Commercial auto insurance is just like a personal auto insurance policy, except it covers your business vehicles. If your business vehicle is damaged or involved in an accident, your commercial vehicle policy will cover the vehicle and help you get the damage repaired.
Understanding the different types of auto insurance can be confusing. This quick guide will tell you everything you need to know about commercial auto insurance.
Commercial Auto Insurance
Commercial auto insurance covers accidents of business vehicles. Third-party liability coverage for injuries is required in most states. Most policies also include coverage for collision and medical payments. Most small business owners can purchase a commercial vehicle policy for around $600 to $2,400 per vehicle.
Companies That Need Commercial Auto Insurance Coverage
Any business owner that uses vehicles in the course of their normal business needs to get commercial auto insurance to cover those vehicles.
Whether your business uses cars, vans, work trucks, box trucks, utility trucks, or food trucks, you need to have a commercial auto policy. Semi-trucks and tractor-trailers also need to have a commercial insurance policy but these policies are a bit more specialized than a policy for a car.
Your commercial auto policy will cover
- Damages to your vehicle
- Injuries to driver
- Injuries to anyone else
- Damages to other people’s property
Overall commercial auto policies have higher coverage limits than a personal policy. Business vehicles involved in a crash usually require more protection in the event of an accident and your commercial policy will be able to accommodate these higher limits.
If you drive for Uber, Lyft, or another rideshare service it is not necessary to have a commercial insurance policy. North Carolina insurance companies have a special rideshare insurance policy that would benefit these types of workers.
What to Look for in a Commerical Policy
When you purchase a commercial vehicle policy make sure you get a commercial policy where it would be easy to add or remove vehicles as your company grows. You will also need a policy that is flexible and allows you to add or remove drivers as you hire or let go of employees.
A good commercial policy should also allow you to adjust the levels of coverage. It should be easy to file a claim and follow up on that claim. Claims should be paid out in a timely manner so that it doesn’t cause any harm to your business.
Commercial Auto Insurance vs Personal Auto Insurance
Many people do not realize it but personal auto insurance and commercial auto insurance policies are very different. If you have a personal policy it excludes and business-related driving, especially if that business occurs on a regular basis.
For example, a real estate agent who regularly drives clients to see properties most likely needs a commercial auto policy even if the business isn’t registered in the business’s name.
The agent probably already has a personal auto policy but if they are in a crash while driving a client the injuries to the vehicle or the client passenger will not be covered under the personal auto policy.
On the other hand, business owners only occasionally drive their personal car for work have significant coverage under their personal auto insurance coverage.
If you are running personal errands in a business-owned vehicle, you may be covered by your commercial auto insurance policy.
But these coverages depend on the specifics of your policy, so it is always a good idea to read the fine print and understand the full policy before you buy it.
How Much Does Commercial Auto Insurance Cost?
The cost of commercial auto insurance varies depending on a number of factors. The price could be based on the number of vehicles your business owns. Policies for businesses that only have one vehicle as opposed to a fleet of vehicles cost much less.
Costs are also influenced by the type of vehicle, driver’s records, cargo, and the average distance traveled. Truck drivers face greater risks on the road and that is why it usually costs more to insure a large commercial truck.
Factors that Go Into Pricing Your Policy
Where a small business owner will pay around $1,200 or less for their policy a truck driver will pay $12,500 or so per year. Here are a few things that will affect the price listed below.
- Vehicle type: The larger and heavier the vehicle the more expensive it is to insure because they can cause more damage in an accident
- Vehicle value: If the value of your vehicle is higher it will cost more to repair your vehicle if it is damaged in an accident
- The number of vehicles and drivers: If you have more vehicles and more drivers on each vehicle, the cost of your premium will go up
- Distance: Long trips across state lines will increase the cost of your policy
- Type of coverage: The type of coverage you need for your business will add to the overall cost
- Deductibles: A higher deductible means lower payments but it is a good idea to select a policy with a lower deductible because it will cost less to use
- Cargo: If your business will be hauling cargo or gear, you can expect to pay more especially if your cargo is hazardous or dangerous in any way
- Credit: Insurance companies pull your credit score to help determine the cost of your policy, so if you have good credit, your policy will be cheaper
- History: Businesses that haven’t had to file a claim before may have cheaper premiums than those who have filed claims
Try to understand all the factors that go into pricing an insurance policy so that your business can get the best deal.
Choose the Right Commercial Insurance for Your Business
There are many providers of commercial auto insurance. It is important to pick the right one for your business. Amistad Insurance Services is located in North Carolina. We provide commercial auto insurance to many different types of businesses.
Contact us today and get a free quote on a commercial auto policy for your business.
