If your business regularly uses vehicles for deliveries, passenger pickups, or other work-related operations, then you may be vulnerable to lawsuits or costly repairs if something goes wrong. Choosing the commercial auto insurance that is appropriate is a critical point in protecting the financial health of your business.
Minimum coverage requirements for commercial vehicle insurance are set by individual state laws, and are typically more extensive than the requirements for personal vehicle insurance. It may seem obvious that you need commercial auto insurance for a vehicle used exclusively for business purposes, but what about a personal vehicle that may be used in the operation of your business? If you are driving a personal vehicle for commercial reasons and are in an accident, you may be shocked to discover your personal auto insurance will not cover the damages.
Factors Affecting What Type of Insurance You Need
Every business has unique needs for all types of commercial insurance, and car insurance is no exception. Only an agent who is well-versed in this type of insurance can sit down with you and help you determine which coverage will best suit the needs of your business, but these are some factors to keep in mind:
- The purpose of the vehicle. Whether the vehicle is used for deliveries, transporting goods or passengers, or performing another function (like a snow plow or dump truck) will be a significant determining factor in the type of insurance coverage you will need. Certain features, such as bathrooms, cooking equipment, hydraulic lifts, and other equipment may also necessitate added coverage. Similarly, some vehicles such as tow trucks require their own specific type of insurance.
- Who owns/drives the vehicle. Are you the sole operator of the vehicle, or do various employees drive it as well? Is the vehicle legally registered to an individual, or to a business, corporation, or partnership? Is it rented or leased to anyone else? Inadequate coverage could leave you liable for someone else’s driving mistakes.
- Who or what is being transported. If the vehicle is used to transport goods or passengers, you will want to make sure that your insurance protects them in the event of an accident. Rates may be higher if, for example, you transport hazardous materials.
- Where the vehicle travels. As previously stated, commercial auto insurance laws are set by the state, so if the vehicle stays in state, you’ll only need to worry about your city’s laws. If, however, you cross over state lines, you may be subject to additional laws on a federal level.