What Is Commercial Auto Insurance?

I don’t need special insurance—I already have car insurance. Besides, my employees should carry their own insurance, right?

Not so fast! If you own a business, here’s a fact you should consider. Vehicle accidents rank in the top 10 costliest small business claims.

If you’re the one receiving the payment on a claim, that’s wonderful. However, if you or one of your employees caused the accident, that’s a different story. Especially if you don’t have a commercial auto policy.

If you can’t answer the question “what is commercial auto insurance?” we can help.

Continue reading and learn more about business auto policies. Then you can determine whether you need one or not.

What Is Commercial Auto Insurance?

Personal auto insurance, at a minimum, covers physical damage and liability for injury to others caused by a driver involved in a car accident. 

Commercial insurance goes a few steps further than a personal policy. First, it’s a type of business insurance and goes by a few different names. Other than commercial car insurance, it’s also called fleet insurance.

A personal policy covers your own car and possibly any personal belongings stored in the car.

Commercial insurance can cover any vehicle a business owns. If you run a mobile food business, landscaping company, moving service, or plumbing and heating business, your trucks and other vehicles will be covered.

Not only are the business vehicles covered, so are your employees. Coverage can also include your business equipment if it’s inside the vehicle when an incident occurs.

The Key Benefits

Teachers at the Pierre Paul Driving School say “driving is serious business.” Every time you or one of your employees gets behind the wheel, you risk involvement in an accident.

Not every driver has good driving skills. If you or your employee cause injury to another person as a result of an accident, liability costs can rise into the six-figure range.

One key benefit of commercial auto insurance is high policy limits, meaning you can avoid costly lawsuits.

Another key benefit is coverage for your employees. If they’re injured while driving one of your vehicles, they have protection in the event of an accident.

If you carry tools or business equipment in your vehicles, the insurance may also provide coverage. For example, if you own a mobile food business and your cooking equipment suffers damage because of an accident, the insurance covers repair and/or replacement.

Finally, if you lease your business vehicles, all leasing companies require that you carry fleet insurance. Commercial driving insurance satisfies those requirements and protects the leasing company from financial damages.

Now you know how to answer the question, “what is commercial car insurance and why is it beneficial?” What about people who don’t own the business—should they have their own policy?

But I Don’t Own a Business

If you don’t own a business you don’t need to worry about commercial auto insurance. Or do you?

There’s a fine line between personal and commercial vehicle insurance. And crossing it could mean the difference between protection for you and your vehicle if you have an accident.

Let’s imagine you work for as a delivery person for a pizza business. You use your personal vehicle while delivering pizzas to customers. Who is liable if you run into a parked car at your customer’s home?

Without commercial insurance, the responsibility for damages most likely will fall on you. And your personal policy probably won’t pay the bill.

If you drive your personal vehicle while working for your employer make sure you have the proper insurance coverage.

Don’t Drive Without It

Every driver who gets behind the wheel of a car needs auto insurance. Your state requires it and the penalties for not carrying it can bankrupt your personal finances.

The penalties for driving without commercial vehicle coverage may be even higher. A lawsuit for punitive damages against your business could result in you losing the business.

If an employee suffers injuries or loss of life while driving your business vehicle and you don’t carry the right type of insurance, the employee or their family can sue you.

Need More Information?

Hopefully, you can now answer the question, “what is commercial auto insurance?” And you know the benefits of having it vs. the penalties for deciding against purchasing a policy. 

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