The Essential Benefits of Commercial Auto Insurance

July 30th, 2021 abriinsurance
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Hello, readers! Welcome to Abri News, your resource for helpful policy information and assistance finding you the optimal coverage for your needs. Our previous articles about how to judge “good” insurance companies from “bad” insurance companies, how to combine life insurance with a will and testament, and how to determine whether you need RV insurance are interesting reads! When you’re finished with this article, we recommend giving those a read as well!

Today, we’ll be discussing the essential benefits of commercial car insurance. Commercial car insurance isn’t an expense for large companies and corporations? Are you a freelancer or the owner of a small business? Do you use your vehicle to haul supplies or perform services? If so, you may be interested in investing in commercial car insurance. We’ll outline the major reasons for such an investment, as well as inform you of everything you need to know before choosing a commercial car insurance provider. There are tax benefits and write-offs which factor into the decision. Therefore, make sure to read until the end!

The Difference Between Personal and Commercial Auto Insurance

By law, all drivers are required to have car insurance. Personal auto insurance is as common as a driver’s license or an update tag. Commercial auto insurance is less common. You might wonder why you would even need to invest in a separate policy when you already have what’s required by law. Shouldn’t your personal auto insurance cover everything in the event of an accident? Well, unfortunately, no. Personal auto insurance will cover you getting into an accident on your way to work, but anything involving your personal business is where most companies draw the line.

Say you’re the owner of a small business which sells high-end balloons for birthday parties. If you use your personal vehicle to transport these balloons, the distinction between personal and commercial is blurred. In the event of an accident, most personal auto insurance policies will not pay out. For this reason, every business owner who uses their vehicle—car, truck, or van—to complete services related to their business should have commercial auto insurance. This could include transporting supplies, delivering products, or driving to a job site. If you’re a ride-share professional, a pizza delivery driver, or a food truck owner, investing in commercial auto insurance is doubly important.

Another major difference between personal auto insurance policies and commercial auto insurance policies are liability limits. In most cases, the insurance policies most individuals have on their personal vehicles are not enough to cover liabilities for business use. In the event of an accident involving your business vehicle, an injured party might try to enact litigation on your business. In this case, you would need a much larger limit of liability to cover the damages.

Reasons to Invest in Commercial Auto Insurance

There are a multitude of reasons to invest in commercial auto insurance. Chief among these reasons is to protect your employees. If you’re a business owner with people working underneath you, it is in your best interest to invest in commercial auto insurance. Employees will be classified as additional insureds on your policy. Commercial auto insurance is comprehensive and protects your employees in the event of injury. Depending on your provider, your policy can even extend to employees using their personal vehicles for work-related trips. This is classified as hired or non-owned auto insurance. Doing your due diligence as a boss and owner means insuring your employees as drivers of your business vehicle.

Secondarily—and similar to personal auto insurance—you might be required by the laws in your state to invest in a commercial auto policy. Almost every state requires business owners to have at least a minimum liability policy for each employee who is cleared to drive a commercial vehicle. Truthfully, you’ll want to invest in more than just the bare minimum. Keep in mind that if your business vehicle must cross state lines to carry out services then those states’ commercial auto insurance requirements apply to you as well.

Most commercial auto insurance policies cover: bodily injury liability, property damage liability, combined single limit (CSL), medical payments/no-fault personal injury coverage, uninsured motorist coverage, comprehensive physical damage coverage, and collision coverage. That’s quite a lot of coverage! And, there are even more protections available to you when choosing a commercial auto insurance policy, such as cargo coverage and insurance on your equipment. To take advantage of these additional protections, you’ll need to invest in a business owner’s or general liability policy.

Different types of vehicles will generally require commercial auto insurance. Box trucks, food trucks, service utility trucks, tractor trailers and semi-trucks are among these types of vehicles. If you own one of these vehicles and are conducting business use with the vehicle, it’s high time you invest in commercial auto insurance.

As we mentioned before, all of these protections are necessary in the event your company is sued for an accident. A good commercial auto policy can help you pay court fees and damages.

Finally—and this is probably the best part—commercial auto insurance can be written off as a business expense as it is tax deductible! We could write an entire article about tax deductible premiums (and probably will), so check back into Abri News if you’re interested in learning more!

How to Know Whether You Need Commercial Auto Insurance

As stated previously, the line between a personal vehicle and a commercial vehicle can be thin, especially as a small business owner. We’ve come up with a list of questions to help you determine if your vehicle qualifies as a commercial vehicle:

  1. Is your vehicle being used to transport people or goods related to your business?
  2. Is your vehicle being used to conduct a service related to your business?
  3. Does your vehicle require a higher limit of liability due to the nature of your business?
  4. Is your vehicle being used to haul a substantial weight (eg. tools or equipment) or towing a trailer used to transport goods for your business?
  5. Is your vehicle operated by employees?
  6. Is your vehicle owned by a corporation or partnership?

If you answered yes to most of these questions, you more than likely need commercial auto insurance. If you answered yes to question number six then, by law, you must own commercial auto insurance. Please do not wait to invest in commercial auto insurance, as these protections are for the benefit of both you and your employees.

How Much Coverage Do You Need

How much coverage you need depends on the size of your business vehicle, the amount of supplies or equipment being hauled in your vehicle, and the size of your business. Larger, heavier vehicles will require larger liability limits. These types of vehicles can do a lot of damage on the road and often carry more in value than smaller vehicles. Mid-sized sedans and small cars will need an average amount of coverage, not unlike your personal vehicle. If you’re insuring a trailer, anything less than two-thousand pounds is automatically covered. Anything more than two-thousand pounds will require an addendum to your policy.

Be sure to choose a provider who is well-equipped to pay out your claim, in the event of an accident. Choosing a good provider is equally as important as choosing the correct policy for your business.

We hope the line between a personal vehicle and a commercial vehicle has become unblurred and you feel adequately prepared to make the best decision for your business. As an owner, investing in commercial car insurance is one of the best decisions you can make for the safety of both your employees and business. Of course, do your research to find the best provider and quote. As well, be honest about your business needs and invest in additional protections where necessary.

If you still need help finding the right insurance policy for your needs, reach out to us! Everyone here at Abri Insurance is eager to assist you in your search for the best coverage. Come back here to read the latest news and discover more about how to make the insurance industry work for you! Thanks for reading! Until next time!

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