Are you considering commercial auto insurance coverage? If you are, it is essential to understand the basic elements of the insurance policy. This post provides vital insights on how commercial auto insurance works and what it covers.
What is Commercial Auto Insurance?
A personal automobile insurance policy does not extend to vehicles used for business purposes. Instead, you have to secure a business insurance policy that applies to cars owned by or used in the business. Thus, commercial auto insurance protects your business from liabilities resulting from accidents that involve your business vehicles. The policy offers financial protection to you and your employees while driving a company-owned or leased car.
Who Needs Commercial Auto Insurance?
Do you own, lease, or hire vehicles for business-related assignments? Perhaps you move goods or people across state lines? Then, the laws require that you get commercial automobile insurance.
Notably, you may have to get additional coverage for vehicles performing certain functions like food delivery, taxi services, towing, and transporting hazardous materials.
How Does Commercial Auto Insurance Work?
A commercial vehicle may cause an accident leading to injuries and property damage. The affected party may then file a claim on your policy and sue you or the driver. The insurer will pay damages on the claim up to the policy limit with a commercial auto insurance policy. Also, liability insurance would cover the legal cost of defending you or your driver from accident-related lawsuits.
What Does Commercial Auto Insurance Cover?
The following are the three main parts of any commercial insurance policy
Physical Damage Insurance
This policy includes collision and comprehensive coverage. Essentially, collision insurance caters to damage to your vehicle resulting from an accident regardless of the party at fault. Then, comprehensive insurance will pay for damages to your business vehicles from non-collision-related causes like theft, fire, and weather-related calamities.
A liability insurance policy has four main parts: bodily injury, property damage, and uninsured or underinsured motorist coverage. In the first instance, the policy covers bodily injury to other parties and property damage to other cars when you are at fault in an accident. Then, uninsured motorist coverage pays for your injuries and property damage when hit by an uninsured or, in some cases, unidentified motorist. Lastly, underinsured motorist coverage will protect you in case the driver at fault does not have enough liability insurance to cover your losses.
You can seek additional endorsements to customize your commercial auto insurance policy. For instance, roadside assistance covers problems such as flat tires, dead batteries, and getting locked out of your car. Then, rental reimbursement pays for a rental car to ensure you have transportation following an accident. Also, you can get a new vehicle following a total loss if you have new vehicle replacement cost coverage.
Ultimately, you will need commercial auto insurance for vehicles you own or lease in your business. Contact an insurance agent to ensure you have adequate coverage for all your business automobiles.