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What Insurance Do I Need for My Business Vehicles?

— May 25, 2021

There is no standard coverage, each state has its own business car insurance policies and every business owner has their unique needs. Some policies include a driver and a spouse and others cover all drivers.

Your employee is driving a company car to deliver goods to a client. Along the way, the service vehicle collided with another car causing severe damage. Also, there were injuries sustained by the other motorist and needs immediate medical attention. If you don’t have a commercial auto insurance policy your business has to shoulder all the expenses. If the injured party files a lawsuit, the legal expenses are covered by the policy.

There is no standard coverage, each state has its own business car insurance policies and every business owner has their unique needs. Some policies include a driver and a spouse and others cover all drivers.

A commercial auto insurance policy is not limited to large businesses: self-employed people can also avail themselves. You’ll have that peace of mind that expenses will be covered in case of an accident while conducting business.

The liability coverage of a business auto insurance policy is higher than a personal auto insurance policy.  In case of an accident and you don’t have commercial auto insurance your personal auto insurance may not suffice to cover the expenses for the injury and the property damage. Once you reach the limit any excess will come out from your pocket.

What is Commercial Auto Insurance?

Companies are required to acquire commercial auto insurance coverage for vehicles that are used in daily operations. These are the trucks, cars, vans, and other vehicles that you and your employees use for driving on business. Some important coverage considerations for businesses are…

  • Injury coverage to employed drivers or passengers such as medical expenses and lost salaries.
  • Loading and unloading liability when transporting goods to clients or events.
  • Replacement car coverage when a commercial vehicle is under repair so work will be continuous.
  • Additional coverages can be bought when crossing states to ensure employees are insured.

Most states require businesses to secure liability insurance for bodily injury and property damage in case of any vehicular accident while on the road.

Image by Thai An, via
Image by Thai An, via

The Business Auto Coverage Form (BACF) is usually the contract that businesses seek for their auto liability insurance. Each vehicle can be treated separately depending on the features and the indemnification you need for it. 

Can I Get Personal Insurance on a Company Car?

Some employers allow the use of the company vehicle for work and personal reasons but ask their employees to get their own insurance coverage when using the car during off duty.

Here, the employee is not covered by the policy in the business’s name, nor any of the family members who used the company vehicles for personal reasons. There is a gap in coverage and there will be no insurance policy to protect the driver or passengers in case of a vehicular accident.

An endorsement to the personal auto insurance policy known as the Extended Non-Owned Coverage for Named Individuals will cover the gap. Every family member who will drive the company vehicle should be mentioned in the endorsement. This includes liability coverage only, and not any physical coverage for the vehicle.

However, if the company won’t allow it or can’t add it, the employee has to buy a Named Non-Owned policy to fill the void.

When and Why Do I Need Commercial Vehicle Insurance?

If a vehicle is used in tasks related to an operator’s occupation or profession, or for activities in a business, a commercial vehicle insurance policy is needed. In case of a vehicular accident, there is insurance coverage to cover the hospital bills and damage to the property.

For instance, transporting goods or people using your vehicle for a fee, employees operate a vehicle in the name of a corporation or towing a trailer used to conduct a business.

What Does a Commercial Auto Insurance Cover?

A commercial auto insurance policy covers:

Collision insurance

Collision coverage is needed if your vehicle is financed or leased. The damage to your vehicle is covered if you hit another vehicle, a vehicle hits you, or your vehicle turns upside down regardless of who is responsible.

Comprehensive insurance

This covers damage to your vehicle other than an accident such as flood, earthquake, theft, vandalism, fire, or damage caused by animals.

Liability insurance

If you are liable for the accident, this insurance will pay for damage to your vehicle and the other vehicle. Bodily injury covers the medical costs and lost wages for those involved and legal expenses in case of a lawsuit.

Uninsured motorist coverage

When you’re ran over by an uninsured or unidentified driver, this insurance will cover your medical bills or property damage.

Underinsured motorist coverage

Pays you if the liability insurance of the accountable driver is not enough to cover the costs of the property damage or injury. In no-fault states, a driver’s auto insurance policy cover losses in a vehicular accident.

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