As a business owner, the commercial vehicles you use are your lifeblood. So, just like you’d never consider doing a job without the proper tools, you should never consider driving your business vehicle without the right insurance. Here are four easy steps to figure out your commercial auto insurance needs.
Decide how to buy
Commercial auto coverages and policies are more complicated than private passenger auto policies. While some people are comfortable buying commercial auto policies directly from a company online or over the phone, more people choose the in-person counsel of an independent insurance agent.
Independent agents represent multiple companies, so they can offer a choice of coverage packages, prices and service levels. After all, just because you bought a Dell computer doesn’t mean you’d automatically buy a Dell printer, so why not use that prerogative to mix and match your insurance policies to produce the best outcome for your business?
You likely have multiple insurance coverage needs—general liability and an umbrella policy, for example—and an independent agent can cater an insurance package to your requirements. Once you decide how you’re going to buy your commercial auto policy, it’s time to think about what companies you’d like to consider.
Select a carrier
A lot of companies offer commercial auto coverages. It’s important to select one that meets your business needs. Questions to ask include:
- How long has this company offered commercial auto coverage? Are they considered experts in this field?
- Are claims handled by company representatives or contracted to a third party? Are the people handling claims specially trained for commercial vehicles?
- Does the company offer 24/7 claims service, ensuring any claim is handled quickly so you can get back on the road—and back to work—fast?
- Does the company offer choices in coverage options that meet your business needs?
- Does the company offer liability limits high enough to protect your business?
- Do you have the flexibility of choosing a six-month versus a 12-month policy?
- Does the carrier offer flexible payment plans?
- Can you manage your policy online?
Know what to buy
Coverages vary by state, but standard commercial auto policies generally provide coverage for injury or damage you cause to someone else; your injuries; injuries and damages caused by an uninsured or underinsured driver; and damage to or theft of your vehicle(s).
Coverage for injury or damage you cause. Bodily injury and property damage liability (BI/PD) covers your legal liability, up to the limit you select, for an accident in which there’s damage or injury to someone else. Generally, BI/PD pays for the cost to replace or repair the damaged property, the medical bills and wage loss incurred by an injured person and other damages you are legally obligated to pay as a result of an accident.
A policy designated 100/300/50 means your carrier will pay $100,000 for bodily injury per person involved in a claim, up to a cap of $300,000 for bodily injury per claim, and $50,000 for property damage.
You may instead choose “combined single limits” (CSL). If you choose CSL of $300,000, that’s the maximum amount your insurance carrier will pay for the total of all damages—bodily injury and property damage—resulting from any one accident. If you’re the driver of your vehicle, BI/PD doesn’t cover your injuries or damage to your vehicle. If your insurance carrier covers an accident for which you’re sued, they should also pay for a lawyer to defend you.
If your business requires you to rent, lease, hire or borrow temporary replacement vehicles, you can expand your liability coverage to include these unlisted vehicles with hired auto coverage. And an employer’s non-owned auto endorsement can expand your liability coverage to vehicles owned by your employees that are used for your business.
Some general contractors require subcontractors to provide a certificate of insurance as proof of commercial vehicle coverage, since such certificates aren’t usually available through private passenger auto policies. Certificates of insurance protect the general contractor if a subcontractor causes damage or injury while on the job.
A waiver of subrogation and additional insured endorsements can help protect individuals and other businesses from liability when they’re listed on the policy. For example, if a subcontractor’s insured employee is driving his or her company vehicle and has a waiver of subrogation in place with the general contractor, then the employee, the subcontractor and the subcontractor’s insurance carrier would not be able to file a claim against the general contractor (or its insurer) for damage to the vehicle or injury to the driver resulting from a collision while the employee is driving on the job.
Coverage for your injuries. Medical payments cover the cost of reasonable and necessary medical care provided to you as the result of a motor vehicle accident and applies no matter who is at fault. Coverage varies by state, and you’ll be asked to select a limit amount (the maximum amount your insurance carrier will pay per accident).
Personal injury protection (PIP), available in some states, generally covers medical bills and often covers wage loss and other costs. PIP coverage is subject to a limit often set by the state and applies no matter who’s at fault.
Coverage for injuries and damages caused by an uninsured or underinsured driver. Uninsured motorist bodily injury and property damage covers your medical treatment and damage to your vehicle (and sometimes other property) caused by someone who doesn’t have insurance. Underinsured motorist bodily injury generally provides protection when the other person has liability insurance, but not enough.
Coverage for damage to or theft of your vehicle(s). Collision and comprehensive covers the cost to repair or replace your vehicle if it’s stolen or damaged in an accident, regardless of who’s at fault. Collision covers you if your vehicle collides with another vehicle or object (other than an animal); comprehensive covers damages caused by an event other than a collision—such as fire, theft, vandalism and weather-related damage as well as crashes with animals. Both are subject to the deductible you choose; a higher deductible can mean a lower rate, but it’s also the amount that you’ll need to pay first in the event of a claim.
Understand and control the price
Insurance companies generally price their policies to cover the cost of future accidents. To do this, they use information about you, your vehicle(s) and your driving history, along with more general historical claims information.
Driving history. Business owners should run motor vehicle reports (MVRs) on potential hires who will be driving on behalf of the company. Ask your agent for help with this. While a commercial driver’s license may not be required in your state to operate your vehicle(s), you may find that drivers who have them are more skilled.
Proof of prior insurance. Never let your insurance lapse; if you do, you’ll most certainly pay more for your next policy.
Ask about discounts. Many are available, including paid-in-full and renewal discounts.
Credit. Some insurance companies use information about your credit history to help determine your rate. Ask your agent specifically what information each company looks at so you can understand what’s influencing your premium—both positively and negatively.
The bottom line
Be smart about your commercial auto insurance policy. Just as your customers call on you as a professional, consider calling on an independent agent for professional advice.
An independent agent can help you assemble a package that combines each type of insurance your business needs while providing the level of service you want at a price that’s right for you.
