Commercial auto insurance – companies, policies and cost

Commercial auto insurance companies specialize in providing automobile, van and light truck insurance to businesses, organizations and corporations that use one or more vehicles.

This kind of cover should not be confused with private auto insurance, which is offered to private individuals who are owners of single autos.

Even if you occasionally require employees to go out on work-related activities in their own vehicles, you expose the company to liability in the case of an accident or theft of the vehicle.

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Commercial auto insurance

The main factor separating the need to choose between private and commercial auto insurance is whether the vehicle is used in any way for commercial activities.

Some private auto insurance policies offer coverage for people like real estate agents and Uber drivers.

Still, generally, this coverage is restrictive and may not fully protect the owner every time you start the engine.

Most private auto policies explicitly void their coverage for cars if they are being used for business purposes.

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For example, a person who owns a car used as a taxi – even only part-time – cannot use private insurance for the vehicle.

There are other differences between a commercial vehicle insurance policy and a personal auto policy, such as usage limits and exclusions.

The bottom line is that when employees, family members or anyone else drives a company-owned or leased car, commercial insurance is essential.

For businesses, the number of vehicles covered under a single policy can range from just one up to whole fleets of cars, vans and trucks.

What kind of vehicles need commercial auto insurance?

A commercial auto insurance policy covers most types of commercial vehicles other than specialized vehicles like busses.

This policy will provide insurance for company cars, commercial vans and trucks and other general-use vehicles.

What does commercial auto insurance cover?

Most of the covers offered under a commercial vehicle policy are the same as for private auto insurance.

For cars, trucks and vans used for business purposes, commercial vehicle insurance, in the same way as personal auto insurance, provides coverage for:

Bodily Injury liability

In the event of death or injury resulting from an accident for which the driver was found to be at fault, bodily injury liability cover meets the payout.

In most cases, the policy provides the necessary legal defense and covers the defense costs.

Property Damage liability

If the vehicle accidentally damages another person’s or company’s property and the driver was found to be at fault, property damage liability cover meets the payout.

In most cases, the policy provides the necessary legal defense and covers the defense costs.

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Collision cover

provides coverage of the costs of repair or replacement of the insured vehicle resulting from a collision.

Uninsured motorist coverage

Covers the cost of repairs to the vehicle if it is involved in a collision with a car driven by an uninsured person who is found to be at fault.

It may also cover any gap between the other driver’s insurance coverage and the costs if that person is under-insured.

In cases involving a hit-and-run driver, coverage is also provided. This is for cases in which the driver who was at fault has insufficient insurance.

Comprehensive coverage

Pays for repairing physical damage to the vehicle in case of vandalism, flood, fire, and similar events.

In case of theft, it provides for costs of recovery and repair when the vehicle can be found.

In both instances, replacement of the vehicle may be provided if repairs are judged to be either too costly or would result in an unroadworthy vehicle.

How to choose the best commercial auto insurance for your needs?

Many factors will help you to decide which policy is best for your specific situation.

We can only try to point out the facts you should be looking for and highlight the different advantages you need to focus on that depend on your own knowledge of your business.

Some of the most important things that will affect your choice are:

Availability

Is the insurance company operating in all states where your company is active.

It may be necessary since policy rates differ in many states.

If you are operating with several vehicles, you could minimize costs by registering the policy in the optimum state.

It also can work in your favor because claims litigation in accidents involving drivers from other states can become costly, and multi-state corporations have the infrastructure and experience to deal with this.

Size of the insurance company

There are two ways that you can look at this point:

  • In the insurance business, you can accept that “bigger is better”. Large insurers have the stability and security that lets you get on with your own business without having to worry about the small details. A critical benefit of being insured by a large company is that individual claims don’t greatly impact their bottom line. They are less likely to argue over the claim or delay their payout, which small companies may have to do to preserve their cash flow and bottom line. In the end, insurance is about probabilities, and the more customers an insurer has, the more their actuarial predictions will match the real-like occurrences, so they will already have built profit margins into their premiums regardless of any one claim. With a big insurance company backing you, you will get the very best in terms of legal services if the claim ever comes to court.
  • There’s no “one-size-fits-all” policy. Especially if you run specialized services that the large insurance company is not familiar with, your premium may be loaded up-front to give themselves a margin of extra safety. Claims may go slower because the claims assessors are learning the ins-and-outs of your business at the same time as they are processing the claim. Try to find an insurer that offers something like a “boutique” service. Talk to others in the same industry to see whether they can recommend a company based on their own experience and history.

Vehicle types covered

again, there may be two different approaches depending on whether your vehicle fleet is specialized or regular.

  • It is preferable to have a comprehensive policy that includes every type of vehicle that your company operates. It’s not to your advantage to write out a different policy for a single-vehicle. That way, you get better volume discounts, and have less paperwork to supervise. The insurance company also prefers having to deal with less administrative work in its back office, so overall would give you better terms and conditions for the largest possible policy.
  • However, some insurance companies do not cater for highly specialized vehicles. Their standard policy may be structured in such a way that you could discover somewhere down the track that a vehicle you thought was properly insured lacks some degree of cover, according to the fine print of the policy. You would need to spend many hours reading every word in the policy or have to engage a highly competent insurance surveyor before you could rest assured that all of your vehicles are covered. In this case, it’s better to take out individual cover for any special vehicles, and then lump all the rest under a single fleet policy.

Unrestrictive policies

some of the most popular auto insurance companies got to be that way because they wrote fewer restrictive clauses into their general policies.

They allow customers to insure some vehicles for seasonal work, such as trucks used in fruit picking only in the summer months that lie unused for half of the year.

They also provide for periods when extra vehicles are being used, either rented or hired from other companies but not actually owned by your company.

The same thing goes for companies that allow their employees to use their own private vehicles for company activities.

Discounts

check whether the company offers good discounts for renewals and additions.

Many insurers reward loyalty with substantial premium discounts, so making the right choice can have a strong effect down the road when it’s policy renewal time.

Discounts should not become penalized if you change your coverage during the policy term.

Options for deductibles

many companies allow you to tailor the cover by specifying different levels of deductibles for the different parts of the policy.

For example, you could set a $0 deductible for health and medical claims but a $1000 deductible for comprehensive coverage against fire and theft.

This makes sense in larger fleets where the frequency of health claims would be higher, but average claims are small, so you don’t want to be forking out the deductible amount often.

Fire and theft is less likely, so taking an occasional hit if $1000 is a good option when it is saving you many thousands of dollars in total premiums over the full year

Buy and manage your coverage online

in the digital age, any good and competent insurance company should already have a strong internet presence.

It allows you to initiate the policy, register all vehicles, lodge claims, and follow up on settlement, without having to meet face-to-face, or even having to physically handle bits of paper.

The benefits to you are substantial, with simplified bookkeeping, faster receipts of claims, better management of all administration when it comes to handling insurance. Commercial auto insurance quotes online are widely available.

A good agent/broker network – many of the best insurance companies do not deal directly with their customers, but instead work through skilled and professional third-party companies.

In return for some commission paid by the insurer out of the premiums they earn, they do all of the interface work.

In many cases, brokers and agents, because they know much more about the current offerings of the insurance market, can find better deals than you can find on your own, and it doesn’t cost you anything to engage them to work on your behalf.

What companies do commercial auto insurance?

Most commercial insurance companies provide business vehicle insurance.

Many bundle the cover-up into a complete business insurance package, but there are also quite a few companies specializing in auto insurance and offering commercial auto insurance.

How can I lower my commercial auto insurance costs?

Start by searching for professional advice from brokers, agents, your industry associations and local business advisory bodies.

Auto insurance is a massive industry and has a strong presence on the internet, so just searching with your main criteria should gather you a swathe of potential companies.

Do I need commercial and personal auto insurance?

It’s crucial to separate business and private insurance.

Remember that insurance companies are not in the business of making payments – they are in the business of collecting premiums, so you can’t assume that because your private vehicle is insured, your insurance company will agree to pay out a claim for some incident that’s related to your business.

Do the clear split between the two, either by taking out separate policies that explicitly describe the terms of cover, or get something in writing from the insurance company that says they will accept liability if something happens that gives rise to a claim.

How much should commercial vehicle insurance cost?

Depending mainly on the state and size of the fleet covered in one policy, you can expect the cost for commercial auto insurance to be about $180 per month per automobile, providing $500k uninsured motorist coverage and $300k liability coverage.

Taxi commercial auto insurance cost and commercial truck auto insurance cost vary too much for us to give any sort of global US estimate.

Consult your local insurer or broker.

Why is commercial auto insurance more expensive?

Business use of a vehicle involves more significant risk to the insurer, including things like the greater mileage traveled, the wider number of drivers using it, the terrain and nature of work and many other factors.

As a result, commercial auto insurance policies are generally more expensive than private auto insurance policies.

Over the past year due to the COVID-19 pandemic, there have also been commercial auto insurance rate increases.

Final thoughts

You need to take into account many personal business factors in choosing the best commercial car insurance policy for your business.

It depends on things such as the number of vehicles your company owns, the type of cover you need, your type of business, whether employees use their own vehicles to carry out business-related tasks, and more.

Take the time to search for the best all-around deal.

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