Should I Buy A Commercial Auto Policy?

Fran Majidi
November 18, 2020

Wondering if you should get a commercial auto insurance policy? If your vehicle is used in tasks related to your occupation, profession and business, other than commuting, a commercial auto policy is necessary. For example, if you use your vehicle to transport work supplies such as parts, testing equipment and other tools, you’ll want a commercial auto policy. Cargo vans and pickup trucks all can be covered with a commercial auto policy. You’ll also want a commercial policy for certain types of gig work, like food delivery.

And you may need a commercial auto policy if you transport goods or people for a fee in your vehicle or conduct a service with your vehicle. Commercial auto policies also protect business vehicles from damage and theft. And there’s even more to consider. If you or any of your employees use a motor vehicle for company purposes then a commercial auto policy should be added to the insurance that you buy for your business. This insurance will protect you should an accident happen with the vehicle and you or your employee are found to be at fault. A personal policy will only cover a commute to work and back, not accidents that occur during work-related trips. A commercial auto insurance policy covers motor vehicles that you own, lease or rent for your business. So there are lots of ways to be protected by a commercial auto policy and lots of reasons to purchase policies for your business.

More Coverage Than Personal Auto

A commercial auto policy also covers physical damage and liability coverages for amounts and situations and usage of the vehicle not covered by a personal auto insurance policy. Buying a commercial auto policy gives you an extra level of protection for your business vehicles.

Types of Vehicles Covered by Commercial Auto

A commercial auto policy covers many different types of commercial vehicles from regular cars and SUVs used for business purposes to vans to commercial trucks. Box trucks, food trucks, work vans and service utility trucks are larger vehicles that can be insured with a commercial auto policy.

What Does a Commercial Auto Policy Cover?

A commercial auto policy covers liability, collision, comprehensive, personal injury protection and uninsured and underinsured motorist coverages. Let’s take a look at each of these coverages found in a commercial auto policy.

Bodily Injury Liability Coverage. Bodily injury liability pays for other people’s bodily injuries if you are at fault in an accident. In most cases, this coverage provides you with a legal defense.

Property Damage Liability Coverage. This coverage provides you with protection if you should damage another’s property with your vehicle. In most cases, this coverage also provides you with a legal defense.

Combined Single Limit. Typically, you have separate limits with liability policies. But with a combined single limits policy, you have the same dollar amount of coverage per covered occurrence.

Personal Injury Protection. Also known as no-fault insurance, this coverage pays the cost of your lost wages and medical bills up to a policy limit. PIP coverage will cover these expenses regardless of who is responsible for an accident.

Uninsured Motorist Coverage. This coverage pays for your injuries caused by an uninsured driver. Underinsured motorist coverage pays for damages caused by a driver without enough insurance.

Comprehensive Physical Damages Coverage. This coverage pays for damages to your vehicle from theft, vandalism, flood, fire and other covered perils.

Collision Coverage. This coverage helps to repair or replace your car if it is damaged in an accident with another vehicle or object such as a fence or a tree.

Are My Tools Covered by Commercial Auto?

Unattached tools and materials that are being transported in your commercial vehicle are not covered by commercial auto insurance. Tools and equipment are covered by a general liability policy or as part of a Business Owner’s Policy (BOP).

BOP coverage includes liability coverage as well as business property coverage. Your business property insurance protects your business from things like fire and theft and other covered perils. BOP policies are popular among small and medium sized businesses such as restaurants, wholesalers, retail stores and contractors.

With a general liability policy, this form of insurance protects you if you cause any damage to another whether it be bodily damage or damage to the client’s or another’s property.

Concerned that your tools may not be covered in your insurance policies? Review your policies in detail with an insurance professional. When you use your tools to make a living you want to make sure they are properly protected.

Who Can Drive My Commercial Vehicle?

Employees, friends and family members can be added to your commercial auto policy as drivers. So if someone is going to be driving your commercial car or truck, add them to your policy.

Higher Liability Limits Than Personal Auto

Commercial auto policies come with higher liability limits than a standard auto policy. Your business will have greater protection if you or an employee causes an accident with a commercial vehicle, since higher liability protections will be in place. So if you have a vehicle that you are using for work purposes, such as a company car, don’t hesitate to sign up for a commercial auto policy. You want everyone who drives that car to have the higher liability protections should an accident happen.

More Liability Coverage for Commercial Auto

If you’d like extra liability protection for your commercial auto policy, you may want to consider excess liability insurance.

Excess liability insurance is a type of insurance policy that provides higher coverage limits when placed on top of an original primary policy. The purpose of excess liability insurance is to close gaps in coverage and provide an extra layer of protection should the primary insurance, such as commercial auto, be exhausted.

Excess liability insurance cannot be applied to multiple policies. So if you have multiple commercial auto policies that you would like to protect you may want to consider a commercial umbrella policy.

A commercial umbrella policy works much the same way as an excess liability insurance works. A commercial umbrella policy steps in when a primary insurance coverage has reached its limit. But unlike an excess liability insurance, a commercial policy can be applied to multiple policies. So if you have multiple commercial auto policies to protect this may be the coverage for you.

Get a Free Commercial Insurance Quote.

Related Articles

Commercial Insurance Commercial Auto Insurance for Realtors

Do you do a lot of driving for your real estate business? Do you drive around town showing clients your listings? Commercial auto insurance may be the best insurance choice for you.

Commercial Insurance Commercial Boat Insurance

Commercial boat insurance protects your boat and covers your liability if something goes wrong. How much commercial boat insurance do you need? Let us help you decide.

Looking for Commercial Insurance?

Compare rates from dozens of companies in less than 3 minutes.