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What Does Commercial Auto Insurance Cover?

Bodily injury and property damage liability is the most common coverage type because it is required in nearly all states. Below, we’ve outlined other types of coverage that may also be mandated in your state plus optional types of protections.

• Bodily injury liability: Pays for medical bills when a company worker can be held responsible for injuries caused to another party while driving a company car.

• Property damage liability: Pays for repair bills or reimburses for damaged belongings when a company worker can be held responsible for injuries caused to another party while driving a company car. Subject to a deductible.

• Collision: Pays to repair or replace your company car if totaled in a car accident, regardless of who was the at-fault driver. Optional coverage but required by your lender or lessor if you are financing or leasing your company vehicle.

• Comprehensive: Covers non-collision losses, such as fire, theft, hail and vandalism. Typically required by your lender or lessor if you are financing or leasing your company vehicle.

• Uninsured/underinsured motorist: Covers your losses if the company car is involved in a car accident but the other driver is at fault but has no auto insurance or insufficient coverage.

• Medical payments coverage or Personal injury protection (PIP): Provides medical, disability and death benefits for you or an employee after a car accident in a company car, regardless of which driver was at fault.

Insurance companies offer endorsements, which are add-ons to your base commercial auto policy, that can provide unique benefits. Roadside assistance, for example, will pay for tows and jumpstarts if your vehicle experiences a sudden breakdown and inland marine endorsement covers your equipment and tools during transit. Here are some common endorsements that may be useful depending on your business.

• Hired and non-owned: Covers vehicles that are used for work but not owned by the company. For example, this coverage may apply when your employee rents a car and uses it to drive to a work-related convention.

• For-hire livery: This coverage is for businesses that transport vehicles, such as a taxi service, hotel shuttle service or a rideshare driver.

• Roadside assistance: Pays for tows, fuel delivery, battery jumpstarts and other emergency services when your company car breaks down at the roadside.

• Gap: Covers the difference between the auto loan on your company car and its actual cash value if it was totaled in a car accident. For example, if your car was worth $10,000 and you still owed $15,000, gap insurance would cover the $5,000 difference.

• Inland marine endorsement: Covers equipment, electronics and other physical business assets inside your company car if they were stolen or damaged in an accident.

• Rental reimbursement: Pays for the cost of a rental car if your company car is temporarily unusable because it was totaled, stolen or in a repair shop due to a covered accident.

• Personal property: Covers personal belongings that were inside your car that were damaged in a covered car accident.

• Motor truck cargo: Covers the freight or commodity being hauled by a for-hire trucker.

What Isn’t Covered by Commercial Auto Insurance?

Commercial auto insurance will not cover you for the below types of losses:

• Liability costs incurred outside a company vehicle (look into general liability insurance instead)

• Personal property inside commercial vehicle

• Intentional losses (e.g., filing a collision claim after intentionally driving the company car into a tree)

• Medical bills when employee driving company vehicle for personal use (can depend on company)

• Use of company vehicle for illegal activities

• Wear and tear

• Floods and earthquakes

How To Get Commercial Auto Insurance

Follow these steps to buy commercial auto insurance for your business:

1. Determine what type of commercial auto policy you need: You may need a specific type of auto policy depending on your business and the type of motor vehicles it uses. For example, if your business uses delivery trucks, you may need additional coverage versus buying a policy for a company car or van. Similarly, taxi services or rideshare contractors may need a for-hire livery policy.

2. Consider which coverage you need: Liability coverage is the most commonly required coverage but certain states may also require UI/UIM coverage and PIP. If you’re leasing or still paying off a loan, then you may also need physical damage (collision and comprehensive) coverage. Optional endorsements, like roadside assistance and inland marine coverage, are worth pondering, too.

3. Compile information: When shopping around for quotes, you will typically need to supply information, including your business model and industry, type of car (e.g., pickup truck vs. cargo van), VIN, whether the car is used for commercial or personal use or both, driving history, date of birth and more.

4. Compare rates from multiple insurers: Collecting quotes from at least five insurance companies can help you find the coverage you need at the lowest price available. Don’t forget to ask about available discounts, such as bundling your commercial auto policy with another insurance plan.

5. Buy your policy: After choosing an insurance provider, it’s time to sign on the dotted line and pay the premium to begin your coverage. Make sure you stay on top of your premiums or you will risk a lapse in coverage — you may not be covered for accidents during this time.

6. Shop around regularly: Market factors are always shifting and your insurance needs can change, as well. For example, you may need to add drivers to your commercial auto policy as you employ more workers or insure additional cars if your business expands. Shopping around at least once per year ensures you’re staying top of your coverage needs at the lowest price available.