What Is Business Vehicle Insurance?
As a businessowner, you need some of the lapp insurance coverages for the cars, trucks, vans or early vehicles you use in your business as you do for vehicles used for personal purposes .
Your Businessowners Policy ( BOP ) does not provide any coverage for vehicles, so you must have a separate policy .
Most states require you to purchase liability policy for bodily injury and property price that may result from a fomite accident occurring while you or person from your organization is driving on business. Most states have mandatary requirements for you to have uninsured/underinsured motorists ’ coverage and/or aesculapian payments coverage ( known as Personal Injury Protection ( PIP ) in some states ). You can besides purchase physical price coverage for vehicles your clientele owns, leases or hires .
The Business Auto Coverage Form ( BACF ) is the standard insurance form used by many insurers to provide commercial car coverage. Although the form refers only to “ autos, ” autos are defined to include cars, trucks, trailers, vans or other vehicles designed for practice on public roads.
Reading: Business Vehicle Insurance
Each fomite you use in your business can be individually “ scheduled, ” or listed on your policy along with represent coverages. In early words, you can choose different coverages, for your versatile vehicles, depending on the vehicles ’ features ( size, old age, larceny denounce and condom evaluation ) and the coverage you need for it .
Do I Need a Business Auto Policy?
Your insurance agent will ask in contingent how you use vehicles in your business ; who will be driving them ; whether you own, lease or rent ; and whether you and your employees are likely to be driving their own cars for your business. The answers to these questions will indicate the types of coverage you need .
In general, lone a BACF can provide the charge of liability protection a business needs. In nowadays ’ s litigious club, many insurers recommend a occupation car coverage limit of $ 1 million with $ 500,000 as the minimum — that even a modest business needs to cover the likely damages in a serious accident .
Will My Personal Auto Policy Cover Business Use?
Your personal car policy provides coverage for some business use of your fomite. similarly, your employees ’ personal car policies cover some commercial enterprise use of their vehicles excessively ( depending on the type of business ) .
even if not specifically excluded, how you use your fomite may not be an satisfactory hazard to the policy company under a personal car policy. The indemnity company may charge extra bounty for certain “ business use ” or deny to insure or cancel policies when the consumption presents besides much hazard. In these cases, a commercial car policy may be the best solution .
If a vehicle is used primarily in business, there is probable no coverage under a personal car policy. If you use your personal vehicle for ferment occasionally, your personal indemnity carrier might be able to tailor your policy to reflect this usage. If the fomite is owned by a clientele, there will be no coverage under a personal car policy. A commercial car policy would need to be purchased .
The personal car policy, whether yours or your employee ’ sulfur, may not have adequate coverage to protect your business. For model, imagine you are driving your car to a business meet while having an acute conversation on your cell call with one of your sales reps. By the time you notice a van ahead of you has stopped to make a leave twist, it ’ randomness besides late to avoid a collision. The driver and five passengers are injured in the accident. They sue you and your company .
If you have only a personal car policy, your insurance company will probably defend you personally and pay the claim—up to the policy limit. Your personal car policy insurance company will not defend or pay damages on behalf of your business, however .
If you or your employees drive company-owned vehicles, your business likely needs commercial car indemnity coverage. If you use your personal vehicle for work purposes like node meetings, business errands or deliveries, you may need hired and non-owned car indemnity ( HNOA ) .
For a identical serious accident or one with a phone number of hurt people, your personal car policy may not be enough to cover the damages. In that event, the hurt parties would probable sue to collect damages from your business .
Do not expect to rely on a personal umbrella policy for any claims that arise from clientele use of a vehicle. typically, the personal umbrella excludes all claims occurring in the run of a business enterprise .
What Vehicles Are Covered?
The setting of coverage in the occupation car policy can be either broad or narrow, depending on your choice of options. It could, for exemplar, be written to apply lone to one specifically describe car. Or, as an model of very broad coverage, the policy could be written to apply to the named insure ‘s liability exposures arising out of the practice of any car .
In general, you have three options for which vehicles you choose to cover .
- Autos your business owns
- All autos your business owns, hires or leases
- All autos used for the business, including those that your business does not own, hire or lease
Most businesses should buy the third type, since that is the only coverage that protects the business from liability when an employee or owner is driving a personal fomite on business .
Be Sure the Right Insured Is on the Policy
An indemnity compress normally requires that the owner of a vehicle be named in the policy “ Declarations ” page as the “ principal insured. ” If you drive any of the lapp vehicles for both commercial enterprise and pleasure, make indisputable you tell your indemnity agent who holds the vehicle ’ south title, you personally or your company. This will avoid problems if you need to file a title or a claim is filed against you .
Physical Damage Coverage
The three types of physical damage coverage for drive vehicles are collision, comprehensive examination and specified perils .
- Collision coverage is for losses that result from the collision of a covered vehicle with any object or from the vehicle overturning.
- Comprehensive coverage is the broadest form of auto physical damage coverage, because it provides for losses from any cause except collision and overturn (insured under collision coverage) and a few policy exclusions, such as wear and tear, mechanical breakdown and acts of war. Among the causes of loss covered under comprehensive are flood, fire, theft, glass breakage, falling objects, explosion, earthquake or colliding with a wild bird or animal.
- Specified perils coverage covers many of the same perils as comprehensive, but because it covers only “named” perils—those specifically named in the policy—it has a lower premium. It is sometimes referred to as “fire, theft and Combined Additional Coverage (CAC)”.
If your businesses has a large fleet of vehicles, over clock time, it may be more dearly-won to insure the fleet for physical damage than it is to retain the gamble, that is, pay for any physical wrong directly quite than by indemnity ( besides known as self-insurance ) .
regardless of how many vehicles your business has, it may be cost effective to carry physical wrong coverage only on the newer or more valuable vehicles .
What Will the Insurer Pay for Physical Damage?
The total an insurance company will pay on an car physical damage or larceny claim depends on the market value, known as actual Cash Value ( ACV ), of the vehicle at the time of the loss. The most that will be paid is the lesser of the ACV or the monetary value to repair or replace the vehicle with one of like kind and quality. In the consequence of a total loss, the ACV is adjusted for disparagement and the vehicle ’ s physical condition. therefore, the older the fomite and the worse its condition, the more its value has depreciated and the less the insurance company will pay .
The insurance company may pay you the value of the personnel casualty in money or, at its choice, it may repair or replace the damaged or stolen fomite. In sheath of a larceny, it may return the steal vehicle to you with requital for any price caused by the larceny.
The indebtedness fortune of the BACF obligates the insurance company to pay all damages the business is legally obligated to pay because of bodily injury or property damage caused by a shroud vehicle, up to the policy limits .
When there is an car indebtedness lawsuit against the insure clientele, where the loss is covered by the policy, the insurance company is obligated to defend the business or settle the lawsuit. The decision whether to contest or settle the subject is entirely at the insurance company ’ mho free will .
The insurance company ’ s duty to defend or settle ends when the insurance policy limits are exhausted. By means of example, think that three people are injured in an accident in which you or one of your employees is at defect. The policy limit is exhausted in judgments or settlements for the inaugural two claimants. That leaves your business liable to pay the award directly, should there be a judgment in privilege of the third base person .
punitive damages may be awarded in cases of crying negligence, such as drink or foolhardy drive. By law in respective states, a BACF can not cover any punitive damages for which you may be apt. flush in states where coverage for punitive damages is allowed, your policy may exclude them .
How Much Liability Coverage Does My Business Need?
many insurers recommend a business car coverage limit of $ 1,000,000, with $ 500,000 as the minimum. The higher limit does not add a great consider to the premium, considering the sum of extra protective covering it provides .
What is a Combined Single Limit (CSL)?
Unlike personal car policies that have separate limits for bodily wound and property wrong liability ( separate limits ), the BACF normally has a Combined Single Limit ( CSL ). This creates higher limits for both bodily wound and property damage coverages, including per occurrence limits. Although you can purchase early limits, the most common commercial car CSLs for a humble business are $ 500,000 and $ 1,000,000 .
Does a Business Umbrella Cover Autos?
If you have a clientele umbrella policy, it would provide protection for owned, hired and non-owned autos, if the umbrella shows the car liability policy as an fundamental policy for which it provides coverage .
What Coverage Do I Need if My Employees Use Company Vehicles for Personal Use?
Some businesses let employees drive company vehicles home and use them for personal purposes in the evenings or on weekends. so hanker as these vehicles are scheduled on your clientele car policy and the appropriate “ coverage car symbols ” are shown on the “ Declarations ” page, you have coverage for owned autos taken home by employees .
Employees ’ own personal car policies will not cover their use of a party car unless the cable car has been specifically borrowed as a irregular replacement for the employee ’ south own car while it is unavailable. In addition, employees who lease, hire, rent or borrow autos for their personal use are not covered by their employer ’ randomness business car policy .
When Your Business Vehicle Is Also Your Personal Vehicle
sometimes employees or executives of a company or other persons who are supplied with a vehicle owned by the company have only that vehicle. They do not own a personal vehicle nor do they obtain personal car coverage. The BACF does not cover personal use of the vehicle in this situation. To close this coverage col, you need to add the Drive other Car Coverage Endorsement to your BACF. This provides indemnity while the named individual or a extremity of his or her syndicate is driving a cable car borrowed from a third base party .
What Coverage Do I Need if Employees Drive Their Personal Vehicles for Business?
If your employees drive their own cars for business purposes—to visit clients, for example—your business could wind up liable for property wrong and bodily injuries resulting from a traffic accident for which an employee was at fault .
sometimes businessowners don ’ thymine notice they have this exposure. Consider these scenarios :
- Your office manager stops by the office supply store to pick up some items for work on her way back from lunch.
- On the way home, a supervisor stops by a client’s office to leave a product sample.
- While on vacation, a salesperson driving his personal vehicle makes a brief stop to visit a customer.
These are all situations where a business can find itself liable for an car accident with damages higher than the policy limit of the employee ’ s personal car policy .
To protect your business from these indebtedness risks you can add this type of indebtedness to the BACF either under “ any car ’ or “ non-owned autos. ”, which provides coverage when employees drive their own vehicles on business. The types of autos that are covered are indicated by one or more numeric symbols that appear in the declarations. These are called cover car appointment symbols. The policy utilizes the numbers 1 through 9 and 19 ( which are land vehicles ). Each total represents a category of cover autos .
This BACF coverage is excess over the limits provided by the employee ’ s personal car coverage. If the employee ’ second limits are low—such as only to satisfy state of matter fiscal responsibility limits—then it is critically crucial for the commercial enterprise to have this non-owned car auspices .
It ’ s a good mind to require employees to carry commercial car coverage on their vehicles. Obtain proof of their coverage annually and ask employees to sign Motor Vehicle Report ( MVR ) authorization forms –to avoid privacy law issues— allowing your company to pull their Motor Vehicle records per annum .
You Are Liable if You Allow a Bad Driver on the Road
You are legally liable when you allow person to drive one of your vehicles. If you fail to take reasonable steps to determine that the driver is qualified to drive or if you allow person to drive whom you know has a hapless repel record and that person causes an accident, you could be liable for “ negligent entrustment. ” .
A case of negligent entrustment arises when person allows another person to use a vehicle know or having reason to know that the use of the fomite by that person creates a risk of damage to others. Any damages awarded for negligent entrustment would be on clear of indebtedness for the accident itself .
Your arrangement is responsible for verifying a driver ’ south qualifications before entrusting him or her with a vehicle. Do not entrust a bad driver with a vehicle—not even for a quick errand.
Keeping Premiums Down
The best way to keep your BACF premiums down is to avoid accidents. Driving safety should be emphasized. Drivers should not be so blackmail to produce that they feel compelled to drive unsafely. Have a policy in plaza with regard to cellphones and texting and using hands-free devices. besides consider annual driver refresher course courses. All vehicles should be well maintained .
early ways to save money :
- Hire employees with good driving records
- Bundle Commercial Auto with Other policies
- Pay your insurance bill in full.
- Keep your vehicles secure.
- Increase your commercial auto insurance deductible
- Business experience discount (three years or more in business)
Ask your agentive role whether your indemnity company has business car condom resources that you can use to help your arrangement be accident free. For more information on reducing the risk of car accidents, suction stop here .