Commercial auto insurance is a useful policy designed to protect the vehicles owned or used by your business for work purposes. However, a basic commercial auto insurance policy will not cover everything. Your typical full coverage commercial auto insurance policy may include:
- Comprehensive Coverage: Comprehensive coverage provides compensation for damages to the vehicle caused by fire, wind, hail, lightning, smoke, theft, vandalism and other incidents.
- Collision Coverage: Collision coverage provides compensation for damages to the vehicle caused by a collision with another vehicle or object.
- Liability: Liability insurance covers bodily injury and property damage the driver may cause someone else after an accident.
- Medical Payments Coverage: Medical payments coverage provides compensation covers injuries the driver and their passengers may receive after an accident, no matter who caused the accident.
- Uninsured/Underinsured Motorist Coverage: This coverage provides compensation for damages incurred in an accident involving a driver who is not carrying insurance.
- Roadside Assistance: Roadside assistance covers trip interruption expenses such as running out of gas and needing to be towed.
However, this type of policy can vary and doesn’t always cover every danger that could face your commercial vehicles.
What Does Commercial Auto Insurance Not Cover?
As a rule, commercial auto insurance policies may not cover:
- Vehicles not owned by the business for work purposes
- Intentional damage or accidents
- Accidents that occur while the driver is under the influence of drugs or alcohol
This is why you should ask your insurance agent about additional coverage options, such as:
Hired and Non-Owned Auto Insurance
Hired and non-owned auto insurance is for companies that rent vehicles or have employees use personal vehicles for work purposes. The issues with borrowing or renting vehicles is that it leaves the employer at risk for liability if the driver causes an accident. Hired and non-owned vehicle insurance covers medical bills and property damage for such vehicles.
As a businessowner, you may choose to have only named insureds for work vehicles or purchase additional insured to protect anyone driving the company vehicles. This coverage is more limited for drivers than it is for the insured. It helps cover legal fees and third-party lawsuits concerning bodily injuries and property damage.
One side of commercial auto insurance is trucking insurance. This insurance is geared specifically for truckers and trucking companies, as these vehicles face unique risks and tend to cost more to repair. It covers the same auto coverages as commercial auto insurance but also involves:
- Cargo Insurance: Cargo insurance provides compensation when cargo is lost or damaged.
- Warehouse Legal: This insurance helps pay for items kept in a warehouse that are damaged or lost due to theft, fire and other covered perils.
- Non-Owned Trailer Coverage: Non-owned trailer coverage provides compensation if a rented or borrowed trailer is damaged or lost.
Umbrella insurance is additional coverage that fills in holes left over by other liability coverages. If an accident happens and costs more than your policy limits, umbrella insurance will help pay for the extra damages. This policy is typically an add-on to another policy such as general liability or bodily injury liability.
Discounts for Commercial Auto Insurance
Commercial auto insurance can be expensive, especially for large businesses or businesses with vehicles that travel across states. Compare quotes and ask about discounts for your commercial auto insurance policy. Common discounts include:
- Paid-in-full discounts: If you pay your entire premium in one lump sum, they can receive a discount.
- Experienced commercial driver discounts: Some agencies offer discounts for drivers who have been driving for a certain amount of time.
- Multi-policy discounts: Many insurance providers want to be your main source of insurance and thus will offer discounts if you bundle commercial auto insurance with your other business insurance policies.
- CDL discounts: CDL discounts, or commercial driver’s license discounts, save money for policyholders that have a commercial driver’s license.
Also be aware of specified perils coverage, which may save you on premiums by covering only named perils instead of named and unnamed perils.
Commercial auto insurance often as a combined single limit (CSL) which combines bodily injury and property damage to raise the limits on these coverages.
How Much Commercial Auto Insurance is Required?
Commercial auto insurance isn’t specifically required in most states, but all vehicles must be insured in order to drive legally on the road. Requirements vary per state, so be sure to check your location—especially if you have more than one in varying states—to ensure that you have the proper coverage.
In Texas, for example, all vehicles both personal and commercial must be insured with at least:
- $30,000 in bodily injury liability per person
- $60,000 in bodily injury liability per accident
- $25,000 in property damage liability
Be sure to ask your insurance agent if you have any questions about exclusions or additions available for your commercial auto insurance policy.