Commercial auto insurance is a $52.2 billion industry. It didn’t become that way because it is unnecessary. Commercial auto insurance is essential if you use a vehicle during any part of your business, as it can financially protect you against the pitfalls you and your employees face on the open road.
Without commercial auto insurance, a collision or other auto accident could easily incur great enough legal fees and other costs to put you out of business. According to OSHA, motor vehicle crashes cost American businesses $60 billion every year. The average cost when an employee suffers an injury while driving on the job is $74,000. If a fatality results from the accident, your costs could exceed $500,000.
What Is Commercial Auto Insurance?
Commercial auto insurance covers cars and small trucks which you own, hire or lease for your business. It protects you against liability for injuries, property damage and other types of damages your business vehicles may cause, and may also provide compensation to your vehicles’ drivers as well.
In addition to liability, a commercial auto insurance policy may cover reparable or irreparable damage to your business vehicles. It may also cover medical expenses in the event that you or your employee is injured during a collision, even if an uninsured driver was responsible for the damages.
Commercial auto insurance is typically available with one of two tiers of coverage for physical damage to your vehicle: collision loss, and comprehensive loss which covers other types of damage in addition to collisions such as theft, vandalism and hail.
Commercial auto insurance also provides two types of coverage for liability: bodily injury, which covers you in the event that your business vehicle’s driver was at fault for the damages, and property damage.
Other types of coverage are also available. Rental reimbursement covers the cost of vehicles your business might have to rent following a collision. Uninsured motorist coverage is also available, as is coverage for medical or funeral expenses incurred by the driver of your business vehicle.
When Do You Need Commercial Auto Insurance?
You need commercial auto insurance if your business utilizes any motor vehicles. Your business operations may be as simple as making sales calls, delivering packages to the post office and driving to the store for materials – commercial auto insurance still applies while you or your employees are conducting light errands.
Larger commercial vehicles, such as semi-trailer trucks, are typically covered by commercial truck insurance policies, and additional coverage may be required for specialized business operations such as food delivery, limousine service and towing other vehicles.
Your personal auto insurance policy does not cover any vehicles which are used as part of your business operations, even if you are the driver at the time of an incident. However, a commercial auto insurance policy typically covers the business owner while they are driving one of their work vehicles for personal reasons.
How Much Does Commercial Auto Insurance Cost?
The cost of commercial auto insurance depends heavily upon the nature of the business it covers. Business size, number of vehicles, number of employee drivers, and any special risks associated with the business will be taken into consideration by the insurance provider. You may be able to offset the costs of commercial auto insurance by deducting its premium from your taxes.
It is good to partner with an independent agent while you are shopping for commercial auto insurance. They are qualified to understand which liabilities your business and its vehicles may uniquely face, as well as facilitate the claims process in the event of a collision or other incident.
If you are just starting a business and would like to make certain your vehicles are covered, or if you are currently doing business and want to ensure you’re paying a fair price for the commercial auto insurance you need, then we welcome you to contact the Hoffman Agency today. We have served business owners in Sioux City, Iowa and the wide surrounding area since 1964!