Business auto insurance, also known as commercial auto insurance, protects your drivers and company vehicles when they are out on the road.
Conventional auto insurance policies do not kick in when someone is driving on company time, meaning drivers are uninsured and at-risk without business auto insurance.
Businesses with company vehicles, like vans, trucks, and cars, need business auto insurance to be covered by insurance when an accident happens.
Plumbing, HVAC, electrical, landscaping, painting, and other service companies frequently purchase business auto insurance for their team.
What Can it Cover?
Our agency offers business auto policies from local companies and large chains. Most Commercial auto policies are customizable to fit the size of your business.
Generally, business auto insurance will cover any designated commercial vehicle that is purchased, leased, or rented.
Business auto insurance policies cover the following vehicles:
- Cars
- Trucks
- Vans
- Dump Trucks
- Tractor Trailers
- Detachable Trailers
Business auto insurance policies cover a large variety of situations and risks.
Once your drivers get out on the road, you want to be confident that they will stay safe and that your property will not be damaged at a loss. A business auto policy mitigates this risk by covering a wide array of situations.
Business auto insurance offers protection for these things:
- Medical Payment to Your Driver
- Medical Payment to Someone Your Driver Injured
- Payment for Your Damaged Vehicle
- Payment for a Vehicle or Property Your Driver Damaged
What Does it Not Cover?
Remember that business auto insurance policies only kick in when a driver is on the clock. Injury to your driver, their passenger, or someone else and their property is not covered 24/7. If your employee is not working and is driving a company vehicle when there is an accident, you are not protected.
Business auto insurance does not cover construction vehicles or equipment, regardless of if it is rented or purchased. Construction businesses looking to insure their vehicles should consider heavy equipment insurance instead.
Rideshare drivers also cannot be covered under commercial auto insurance and instead need rideshare insurance.
Are there Policy Limits?
Commercial auto insurance does have policy limits. However, these policy limits notably exceed personal policy limits.
Insurance agencies work as intermediaries between you and auto insurance companies to find the right policy with appropriate limitations. You have to notify your selected insurance company and let them know what vehicles you want to be insured. Automobiles do not automatically become insured at the time of your purchase.
Automobiles do not automatically become insured at the time of your purchase. If you want to add more vehicles to your policy, your deductible or premium may increase, and your policy limit will change.
Types of Business Auto Insurance Coverage
Uninsured Motorist Coverage
Required by South Carolina law, you can purchase an amount of uninsured motorist coverage up to the liability limit.
If you are involved in an accident with another vehicle that is uninsured, and they cannot pay for your damages, you would file an uninsured motorist claim against your insurance policy.
There is a property damage deductible.
After settling your claim, your insurance carrier should try to recover your deductible and damages from the other driver whose negligence caused the damage.
A judgment can be obtained until the other party pays the claim, and then the claim would be removed from your record. Until there is a recovery, the claim would affect your auto premium.
Underinsured Motorist Coverage
Not required by South Carolina law, underinsured motorist coverage works like uninsured motorist coverage, except in this case the other driver does not have enough liability coverage to pay for all the damages.
You could file a claim against your insurance carrier, or you could sue the responsible party yourself. If you file a claim and a payment is made, it will affect your auto insurance premium until recovery is made from the responsible driver.
As uninsured motorists you may purchase up to the limits of your liability policy. The limits for both uninsured and underinsured motorists must be the same, and there is a property deductible which is applied to both coverages.
The premium for this coverage has gone up faster than uninsured motorist because of the number of claims.
With the low limits required by SC ($15,000/$30,000 for Bodily Injury and $10,000 for Property Damage) there often isn’t enough money to pay all the damages that result from an accident.
Physical Damage Other Than Comprehensive and Collision
Physical Damage includes coverage for comprehensive or collision losses.
Comprehensive Loss “Other than Collision” (OTC) includes fire, theft, vandalism & malicious mischief, missile, or projectile (rock), falling object (tree), hitting an animal, or glass breakage.
A Collision Loss includes impact with another object.
In most cases your Business Auto includes liability losses as excess over other collectable insurance. Physical Damage must be purchased on the Commercial Auto Policy prior to the loss.
Loading and Unloading a Business Vehicle
If an employee causes damage while making a delivery to a customer’s house then the loss is paid under the Commercial Auto Policy. This can cause a problem for your auto coverage.
For example, if an appliance is being delivered on a hand truck, and while being pushed into position, tears the vinyl floor, the claim is paid under the Commercial Auto Policy.
Several of these losses can cause a problem at renewal.
The exception to this rule is when the delivery is being unloaded with a mechanical device such as a fork lift that is carried on the back of the truck. If the unloading is done by mechanical device the claim is handled under the General Liability Policy.
Commercial Auto Drivers Age and Record
Most insurance companies prefer commercial vehicle drivers to be over 21.
Certain vehicles require a special commercial driver’s license. A driver’s age and driving record can cause an employer problems obtaining and keeping insurance coverage at a reasonable cost.
It is important to regularly check your employee driving records.
Use Deductibles as in Health Insurance to Lower Premiums
Shop deductibles for liability and physical damage coverage to find out where you get the best bang for your dollar.
Deductibles help lower premiums and if your willing to pay the smaller claims it will help to hold down your auto premiums and keep coverage in effect.
Be sure to check to see if the savings are worth taking a larger deductible.
Temporary Substitute Vehicle
Your commercial policy does not work like your personal auto policy. Under your personal auto policy if a vehicle is in the shop for repairs, a rental vehicle becomes a temporary substitute.
It temporarily acquires the coverage that was on the insured vehicle but only while your vehicle is in for repairs. Most personal auto policies extend this coverage to physical damage coverage and liability.
However, the commercial policy only includes liability coverage unless you purchase physical damage coverage for the rented/non-owned vehicle.
In most cases your liability coverage would be excess to other collectable insurance, however, in some states such as Texas, your coverage is primary. You can purchase physical damage coverage on your Commercial Auto Policy.
The premium is usually based on rental receipts. Your policy is worded to comply with state law. If you are traveling out of the country, you should check with your agent.
While coverage extends to the continental United States, its territories, and Canada; you should purchase insurance at the border before traveling in Mexico.
Having a Business Auto Insurance Hiring Policy
Business drivers can be one of the greatest loss exposure areas for an employer. That’s why it is important to have a hiring policy for employees who drive a company vehicle.
Because of the Privacy Act of 1994, the employer must have the applicant or employee’s written permission to obtain their driving record or any health information that might be pertinent to the performance of the job.
We recommend getting a permission form signed before hiring an employee.
The driving record should at least be checked for the previous three years. A ten year check is better.
This is so important, because the employer can be held “vicariously” liable for the negligent act of his employees.
A jury can hold an employer guilty of negligence if he/she allows an employee with a bad driving record to drive a company vehicle and may even award punitive damages for the employer’s negligence. These awards usually involve large sums of money.
So how can the employer protect his/her business assets?
How much coverage is enough?
The first step is to carefully check each employee whose job will require driving a company vehicle.
Clear guidelines should be outlined in the company manual. A driver with a poor record can adversely affect the cost of the business auto coverage for any employer.
Getting a Business Auto Insurance Policy
An employer should purchase enough liability coverage to protect the assets of their business or enough to cover what they can’t afford to lose.
Contact your local Kenneth Rhodes and Associates location to work with an experienced agent who can help you get the exact commerical insurance policies your business needs.