Who Needs Commercial Auto Insurance?

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Who Needs Commercial Auto Insurance? on avanteinsurance.com

Driving for business instead of pleasure

Most of us have auto insurance for our personal vehicles. In fact, it’s required in most states. Commercial auto insurance serves a different purpose, but for whom or what types of businesses? Do you need a commercial policy if you use your car for work? What if you work for a rideshare company like Uber or Lyft? We offer an overview and answer your questions about commercial auto insurance.

What is the purpose of commercial auto insurance?

As the name implies, this type of insurance is meant to cover vehicles that are used for business purposes. In most states, all drivers who have a registered vehicle must carry private liability, uninsured motorist, and no-fault car insurance coverage. States usually go further, requiring businesses that transport people or materials to have “at least the same minimum insurance requirements that apply to passenger cars or commercial vehicles,” according to the U.S. Department of Motor Vehicles (DMV).

The reason for the extra coverage is that most businesses have higher liability requirements in order to protect drivers, passengers, equipment, and other people/equipment in the event of an accident.

What does commercial auto insurance cover?

According to the DMV, “… commercial car insurance covers the same major coverage private individuals purchase…however, there are many add-ons more suited for commercial driving.”

This includes coverage for you, your employees, work equipment, and your business. Just like private insurance offers liability coverage to pay for medical expenses or property damage, commercial auto insurance serves the same purpose. The coverage amount and state requirements are usually higher than a commercial policy, however.

What types of businesses need a commercial auto policy?

When most people think of commercial auto insurance, they probably picture an 18-wheeler or a taxi. However, this type of coverage can extend to almost any business that transports people or goods, including:

•  Pickup and delivery services (materials, furniture delivery, packages, food delivery, etc.)

•  Messenger services

•  Taxi services

•  Limousine services

Other types of vehicles that might need a commercial auto policy:

•  Vehicles registered with a business, corporation or partnership

•  Vehicles that are rented or leased by others

•  Vehicles that are consistently driven by you or your employees for business purposes

•  Vehicles that are equipped with any of the following:

• Cooking/catering equipment (i.e. food trucks)

• Bathrooms

• Snowplow equipment

• Altered suspensions

• Hydraulic lifts

• Racing equipment

A commercial policy can cover cars, pickup trucks, SUVs, vans, limousines, taxies, flatbed trucks, and more.

What if you use your own car to make deliveries?

If you use your personal vehicle to deliver pizzas, you might need to consider purchasing commercial auto insurance. “Personal car insurance typically won’t pay to repair damage or treat injuries you sustain while you’re transporting people or goods for money, in large part because the liability and property damage risks are too great,” according to NerdWallet.com.

Do rideshare drivers need commercial auto insurance?

This is an area of growing concern in many states. Drivers for rideshare companies such as Uber and Lyft operate their own vehicles. Up till now, a commercial auto policy has not been required, but many states and local governments are beginning to adopt new policies. Even if your state or county does not require commercial insurance, it’s a good idea to buy the additional coverage.

Your personal auto policy might not cover activities that include transporting people. Some rideshare companies do provide commercial insurance to their drivers, but those policies might not be enough to cover your personal expenses and your liability if you’re ever involved in an accident that results in serious injury or property damage.

Should you consider any other type commercial coverage?

Aside from liability insurance – which is generally required for businesses in most states – you might also consider purchasing additional coverage, including:

Uninsured/underinsured motorist insurance – This policy helps protect your business vehicle if the other driver is not insured.

Personal injury protection (PIP) and medical payments coverage – This coverage helps pay medical expenses and/or lost wages as the result of an accident.

Emergency roadside insurance – Vehicles break down all the time, so it might be a good idea to consider protection that will cover battery charging/replacement, towing, tire changes, fuel delivery, and locksmith services.

Personal effects insurance – If a vehicle is ever stolen or personal items were taken from inside, this type of coverage can help employees pay to repair or replace them up to a certain dollar amount.

Commercial auto insurance is required for certain businesses and many more individuals should consider such a policy if their job requires transporting people, food, or other goods. If you have questions or you would like a quote, please contact Avante Insurance today.