Who Needs Commercial Car Insurance?
Commercial car insurance, also known as business auto insurance, is coverage for a vehicle used by a business. It protects companies in case of a car accident involving a company vehicle or an employee traveling for official company business. If you haven’t looked into this type of policy and discussed the pros and cons of this type of auto insurance, you need to call Autumn Insurance today.
Who Needs Business Auto Coverage?
If a vehicle is titled to a business, or if an employee uses a vehicle in any way, shape, or form for a business, then that company needs a commercial auto policy.
What About Delivery Services?
If your company offers any type of delivery service—whether you’re delivering packages, products, or pizza—you need a commercial car insurance policy.
Many people mistakenly assume that you only need commercial auto insurance for a company vehicle, like a UPS truck. But even if your employees are driving their own passenger cars to make deliveries, you need a commercial policy to protect your business properly in case of an accident.
Company-Owned Vehicles vs. Personal Vehicles
Even if you don’t provide company-owned vehicles, you may still need some form of commercial auto insurance.
For example, let’s say your employee needs to drive their personal vehicle to the bank once a week on company business. If they get into a car accident on the way to the bank, your business may be liable for their damages or injuries.
Businesses without company-owned cars can add an endorsement to their general liability policy called Hired and Non-Owned Auto Coverage. This protects the company in case an employee gets into a car accident while using their personal vehicle for company purposes.
What If My Employees Already Have Personal Auto Insurance?
Even if your employees have personal car insurance, you still need a commercial auto policy if you have company-owned vehicles or if your employees drive for company purposes.
Commercial car insurance protects your company from legal exposure in case an employee gets into a car accident. With commercial auto coverage, you protect yourself in case it’s determined that your company should pay some or all of the expenses associated with the car accident.
What If I Only Have One Company Vehicle?
It doesn’t matter if you have one company vehicle or one hundred; you need a business car insurance policy to properly protect your company in case of a car accident.
What About Independent Contractors?
Some companies may hire independent contractors to haul materials or products for large jobs. In these cases, the company doesn’t need a commercial auto policy. However, the independent contractors do need to list the company in question as an additional insured to their own policy.
What If I Drive for Uber or Lyft?
If you’re a driver for a ridesharing company like Uber or Lyft, you will need a policy from an insurance company that specializes in that very specific type of coverage.
Who and What Is Covered by Commercial Car Insurance?
- Who: The business owner and their employees
- What: The same coverage you would have for a personal auto policy (bodily injury, property damage, etc.), but written for a business instead of an individual
Does Business Insurance Cover Passengers?
Passengers may or may not be covered in a commercial auto policy. It’ll depend on the type of passenger and the risks of the trip in question.
For example, if a long-haul trucker is training a new employee, then that passenger would be covered in case of an accident. However, if the same trucker decided to take their child as a passenger while hauling flammable liquids, that would likely be a risk not covered by their commercial policy.
Are Goods, Materials, or Cargo Covered?
You’ll need to add a specific type of coverage to your policy. It will protect cargo in case of an accident, such as:
- Motor truck cargo: Add this endorsement to your policy if you’re using company-owned cars or trucks to transport client cargo.
- Inland marine: This can protect more expensive products your business owns during shipping, like computers or high-tech equipment.
What Is the Required Coverage?
In Michigan, you have to have bodily injury and property damage coverage, just like in a personal auto policy. Your personal injury protection (PIP) coverage should cover your employees. However, there are no other coverage requirements.
Just because you’re not required to have a certain amount of coverage doesn’t mean it’s wise to go with a lower policy amount. For example, commercial car insurance policies typically start at $1 million worth of coverage. Adequate protection is what matters most.
To make sure your company is completely protected in case of a car accident, consider adding the following coverage to your policy:
- Hired and non-owned auto coverage: This covers your employees in case they get into a car accident using their personal vehicle for company purposes.
- Comprehensive and collision coverage: This covers physical damage to the vehicle itself. This protects you if an employee is in a single-vehicle accident (e.g., if they hit a tree or a deer). It also applies if your vehicle sustains damage through extreme weather, vandalization, or theft.
- Under-insured and uninsured motorist coverage: This covers you in case your employee gets into an accident with someone who is uninsured or who only has a minimal amount of coverage.
When Does Commercial Car Insurance Apply?
Evaluate coverage on a case-by-case basis. Let’s take a look at some common scenarios to determine whether or not commercial car insurance would apply:
- Commuting in a personal vehicle: Generally speaking, an employee’s morning commute is covered by their own personal car insurance policy, not a commercial auto policy.
- Taking lunch breaks in a personal vehicle: Again, your employee’s personal car insurance would cover them in case of a car accident during a lunch break.
- Attending a meeting off-site in a personal vehicle: This may vary on a case-by-case basis. In certain circumstances, a commercial auto policy may apply.
How Much Does Commercial Car Insurance Cost?
The cost of commercial auto insurance depends on a number of factors, such as:
- Number of vehicles insured
- Type of vehicle
- Vehicle safety rating
- Value of the vehicle
- Driving record of the person assigned to the vehicle
- Cargo the vehicle transports
- The average distance of travel (calculated as a radius)
Do Poor Driving Records Affect Commercial Car Insurance Rates?
Yes. If you or your employees have poor driving records, that could cause your commercial auto rate to increase. Keep in mind that your driving record encompasses both personal and professional driving. Your record will follow you from job to job.
Drivers with minor infractions may have to pay more but still retain their insurance. But something like a DUI on their record may prompt a request from the insurance company. They’ll want to keep that driver off the road. If the business owner refuses, then the insurance company may cancel the policy.
How Can I Save on Commercial Car Insurance?
There are a few ways you can save money when shopping for a commercial car insurance policy:
- Bundles: You may receive a discount if you bundle all of your commercial policies with the same company.
- Safe driving: Some companies offer lower rates if you add a monitoring device to your company vehicles to track length of trip, average speed, etc. For long-haul truckers, good cab reports can help companies avoid increased rates.
- Large fleets: If you have a large fleet of company vehicles you need to insure, you may qualify for a discount.
Call Autumn Insurance today at (248) 478-1177 for your commercial policy. We can help answer your questions. We’ll make sure you have the right coverage for your vehicles.