some businesses may use personal vehicles along with commercial vehicles for business purposes. On the other hand, there are certain organizations with strict policies against involving personal vehicles for business work. Businesses need to carry out an in-depth needs analysis before taking up a commercial auto insurance policy that reflects the ground reality. Companies must ensure they have sufficient coverage under all circumstances.
  • Discussion with your insurance agency: It is important to engage in multiple discussions with an expert insurance agency. An agency in the know can assist by clarifying your doubts and can help you identify an adequate policy portfolio for your business. The right agent will help you evaluate the possible risks as per the nature of your business and the other factors to come up with appropriate recommendations.
  • Underinsured and uninsured motorist coverage: It is extremely important to have these motorist coverages in your commercial auto insurance policy. One cannot control the insurance status of the other party if the vehicle gets into an accident. These coverage types make sure that the damage is provided for irrespective of the insurance condition of the other parties involved.
  • Reference checks: For sure, check what other companies like you think of the insurance agency you’re looking to work with. The reputation of the organization and the customer reviews can provide a glimpse into the services provided by them. Look at their website and their social media to understand more about them. Testimonials are always an effective way to determine the customer satisfaction score for a certain firm.

To Sum it Up

Commercial vehicles are exposed to a wide range of risks, and these can result in minor to major financial risks for small businesses. It is important for business owners to carefully analyze their requirements and take up commercial auto insurance to avail proper coverage. Companies need to look at the necessary add-ons and upgrades that suit them best and choose the right agency to work with for long-term peace and safety.