Do I Need Commercial Auto Coverage?
Your business needs commercial auto insurance if it uses vehicles. Many small business owners think that if their car is in their personal name then commercial coverage is not necessary and their personal auto policy will coverage the auto. This is Not true. Most personal auto policies exclude from coverage the use of a vehicle for commercial purposes. Some ill-informed agents will advise small business owners that such a policy isn’t necessary.
The last thing you want to do is argue with your insurer over whether your vehicle was used more for personal use or business use. If you use any titled vehicles in your business, do yourself a favor and purchase this coverage.
A commercial auto policy does the same thing as your personal auto policy. It provides coverage to repair or replace a vehicle damaged in an accident and it will pay the claims of any third party injured in the accident.
Basics of Business Auto Coverage
To know what you need, you must first understand the basic coverages of a business auto policy.
Auto Liability
The liability coverage of the commercial auto policy protects against the ownership, maintenance or use of any insured automobile. The insurer agrees to pay damages for bodily injury or property damage for which the insured is legally responsible because of any auto accident with a covered auto of the insured. The insurer also agrees to defend the insured for all legal defense costs. The defense costs are in addition to the limit of liability.
Hired and Nonowned Coverage
Coverage is for autos leased, rented, hired or borrowed or not owned by the named insured. Included is coverage for employees vehicles or members of their household, but only while used in the insured’s business.
Medical Payments
Insurer agrees to pay all reasonable and necessary medical and funeral expenses incurred by the insured because of bodily injury caused by an accident. Insured parties are the named insured, named insured’s employee’s, or any person occupying a covered auto. Payments are made without regard to fault.
Personal Injury Protection
Personal Injury Protection (PIP) is an endorsement that adds No-Fault benefits. In the event of an auto accident, each party collects from his insurer regardless of fault. This endorsement is only available in states that have No-Fault Laws, such as CA. It only applies to bodily injury and not property damage.
Uninsured Motorist Coverage
Uninsured Motorist pays for bodily injury to any insured injured by an uninsured motorist, a hit-and-run driver, or a driver whose insurer becomes insolvent.
Underinsured Motorist Coverage
Supplemental coverage to the Uninsured Motorist coverage. UIM applies when the other driver has liability limits at the time of accident that may be insufficient to pay for damages for which that driver is responsible. In this case, coverage would apply and payment for the difference could be made.
Drive Other Car (DOC) Coverage
DOC applies to employees or executives of a company or any other person who is supplied a company car, but who does not own a personal vehicle. Individuals who are owners of the company qualify for the “individual named insured” endorsement, which includes family coverage.
Collision Coverage
Protection against loss or damage to a covered auto or non-owned auto resulting from the impact with another vehicle or object. Collision losses are paid regardless of fault.
Comprehensive Coverage
Protection against loss or damage to a covered auto resulting from loss other than a collision.
Garage Liability
Coverage protects against liability arising out of service work performed by mechanics or employees.
Garagekeepers Legal Liability
Coverage applies to damages to vehicles left in the insured’s custody for inspection, service or repair.
