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Commercial Auto Policy Basics

A semi-truck and a trailer driving on a desert road thanks to commercial vehicle insurance.

A commercial auto insurance policy might be obvious if you own a business in the construction industry with a fleet of vehicles and a dozen employees. But what if you are a caterer that uses your personal vehicle to deliver food orders or you are an individual shuttle operator with one van? You may think that your personal auto policy will protect you if you are in accident; however that might not be the case.

While your personal auto policy may provide some coverage for the business use of your vehicle, it can be considered a commercial vehicle if it is used for anything beyond commuting. In order to avoid a situation where you are left unprotected, learn more about commercial vehicle insurance.

How Does Commercial Vehicle Insurance Differ From Personal Insurance?

Commercial auto insurance works the same way personal auto insurance does in the sense that you can file a claim and the company will cover the resulting damages up to your designated limits. However the difference with commercial vehicle insurance is that its designed to cover the greater risks that can be associated with a business.

For example, if you work in the construction industry and are transporting ladders and other expensive tools, there is a higher risk of theft or property damage to this equipment compared to the average driver. In addition, heavy duty vehicles such as a dump truck can cause greater damage in accident than a personal vehicle can. If you have employees, a commercial vehicle insurance policy will protect them when they are operating your company’s work vehicles.

Beyond your equipment and employees, commercial auto insurance offers higher liability limits to protect your business should a work vehicle wind-up in an accident that results in a lawsuit. Minimum liability limits vary from state to state and are often the same for commercial and personal auto insurance; however many insurance companies recommend or require much higher limits for a commercial policy.

Basic Elements of a Commercial Auto Insurance Policy

Commercial auto insurance policies include similar coverage to what is found on a personal auto insurance policy, but there are optional coverages that can be purchased separately. All standard commercial auto insurance policies include these three basic parts:

Liability Insurance
Includes bodily injury, property damage, and uninsured/underinsured motorist coverage.

Physical Damage Insurance
Includes collision and comprehensive coverage.

Other/Optional Coverage
Includes medical payments,towing and labor, rental reimbursement, and gap coverage.

While these terms may be familiar, it is important to understand what they exactly mean.

  • Liability insurance helps pay for property damage and bodily injury inflicted on another party resulting from an accident you caused.
  • Collision insurance provides coverage for damage to your vehicle from an accident regardless of whether or not you are at fault for the accident. This includes accidents with other vehicles as well as an accident that involves a stationary object such as a tree or a fence.
  • Comprehensive insurance covers damage to your vehicle that is not caused by an accident, but another incident such as fire, vandalism or theft.
  • Underinsured or uninsured motorist coverage helps pay for your personal injuries or property damage if you are hit by an individual who is not insured or doesn’t carry enough liability insurance to cover your bills.
  • Medical payments This optional coverage pays for medical expenses if you are hurt in an accident, regardless of who is found at fault for the accident. This coverage may also help pay for injuries sustained by your passengers.

How Do I Know if I Need to Look For Commercial Auto Insurance?

You may want to consider commercial insurance if:

  • You transport goods or people for financial gain.
  • You have a business owned vehicle or a vehicle that is designed for business use such as a tow truck or a food truck.
  • You have employees that operate your vehicle or their own vehicles for business purposes.
  • You use your vehicle to transport work-related equipment.

These are just a few examples, but it would be best to speak to an insurance representative to determine your needs and to tailor a plan that fits your business needs.

If you’re shopping for commercial auto insurance, you’ve come to the right place. Freeway Insurance has been helping businesses find affordable commercial auto insurance for over 30 years, and we can help you do the same. Request a free commercial auto insurance quote online or over the phone at 800-777-5620.

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