When looking to start a business that includes travel or transportation, you may often hear the term “commercial auto” or “commercial vehicle.” Both refer to vehicles specifically used for work purposes. These are generally not personal vehicles, but trucks and such that are used for specific work.
Types of Commercial Vehicles
There are many different types of commercial vehicles, most created to carry either cargo or passengers.
Common examples of commercial vehicles include:
- Passenger vehicles
- Passenger buses
- Box trucks
- Cargo vans
- Ice cream trucks/food trucks
- Pickup trucks
- Cement mixers
- Vehicles designed to carry over 15 passengers
- Any vehicle weighing over 26,001 pounds
Are All Trucks Commercial Vehicles
Most trucks can be classified as a commercial vehicle if they are used for work purposes, but not all commercial vehicles are trucks. This is especially important when it comes to insurance.
Each state has different laws regarding commercial auto insurance, and there are also different laws concerning trucks. While commercial auto insurance needs are calculated based on many of the same factors as personal auto insurance, trucking insurance requirements concern the truck’s cargo and where it is being carried.
Ohio, for example, has different laws regarding these two coverages.
Commercial vehicles in Ohio must carry a minimum amount of commercial auto insurance, which is:
- $25,000 in bodily injury liability per person
- $50,000 in bodily injury liability per accident
- $25,000 in property damage liability
On the other hand, insurance for certain trucks is slightly more complicated. For certain cargo, trucks in Ohio must carry:
- Household Goods: $300,000 in liability insurance
- General Freight: $750,000 in liability insurance
- Oil Transport: $1,000,000 in liability insurance
- Hazmat/Hazardous Material: $5,000,000 in liability insurance
All vehicles transporting cargo must carry at least $10,000 per vehicle and $10,000 per catastrophe in cargo insurance.
What is Commercial Auto Insurance?
As stated above, commercial vehicles should not (and often cannot) be insured with a personal auto insurance policy. Commercial auto insurance is designed to cover these vehicles and the unique risks they face. Commercial vehicles often face higher risks than personal vehicles, as they transport equipment, cargo, and often frequently travel far distances on busy highways and roads.
All businesses using commercial vehicles should have commercial auto insurance.
What Does Commercial Auto Insurance Cover?
A full coverage commercial auto insurance policy typically includes:
- Comprehensive Coverage: Comprehensive coverage provides compensation for loss of or damage to the insured vehicle due to fire, wind, hail, lightning, falling objects, theft, vandalism and other incidents not involving collision.
- Collision Coverage: Collision coverage provides compensation for loss of or damage to the insured vehicle due to collision with another vehicle or object.
- Liability: Liability insurance compensates for bodily injury and property damage the driver may cause someone else while operating the insured vehicle.
- Medical Payments: Medical payments coverage helps with medical expenses for the driver and their passengers after an accident.
- Uninsured/Underinsured Motorist: This coverage provides compensation for expenses related to an accident involving a driver not carrying insurance.
- Roadside Assistance: Roadside assistance helps take care of trip interruptions such as running out of gas, flat tires and towing.
Are Company Vehicles Commercial Vehicles?
Say your employer provides you with a company vehicle to travel and take clients out to lunch. Is that vehicle a commercial vehicle?
In most cases, yes. Any vehicle owned or used by the business for work purposes can be considered a commercial vehicle and should be covered under commercial auto insurance.
Most companies that provide company cars also cover commercial auto insurance for the vehicles, so be sure to ask your employer about their policy and the coverage available to you.
Does Commercial Auto Insurance Cover Personal Use?
Although personal auto insurance policies don’t cover commercial use, the same is not true in reverse. Most commercial auto insurance policies cover personal use of commercial vehicles.
Be careful when choosing which type of insurance policy you need. Insurance providers will not insure commercial vehicles used for work with a personal auto insurance policy. If the insurance provider discovers that the vehicle is being used for work, or if a commercial vehicle is not being used for work, they could cancel your policy. Keep in mind that commuting to and from work does not count as work purposes and any accidents that occur while you’re commuting should be covered under your personal auto insurance policy.