Accidents happen.
Be ready when they do.
When a company vehicle is involved in a collision, the consequences can be far-reaching, potentially resulting in a costly lawsuit. Even if your small business does not have deep pockets, you can be pulled into complex claims. The smartest way to protect your company is with a solid risk management strategy that includes commercial auto liability insurance.
Understanding Small Business Auto Insurance
Just as you need personal auto insurance for your personal vehicles, you need business auto insurance for your business vehicles. Maintaining adequate insurance is necessary to comply with state auto insurance requirements and to protect your business from liability stemming from a crash.
If your small business transports expensive equipment or inventory, you may also need a separate inland marine insurance policy. Commercial auto insurance policies typically exclude coverage for cargo and property in your care, custody and control. Commercial auto insurance and inland marine insurance are complementary coverages that work together.
Frequently Asked Questions
What is commercial auto liability insurance?
Commercial auto insurance provides coverage for business vehicles. It may also be called liability truck insurance or fleet insurance.
Who needs commercial auto liability insurance?
Any business with company vehicles needs commercial auto liability insurance, whether the business owns a single car or a fleet of vehicles. If your employees use personal or leased vehicles for business purposes, you should also consider securing commercial auto insurance with hired and non-owned auto coverage.
What is hired and non-owned auto insurance?
Hired and non-owned auto insurance provides liability coverage when personal, rented or leased vehicles are used for work purposes. For example, if an employee uses their personal vehicle to make deliveries, and a crash occurs while that person is driving for work, the other party can name your business in a lawsuit, even if the employee has their own personal auto insurance. The employee’s personal auto insurance likely won’t cover your business. Hired and non-owned auto insurance provides coverage for your business in situations like this.
What does commercial auto liability insurance cover?
Commercial auto insurance can include multiple coverages. In addition to liability coverage, many policies provide collision and comprehensive coverage for damage to your own vehicles.
Commercial auto liability insurance does NOT cover damage to cargo/inventory or treatment for injuries incurred by you or your employees. Workers’ compensation insurance and inland marine insurance are needed for those exposures.
Is commercial auto liability required by law?
Most states require all vehicles to be covered with liability insurance. If the vehicle is a company vehicle, you need commercial auto liability insurance. You also need to maintain liability limits that meet your state’s requirements, and you may wish to secure higher limits in order to protect your company from large settlements and jury awards. State laws vary, so additional types of auto insurance may be required depending on your location.
If you are financing your company vehicles, your lender will likely require you to maintain collision and comprehensive insurance in addition to liability insurance.
How much does commercial auto insurance cost?
Costs vary depending on many factors such as the number and type of vehicles insured, your company’s claims history, the crime risk and claim frequency within your zip code and your coverage limits and deductibles. To get a better idea of the costs for your organization, request a business car insurance quote.
What’s the difference between personal and commercial auto insurance?
Personal auto insurance is designed to cover an individual and personal driving activities, whereas a commercial auto insurance policy is designed to cover a business and business-related driving activities. Personal auto insurance policies often exclude business-related activities, so you need the right type of policy to ensure you have coverage in the event of a claim.
There’s a good reason for these exclusions – an individual’s risk profile is not the same as a company’s risk profile. For one thing, lawsuits against companies often have much larger settlements and jury awards.
For this reason, commercial auto insurance policies tend to have higher limits than personal auto insurance policies. Some business owners opt to secure additional coverage through a business umbrella or excess liability insurance policy. Businesses may also need additional coverage types, such as hired and non-owned auto insurance coverage.