Why Does Your Business Need Commercial Auto Insurance?

If you are a business owner, small or large, the importance of having auto insurance should be paramount. A business that has any use of a vehicle must insure all the cars to prevent heavy financial losses and legal ramifications.

It does not matter if your business uses vehicles to deliver food or uses large loading vehicles for industrial purposes; commercial auto insurance policies should always cover your vehicles and employees.

Commercial vs. Personal

Many business owners think that if they have personal car insurance coverage with a high coverage limit, it can be claimed if their commercial vehicle gets in an accident. It is not the case.

Auto insurance companies would reject any claim of personal auto insurance if the vehicle were used for any commercial activity, even if that included dropping a client at a business address.

Let’s take a look at what makes commercial auto insurance policies differ from personal auto insurance and why your business needs it.

Features of Commercial Auto Insurance

Commercial and personal car insurance coverage are both very similar, with only a few differences. Apart from being used for covering vehicles for commercial use, here are some features of this type of car insurance coverage that make it different from general car insurance policies. 

Commercial auto insurance is more expensive than personal auto insurance

No matter which auto insurance provider you choose, you’ll always find the price of commercial car insurance higher than personal car insurance, and there is a reason for it.
Commercial car insurance always comes with higher coverage limits and a few extra features and conveniences that bump up the cost a bit. But you can always find low-priced auto insurance.

For example, if your business operates in Illinois, search for cheap car insurance in Illinois and select the most affordable option. Make sure you do not compromise on the coverage limit to save some dollars. 

Commercial car insurance also covers personal vehicles
Many businesses use personal vehicles for commercial uses, be it delivering food for DoorDash, or just the freshest pizza from a pizzeria. While individual insurance won’t cover your vehicle for these uses, commercial coverage will.

Business owners should get Hired and Non-Owned Auto Insurance (HNOA) which provides liability coverage to your or your employees’ vehicles or any other vehicle you may rent for commercial purposes. 

Let’s say your employee is delivering pizza using their vehicle. HNOA will provide liability coverage if they get into an accident and cause damage and injury to the other driver.

HNAO is worth it if your business leases cars for business trips or other purposes regularly. It does not provide collision or comprehensive coverage.

Commercial insurance offers all the necessary policies

Just like personal auto insurance coverage, a commercial car insurance policy offers all the essential coverage (both optional and mandatory). This includes;

Liability Coverage

This policy covers the cost of medical treatments and vehicle repairs of the other driver involved in the accident caused due to your fault. Liability coverage is mandatory in almost every state. 

Liability coverage payouts can go very high, even in millions of dollars. Your policy coverage limit must be increased to avoid paying from your pocket and getting sued along with that. 

Collision Coverage

Collision coverage covers the cost of repairs to your vehicle. It does not matter whose fault the accident was; if the car was damaged while driving due to a collision and the accident was unintentional, this policy could be claimed. 

Some auto insurers also offer an additional policy called “Loading and Unloading” vehicle coverage that includes heavy earthmovers, semi-trailers, and other industrial vehicles. 

Since these machines are costly, collision coverage is worth buying. The policy also covers damages due to collisions with anything. 

Comprehensive Coverage

Comprehensive coverage is essential if your business owns multiple vehicles, but it is also crucial if you have just one car. Comprehensive coverage protects your vehicle from every damage while the vehicle is not operated. 

Comprehensive insurance includes damages due to natural calamities, including:

• Earthquakes
• Fires
• Floods
• Projectile damage
• Hailstorms
• Volcanic eruptions
• Hurricanes

Not just that, but comprehensive coverage can be claimed in case your vehicle gets stolen. The insurance company will give you the actual cash value of the car (current market price.)

Uninsured Motorist Coverage

Uninsured Motorist Coverage is an essential car insurance policy that protects drivers from financial issues after getting in a car accident with an uninsured or underinsured driver. 

There are over 32 million uninsured drivers in the US. If you get in a car accident with such a driver, you’ll have to pay the cost of car repairs and medical bills. Of course, suing the driver is an option, but that does not guarantee a payout. 

This is the reason why getting uninsured motorist coverage is so important. This policy can be claimed if you get in a car accident with an uninsured driver. It can also be claimed in a hit-and-run case when the driver at fault is not known. 

Medical Coverage

Depending on the state you live in, your business may or may not be legally required to have medical car insurance coverage or a personal injury protection plan.

A personal injury protection plan covers the cost of medical treatments needed after a car accident. It can also be claimed that the accident was not the driver’s fault. There are twelve states that have made it mandatory to have a personal injury protection plan. 

Conclusion

Just like your business needs capital to operate, it also requires a commercial auto insurance policy to use its vehicle safely. 

When a commercial car gets in an accident, and the fault is of the driver, the fines are very high, and the business can get sued for a massive amount. This is just a financial issue. The legal case would render the business bankrupt.

So get an excellent and affordable commercial auto insurance policy with a high coverage limit to ensure that your business can bear the cost of a car accident or the repairs and medical treatments needed after that. 

Meta

Whether you own a small business or a big empire, if your business uses vehicles, then it needs commercial auto insurance. Read more to know why.