What does business auto insurance cover?
Business auto insurance covers the driver and damages to a company vehicle in an accident. Recommended minimum liability auto insurance coverage for a business is around $500,000.
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UPDATED: Nov 9, 2021
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- Business auto insurance, also known as commercial auto insurance, will cover vehicles operated for a business
- Keep in mind when shopping for commercial insurance you will need the same basic coverages that you need for personal auto insurance
- There are additional commercial coverages that you can add on such as, liability, renters, employee and uninsured motorist coverage
- When shopping for commercial auto insurance, providers will often offer coverage for different types of businesses that may have unique needs
- Make sure you do a little research to make sure that you are getting the best price for the coverage your business needs
Different employees may be using the vehicles as well. These vehicles should be insured, and many states require commercial auto insurance in these cases.
Business auto insurance, also known as commercial auto insurance, will cover vehicles operated for a business.
According to auto insurance laws, every state in the US requires cars, vans, and trucks to be insured if they are on the road.
Since personal auto insurance or the owner’s insurance will not necessarily cover a car used for a business purpose, business auto insurance is needed, especially if employees are using company-owned vehicles. This need applies both if companies own or lease their vehicles.
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Types of Business Auto Insurance
Business auto insurance will cover you through many types of damage.
Collision, the most basic type of insurance will insure your vehicle when it is in a collision with another car or with an object like a tree, phone pole, or guardrail.
Comprehensive coverage will provide protection in a variety of other circumstances, including:
- Fire, including fires in the engine or fires in the building where the car is parked
- Storm damage, including wind, hail, and ice events that damage the car
- Theft and vandalism
Most auto insurance companies will offer you a package that can be customized. Depending on the needs of your business, you may want to include some of the following features:
- Liability – though basic collision coverage will offer some liability protection, you may purchase additional or higher levels of this to cover expenses for your own vehicle, others involved in the incident, and items that may be damaged in a crash
- Medical payments – In the case of a crash, medical coverage can be applied to your business’s driver and any passengers who may be injured in an accident regardless of fault
- Uninsured/Underinsured motorist coverage – if your business’s vehicle is hit by someone who is uninsured or underinsured, this feature will pay for your vehicle to be repaired even if the other person’s insurance will not
- Hired or borrowed vehicle insurance – it may be the case that your business needs to rent cars or vans, or borrow them from someone on occasion. Their insurance may not cover the driver, and likely will not cover commercial use of the vehicle. This provision in your insurance will extend your coverage to these vehicles
- Coverage for employees – If your employees use their own cars for business, their personal insurance may not provide the full range of coverage needed for business use
Furthermore, you likely do not want your employees to have their rates affected or to pay out of pocket for an incident that happens while they are working.
Your commercial insurance can extend coverage to these employees and their vehicles as they are being used for work.
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Specialized Insurance Coverage
When shopping for commercial auto insurance, providers will often offer coverage for different types of businesses that may have unique needs.
For example, many construction and contracting businesses will have their vehicles covered by basic collision and liability insurance, but additional policies will be needed to cover physical damage to the vehicle that may occur from use in the business.
Some industries with special needs include:
- Contractors – including landscaping, electricians, plumbers, and other trades
- Service Industry – Janitorial and cleaning services, locksmiths, or basic lawn service
- Distribution – Business making many deliveries, such as bakeries, food distributors, vending operations, etc.
- Automotive service – Roadside assistance and tow truck operators
- Heavy construction – Vehicles like dump trucks and other construction equipment
The questions you should ask when investigating business auto insurance are similar to those you might ask for your own personal auto insurance policy.
However, requirements are different and the needs of businesses will vary. Here are some common factors to consider when choosing a policy:
- Will the same people use the same vehicles? You can insure your vehicles for anyone in the company to use, but if the same person or set of people will be using a car, truck, or van all the time, you may be able to insure them only and then save on your policy cost.
- Does your business own your vehicles outright or are they leased or on a payment plan? Depending on the situation, you may be legally required to have comprehensive insurance on the vehicles.
- Will you have to cover the cost of products or equipment you are transporting? Some businesses will have a fleet of vehicles for employees to go on business calls, transport people, or run errands. Others will use their vehicles to transport products or bringing equipment and supplies to a job site. If the latter is the case, you may want to get coverage that will insure the value of the items you will have with you in addition to damage to vehicles involved in an accident.
- What can your business afford? There are varying levels of coverage for business just like there is for personal insurance. Many insurance providers will customize a policy to match both your needs and budget.
- What can you pay out of pocket? Business policies have deductibles like personal policies. You should understand what you can pay directly from your business in order to craft a policy that is affordable and provides the coverage you need.
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The auto insurance coverage should include collision and liabilities, and, depending on the extensions a business needs, it may also cover the value of products or equipment being transported.
Your insurer will help you build a policy with the level of coverage that meets your needs, the legal requirements, and that works within a budget. Compare FREE auto insurance quotes now with our quote comparison tool!