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Read commercial auto insurance for small business articles about costs, coverages & options. EK Insurance provides business auto articles aimed at helping vehicle insurance buyers make and informed choice, and to better understand the policies you already have.

Commercial Auto Insurance For Small Businesses

Whether you own a pizza shop that delivers or you are a florist that transports flowers to clients, company vehicles are an important part of your business. However, while they may be the backbone of your establishment, there are certain risks that come with owning and operating vehicles for small businesses, such as accidents and injuries. Fortunately, there is a way that you can protect drivers and your business from these risks: commercial auto insurance.

Not sure what commercial auto insurance for small business is all about? Keep on reading to learn more about this type of insurance and the benefits it can offer your business.

Does My Business Need Commercial Auto Insurance?

The best way to determine whether or not you need commercial auto insurance is to speak to an insurance agent or someone else who has ample knowledge of the topic. However, if the business you operate uses vehicles on a regular basis, it’s a pretty safe bet that you are going to need it, no matter what size your business is.

It’s pretty obvious that a company that has a fleet of vehicles and uses them to transport goods or perform services should have commercial auto insurance. However, if you own a small company or are a sole proprietor and don’t have commercial drivers, it can be hard to determine if this type of insurance is right for you. Your personal auto insurance may not cover you or any of your employees in the event of an accident, so it’s essential to find out immediately if commercial auto insurance is necessary.

Business auto insurance is a policy that covers any vehicles that are used for your business, as well as the people who drive those vehicles. It provides financial protection for you and any employees that drive for reasons related to your business if an accident or some other type of incident occurs.

While business vehicle insurance has some similarities to personal auto policies, there are notable differences in eligibility, coverages, exclusions, definitions & limits. Commercial car insurance is needed for certain type of vehicles (think heavy vehicles like tractors, dump trucks etc.). This can include cars used for business purposes as well as box trucks, food trucks, service utility trucks, etc.

Some professions that require commercial auto insurance include the following:

  • Landscapers
  • Electricians
  • Plumbers
  • Home heating oil companies
  • Delivery companies (food, packages, etc.)
  • Realtors
  • Livery drivers
  • Truckers (also look at Truckers General Liability Insurance)
  • Tow truck operators

If your profession isn’t listed above, don’t assume that you don’t need business auto insurance. As mentioned, if your business uses vehicles, there’s a pretty good chance that you are going to need commercial auto insurance. Also you might be contractually required to have it of a customer requires it as part of a deal.

What Does Commercial Auto Insurance Cover?

As the name suggests, commercial auto insurance is a type of vehicle insurance policy that is specifically designed for businesses that own and operate vehicles. Generally, this type of insurance coverage provides four main types of protection:

  1. Liability coverage. This helps to pay for any third-party bodily injuries or property damage that may occur as a result of a vehicle-related accident. It can also help to cover the costs of legal expenses that may arise after an accident, such as lawyer fees, court fees, and settlements.
  2. Collision & Comprehensive coverage. If a company vehicle is damaged by an accident or something other than an accident (a falling tree, etc.), this type of insurance can help cover repair costs.
  3. Medical expense coverage. If a driver or passengers are injured, commercial auto insurance can assist with the medical expenses, no matter who is at fault. Uninsured /
  4. Underinsured motorists. Should someone who isn’t insured cause an accident and hurt your company drivers, this coverage allows the business owner to claim against their own insurance for costs associated with injuries including medical expenses, pain and suffering & lost wages.
The type of commercial auto insurance for small business a company needs depends on the defined risks that are associated with using vehicles for business use. It’s important for business owners to determine what risks they face in order to select the right policy. A reputable insurance broker can help you indentify these risks.

Whatever policy you choose, you should consider extending it so that it will cover any employees who may drive in order to complete tasks that are related to your business. For example, if you own a restaurant that delivers food, it’s a wise idea to have your delivery drivers covered. Or if you rent vehicles you can get coverage for that as well and it is called hired & non-owned auto.

What Commercial Auto Insurance Doesn't Cover

An insurance provider will not cover any physical damage a business vehicle sustains if that damage is the result of exclusions. For example, if you or an employee is driving a company vehicle after business hours and are involved in an accident while doing something unlawful (committing a crime, for example), it’s likely that the insurer will not cover the cost of damage to the vehicle.

Know as exclusions, which elimiate risks for the insurer, commercial auto insurance typically does not cover:

  • Intentionally damage caused by the business owner or employees.
  • Workers compensation.
  • Employer’s liability.
  • Racing.
  • Pollution.
  • Contractual liability.
  • Amounts beyond the policy limits and auto value.

How Much Does A Business Owners Policy Cost?

How much does a business owners policy cost? The premiums vary depending on the amount of risk exposure, and it depends on the endorsements and deductible selected. Following are some of the main factors that go into the price of a policy:

  • Type of business (contracting, service, retail etc.)
  • Business location
  • Years in business
  • Business experience
  • Annual payroll
  • Annual revenue
  • History of claims
  • How much property you want to cover

These are just some of the exclusions. It’s important to know what your commercial vehicle insurance policy doesn’t cover so that you can properly train and direct the employees who will be driving your company vehicles.

How Much Does Commercial Auto Insurance Cost?

How much does commercial auto insurance cost? The average price of business vehicle insurance varied widely based on certain factors. The premiums vary depending on the company and their underwriting rules, and it depends on the coverages and deductible selected. Following are some of the main factors that go into the price of a policy based on the business:

  • Geographical location – The more dangerous your location is the higher premiums you will pay as there is a higher probability for claims. If you live in a highly populated urban area accidents and insurance claims happen more often and rate are higher.
  • Previous insurance coverage – Continual auto insurance history can help get you a better rate.
  • Vehicle types – Purchase price, theft rate, cost of repairs, accident rate and safety tests weigh heavily in car insurance cost.
  • Vehicle use – A vehicle used to haul hazardous waste more of a risk than the van used to drive to a worksite.
  • Miles driven annually – The less you drive, the less risk you have of being in an accident.
  • Business credit history – The better credit you have, the lower your rates. Most insurers look at credit and weight it heavily.
  • Coverages – The more coverage you choose with higher limits, the more it will cost you since the insurer is taking on additional risk.
  • Deductibles – The deductible is your out of pocket cost before your policy kick in. Lower deductible = higher premium, and higher deductible = lower premium.

And the following factors have an effect on the price based on the acutal drivers:

  • Age – Typically drivers under 25 pay more because statistically shown to be inexperienced behind the wheel, easily distracted and to crash more often. They are on of the riskiest category of drivers to insure.
  • Gender – Data shows males are more likely to crash, hence men’s premiums are higher.
  • Marital status – Married people have been found to be less of a risk to insurers than singles, including divorced or widowed drivers.
  • Years of driving experience – Inexperienced drivers pose more risk. That is why under 25 have some of the highest rates.
  • Driving record – Drivers with a clean driving record qualify for better rates and can be eligible for a safe driver discount.
  • Claims history – More claims = more premium. Insurers actually count frequency (how many claims in a time frame) more than severity (how large the claim was).

Do You Need Commercial Auto Coverage If You Have Personal Auto Insurance?

That depends. If you are only using your personal vehicle to commute to and from work or to meet a business client on occasion, your personal auto insurance policy might be suitable. However, if any of the following apply, commercial auto insurance coverage is a wise investment for you, your employees, and your business:

  • You drive your personal vehicle for business-related affairs on a frequent basis.
  • A vehicle that you own is registered to your business.
  • Vehicles that are registered to your business are operated by employees.

Further Reading On Business Auto Insurance

Read through helpful commercial auto insurance for small business to help you better understand polices you own or are buying.

Related articles:

Understanding The Business Auto Coverage Form

The person injured in an automobile accident may be a young child, a wage earner, a surgeon, or a homeless person. The costs of the accident may be relatively small or run into the millions of dollars, depending on the victim and his or her injuries. Do you have the assets to handle such costs? Moreover, is that the way you want to use them? If not, the Insurance Services Office (ISO) Business Auto Coverage Form is designed to protect you.

Consult the policy for definitions and limitations. The information below does not represent contract terms. The policy is subject to company underwriting practices.

What Is Covered

The ISO Business Auto Coverage Form protects your assets in several ways:

  • Covered auto liability coverage insures your legal obligations that arise from an accident, including lawsuits and their associated costs. The limits you purchase should be high enough to handle the potentially serious injuries and loss of earnings a victim may sustain.
  • Uninsured and underinsured motorists coverages protect you when you are involved in an accident caused by a driver who has no insurance or insurance with relatively low limits. The limits you select for this coverage should be the same as your liability limits.
  • Physical damage coverage on vehicles directly protects your assets. Comprehensive, Specific Causes of Loss and Collision are the coverage options available. Deductibles should be as high as you can comfortably absorb to maximize the protection provided relative to the premium cost.
  • Medical payments coverage and towing expense costs for private passenger vehicles are other optional coverages to consider.

What Isn't Covered

Every insurance coverage form or policy has limitations and exclusions. This is because either the coverages are needed by only specific types of businesses or the risk or exposure to loss is not considered insurable for one or more reasons. Some of the more common exclusions are:

  • Expected Or Intended Injury
  • Contractual
  • Bodily Injury To Employees
  • Care, Custody Or Control
  • Handling Of Property
  • Operations and Completed Operations
  • Pollution
  • War
  • Wear and Tear
  • Certain types of electronic devices

Always review the coverage form carefully for other limitations and exclusions and the details of the exclusions.

What Vehicles Are Covered

The coverages available are listed on the declarations. A box with numbers in it is next to the coverage. These are called symbols. They explain which autos are insured for the particular coverage. Each coverage can have one or more symbols. The symbols translate as follows:

  1. – All autos are covered. No additional symbols are needed.
  2. – All autos you own are covered.
  3. – Only private passenger autos you own are covered.
  4. – Only autos you own that are not classified as a private passenger are covered.
  5. – Autos you own for which no-fault coverage is required are covered.
  6. – Autos you own for which uninsured motorists coverage is required are covered.
  7. – Only scheduled autos are covered.
  8. – Any auto you hire, borrow, or lease is covered.
  9. – Any auto not owned by you but used by an employee, volunteer or partner for your business is covered but only for your benefit.
  10. – Mobile equipment if subject to financial responsibility laws

If symbol 1 is used, no other symbols are needed. However, a combination of the other symbols is normal when symbol 1 is not used.

Loss Conditions

You and the insurance company have responsibilities and rights following a loss. Review these to fully understand them.

  • Appraisal for physical damage loss
  • Duties in the event of accident. Claim, suit or loss
  • Legal action against us
  • Loss payment-physical damage coverages
  • Transfer of rights of recovery against others to us

Endorsements

The ISO Business Auto Coverage Form provides very broad coverage. Many endorsements are available for use with it that broaden, limit, or exclude coverage.

Further Reading On Business Auto Insurance

Read through helpful commercial auto insurance for small business to help you better understand polices you own or are buying.

Related articles:

Get A Small Business Commercial Auto Insurance Quote

Not all commercial auto insurance for small business polices are the same. If your business uses cars, trucks, vans or more, let one of our expert agents take a look at your situation. In most cases we can save you money and offer you better policy options than you currently may have.

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