Commercial auto insurance is an essential type of coverage businesses that use vehicles as part of their daily operations need to protect their assets, mitigate risk and save money. Commercial auto insurance typically provides financial protection against claims resulting from accidents that cause property damage or bodily injury. Often, businesses can tailor policies to fit their specific needs, allowing them to cover a wide range of risks associated with the motor vehicles they use.
Several types of commercial auto insurance policies are available for businesses, each offering various levels of protection against different risks. Some common types of commercial auto insurance include liability coverage, collision coverage, comprehensive coverage, medical payments coverage, uninsured/underinsured motorist coverage, rental reimbursement coverage and non-owned vehicle liability coverage.
Specific Policies of Note
While the specific type of commercial auto insurance a business chooses will depend on organizational needs, the following are some of the most common types of coverage:
- Liability coverage—Liability coverage helps protect a business from losses caused by injuries or property damage sustained due to an accident involving a company vehicle. This type of policy pays for damages caused by the driver and compensates those injured. This policy may also cover legal defense costs.
- Collision coverage—Collision coverage helps cover the costs associated with repairing or replacing vehicles damaged in an accident where the driver is at fault. This policy can sometimes help cover repairs on both owned and leased vehicles.
- Comprehensive coverage—Comprehensive coverage helps cover damages caused by events other than car accidents, such as theft and vandalism. This policy may also provide reimbursement during the repair process if a vehicle has been declared totaled due to severe damage sustained in an event not involving another vehicle (e.g., fire damage).
- Medical payments coverage—Medical payments coverage helps pay for medical expenses related to injuries sustained during an automobile accident. This policy is usually purchased on its own or in addition to liability and collision policies since it provides additional financial security in case someone gets hurt while driving a company vehicle.
- Uninsured/underinsured motorist coverage (UM/UIM)—Uninsured/underinsured motorist coverage is often required by state laws. It protects against insured drivers whose limits are inadequate following an accident. This may include hit-and-run drivers. UM/UIM policies may also provide compensation if you suffer bodily injury after being struck by an uninsured driver who does not maintain sufficient limits according to state law requirements.
- Rental reimbursement coverage—Rental reimbursement coverage helps pay for rental car expenses incurred due to repairs on your company’s vehicles following an accident that causes significant injury or property damage—up to your policy’s limits. This policy may also provide reimbursement when vehicles are damaged due to hail storms or flooding.
- Non-owned vehicle liability coverage—Non-owned vehicle liability protects against third-party injury claims involving vehicles operated by employees while performing work-related tasks but not owned by your business. This may include rented vehicles or an employee’s personal vehicle used for occasional work purposes. This coverage can help pay for medical bills or legal fees.
Depending on their needs and risk profile, many types of commercial auto insurance are available to businesses. Business owners must work with a qualified insurance agent to discuss their options and review their coverage.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.