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What’s Covered By A Commercial Auto Insurance Policy?

What’s Covered By A Commercial Auto Insurance Policy?

Some organizations need employee automobiles to aid with day-to-day operations. Whether your company has one or several cars, commercial auto insurance may assist cover you in the event of an accident. It is because a personal car insurance policy does not cover your company’s automobiles.

What Is Commercial Auto Insurance?

Commercial auto insurance protects companies that own and operate motor vehicles by covering the costs of property damage, vehicle repairs, medical expenditures, and legal obligations resulting from a covered occurrence.

Commercial auto insurance is sometimes known as business auto insurance or commercial vehicle insurance, although all of these words apply to the same coverage—car insurance for commercial autos.

Commercial car insurance plans give coverage identical to personal auto insurance policies, with the exception that it is only for automobiles used for business reasons. There are rules in place for many commercial vehicles, including trucks, cement mixers, and other trailers.

How Does Commercial Auto Insurance Work?

Commercial vehicle coverage may be purchased for a single vehicle or an entire fleet. Before acquiring a policy, the company must determine what kind of coverage it needs and to what degree. He or she will collaborate with an insurance company representative to decide the following policy elements:


The sorts of accidents, losses, and expenditures covered

Policy Limit:

The most money that the insurer may have to pay out on the policy.


The amount that the employer must pay out of pocket before coverage is offered.

Monthly Premium:

The cost of keeping the coverage monthly.

Businesses should choose plans that provide enough coverage and policy restrictions while also having affordable deductibles and monthly costs.

When a company acquires commercial vehicle insurance, the policyholder will pay monthly rates. In exchange, the insurance company undertakes to pay for any damages, repairs, and medical or legal expenditures incurred due to a covered occurrence, as specified in the policy conditions.

After a crash, break-in, or another insured occurrence, the policyholder must contact the insurance provider to submit a claim and disclose any damages. All insurance companies will ask you to notify them within a few days after the occurrence, and failing to do so may result in the claim being refused.

If the total damage assessed exceeds the policy deductible and the occurrence is covered, the insurer must pay for losses up to the policy’s maximum. Most business vehicle risk and insurance providers apply the policy limit to all expenses covered by the policy, even if numerous losses occur from distinct occurrences.

If a firm needs larger limits, it may obtain extra liability coverage or an umbrella policy, which is distinct from the commercial vehicle insurance policy but will kick in if the commercial auto policy’s policy maximum is reached.

For paying for insured damages, not all insurers follow the same procedure. In the event of an accident, for example:

  • Some insurance companies may require you to utilize one of their authorized vehicle repair shops to evaluate and fix damages. They will often pay the shop immediately and charge you for the deductible. It is an excellent circumstance since it entails the fewest transactions and avoids the store from overcharging you.
  • If the vehicle repair shop is not part of the insurer’s authorized shop network, some insurers will ask you to get several pricing quotes from various auto repair shops.
  • Depending on the degree of the damage, certain insurers may dispatch personnel to assess the damage and estimate the repair costs before authorizing repair quotes from a shop.
  • Some insurers will also only refund expenses once the policyholder has paid them, issuing money after the repairs have been completed. Depending on a company’s financial flow, this might be inconvenient, if not damaging. Policies that are constructed in this manner should be avoided.

No regulations can determine how the insurance provider will handle claims, so research each provider’s technique of resolving claims and ensure that the procedure works for your company.

What’s Covered By A Commercial Auto Insurance Policy?

Commercial car insurance coverage intends to help pay for damages to your corporate vehicle or a driver’s medical costs after an accident. Remember that a covered claim is subject to the deductibles and restrictions of your insurance.

Coverage requirements and availability vary by state, so contact your local Business Insurance agents for more information. To get you started, here are some popular commercial auto insurance coverages:

Liability Coverage:

A business car policy from any insurance company includes two types of liability insurance: bodily injury liability and property damage liability coverage. Every state requires auto liability insurance.

If your employee causes an accident while driving a corporate car, bodily injury coverage pays for the other driver’s medical expenditures. Property damage coverage contributes to the cost of the other driver’s automobile repairs.

Collision Coverage:

After a covered accident, collision coverage pays to repair your work car or may pay to replace it if it is a complete loss.

Comprehensive Coverage:

Comprehensive coverage pays for repairs to your business vehicle if it is damaged by anything other than an accident. For example, if a storm passes through and causes hail damage to your corporate vehicle, comprehensive coverage may pay for repairs.

Uninsured/Underinsured Motorist Coverage:

Your employee’s medical costs or car repairs are covered if they are involved in an accident caused by another driver who does not have adequate liability insurance to meet the related expenditures.

Rental Car Coverage:

Rental car coverage assists in covering the expense of hiring a vehicle while your corporate automobile is being repaired after an accident.

Who Needs Commercial Auto Insurance?

If the vehicle fits any of the following descriptions, it will almost certainly need at least the bare minimum of business car insurance coverage:

  • A company owns, rents, or leases the vehicle.
  • Employees utilize the vehicle.
  • The firm does not own the vehicle, but it is only a means of transportation for corporate activity.

If the vehicle meets the definition of a business vehicle, a personal car insurance policy may exclude coverage for an event that occurs while the vehicle is being utilized for business.

The particular sort of coverage required will be determined by how the car is used for business; but, if the vehicle is utilized for business, it will need some form of a commercial auto insurance policy.

Bottom Line:

If your company has vehicles, you must have commercial auto insurance. You will require it for any vehicle that an employee owns, leases, or rents and uses for business purposes.

You generally don’t want to put your company in danger by being underinsured, such as by choosing minimal motor liability coverage. It is typically advised that each vehicle has at least $500,000 in liability coverage. Contact your local business insurance agent, to purchase commercial auto insurance and for more information.

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