Damage Categories in Auto Insurance: What You Need to Know

If you use a vehicle for your business, you need to understand how commercial vehicle insurance works

Key takeaways:

It’s estimated that traffic fatalities reached a 16-year high in 2021.
Florida drivers have a higher risk of death from auto accidents than all but 14 states.
There are four damage categories when assessing vehicle damage
The right commercial policy can protect you, your employees, and your vehicles.

Almost everyone is involved in an auto accident at some point in their lives. In the U.S., your odds of being in a car accident are 1 in 366 for every 1,000 miles traveled. And those numbers are on the rise. The National Highway Traffic Safety Administration predicts that when all stats are in, traffic fatalities will reach a 16-year high in 2021, with a 10.5% increase over 2020.

For Floridians, the chances of death from auto accidents are especially high. Florida records 15.4 deaths per 100,000 people; only 14 other states have higher odds. Of course, all accidents don’t involve fatalities, but these statistics should set off alarm bells for any Florida company that uses a vehicle to do business.

Commercial vehicles need commercial auto insurance. This type of insurance isn’t just for big rigs and large trucks. Even if you only use a passenger car to make deliveries or pick up supplies, you need commercial auto insurance.

You might wonder what type of accident your insurance should cover, what types of accidents are most common, and what are the damage categories in auto insurance. Here’s what you need to know.

Damage categories in auto insurance

If you’re in an accident, any damage will be evaluated by an assessor to determine both the level of damage and who was at fault. You’ll want to make sure your commercial auto policy covers all four of the following damage categories:

Damage category A: Totally ruined: If your commercial vehicle is determined to be in this category, it can neither be driven nor repaired, and parts can’t be removed for resale. The only place for this car is a scrapyard.
Damage category B: Good only for parts: In this category, your vehicle has been severely damaged and isn’t drivable. However, parts can be salvaged and re-sold, and the rest of the car will be scrapped. The extensive damage suffered by the vehicle means your insurance company will not allow you to save any part of the body.
Damage category S: Bad, but repairable: In this case, your vehicle has suffered structural damage, which means the frame and/or the body is in poor condition. A skilled professional might be able to straighten out the frame, but it won’t be drivable until repairs are done.
Damage category N: Trivial damage: This category might mean a small dent or a broken headlight. This vehicle is likely okay to continue driving after a comprehensive inspection.

The most common types of commercial vehicle accidents

The types of accidents commercial vehicles are involved in aren’t a lot different than accidents involving non-commercial vehicles. Here are the most common:

Intersection crashes. These occur when a vehicle goes through an intersection without stopping at a light, a stop sign, or a yield sign, or when someone makes a left turn and hits an oncoming car. There’s almost an endless variety of causes for these types of crashes, resulting in injuries and damaged property.
Carriage underride. When a passenger car hits a semi truck and slides underneath it, you have a carriage underride accident. These are some of the most dangerous types of accidents because the bottom of the trailer is just about the same height as the top of the car’s windshield.
Hit and run. You’ll be stuck with the repair bill when this happens because the other driver is long gone after causing damage to your vehicle. However, with the right insurance coverage, you can be compensated, minus your deductible.
Rollovers. Commercial vehicles suffer more rollover accidents than passenger cars. SUVs, full-size vans, commercial trucks, and pickup trucks are taller and narrower, and this design makes them more rollover prone. And if they’re carrying a heavy load, a rollover is even more likely to happen when they’re in an accident because they become unstable when hit by another auto.
T-bone. These usually happen at intersections but can also happen when a vehicle is pulling out of a driveway or parking lot. It involves the front end of one vehicle colliding with the side of another.
Rear-end wrecks. Your commercial vehicle can cause quite a bit of damage if it rear-ends a smaller vehicle.
Jackknifed trailer. Slamming on the brakes or turning too sharply can cause the trailer of a truck to swing around dangerously and hit other vehicles or overturn.

Without the right insurance, you’ll need to open your wallet wide if your vehicle is involved in any of these types of accidents. But what is “the right insurance”?

The commercial vehicle insurance you need

Your personal auto insurance policy won’t cover you if you’re using your car to do things like make deliveries, take a client to the airport, or pick up supplies for your business. In these cases, you need a commercial policy. And because businesses have more legal exposure, they usually have higher coverage limits. Here are the essential coverages you need:

Liability. You need both bodily injury and property damage liability. The first pays for medical expenses for injuries and the second pays for damage to property if you or someone who works for you causes an accident during the course of business. This coverage also can help with legal expenses.
Personal injury. This pays for the medical expenses of the driver and any passengers if there’s an accident, no matter whose fault it was.
Uninsured/underinsured motorist. This is your protection against hit-and-run drivers and those who don’t have enough insurance. It will pay for medical expenses and property damage from a hit-and-run accident. Underinsured motorist coverage pays if you’re hit by a driver who doesn’t have enough coverage to pay all expenses.
Comprehensive and collision. Comprehensive coverage pays for damage that isn’t caused by a collision with a vehicle or object. It covers issues like a rock hitting your windshield or someone vandalizing your vehicle. Collision covers damage to your vehicle from any type of collision, no matter who is at fault.

Other coverage is available, including rental reimbursement, hired vehicle coverage, and non-owned vehicle coverage. Let your agent be your guide. Spending some time going over your coverage is a worthwhile exercise to make sure you’re completely covered no matter what the road throws at you.

Avante – Your source for complete commercial vehicle coverage

Avante will work hard to build the coverage your business needs for your commercial vehicles. We’ll sit down and go over deductibles and coverage options and tailor policies that work for you. Reach out today, because life (and the road) is unpredictable. At Avante, we’re always standing by.

Disclaimer

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.