Commercial Auto insurance ensures that your employees, your company vehicles, and your business are all well protected. It’s not only good business, it’s required by law in nearly every state and must cover all vehicles, even if they aren’t being utilized. What’s at risk if you refuse? To start, suspension of your company’s vehicle registrations and licenses.
Policies are designed to protect against property damage, legal and medical costs and physical damage if you are involved in an auto accident. They also cover theft of your vehicles including rentals and employee-owned cars and trucks, and repairs from damages not caused by an accident (say hitting an animal). Especially important; Commercial Auto provides protection against the type of million-dollar awards that often result if there’s a fatality.
In 2021, rates have continued to accelerate because of industry disrupters like distracted driving, more traffic and increasing medical and litigation costs. There has never been a better time to revisit your policy.
What is typically excluded?
Policies vary so it’s important to be aware of any potential gaps in coverage. Some standard exclusions include:
- Intentional acts, such as road rage
- Hazardous materials spills from your vehicle
- Terrorism
- Wear and tear
- Medical expenses and other injury claims from employees driving a company vehicle (these would be covered under Worker’s Comp)
What if subcontractors are involved?
If your company uses subcontractors, they must name your company as an additional insured on a primary and non-contributory basis for automobile liability.
How does a policy work and how long should you carry coverage?
Commercial Auto policies typically cover 12 months at a time. There are two main parts to the policy: Liability and Physical Damage. Auto liability is typically one of a contractor’s largest exposures.
When shopping for a policy there are many factors to consider. Take the time to understand the language and symbols as you consider your options. (Symbols are Arabic numerals 1 – 9 and indicate what vehicles are covered.)
How do I choose the right amount of coverage?
Commercial Auto insurance policies are rated based on the size of vehicles, the vehicles’ year/make/model, mileage radius, and where the vehicles are garaged. Deductible amounts can also influence premium rates. The standard Commercial Auto insurance liability limit is a $1,000,000 combined single limit. In most cases, the umbrella limit should kick in for any claims above $1,000,000.
What happens if your business situation changes?
If your company is growing, that might mean adding more vehicles to your fleet – and your insurance policy but be aware that liability limits typically remain the same no matter how many vehicles you have. Be sure to discuss this with your broker, especially when the vehicles are registered in your name. As your business continues to grow, you might consider implementing safe driving procedures and requiring a fleet safety course for employees.
Take your time. Consult an insurance professional.
Having the right vehicle coverage, policy limits, deductibles, and carriers is not only key to protecting your business, but also an important aspect of financial planning for your company.