Commercial Auto Insurance
What It Covers and When You Should Get It
What Is Commercial Auto Insurance?
Commercial auto insurance protects your business from legal claims of bodily injury or property damage that occur during the operation of a company vehicle or when using a personal vehicle for business reasons. This insurance can pay for repairs, medical expenses, and legal fees that personal auto insurance won’t cover.
Driving can be essential to a small business. You might use a company vehicle or your personal vehicle to transport supplies, meet clients, or run errands. In these cases, it’s essential to purchase commercial auto insurance.
In most cases, a personal car insurance policy won’t cover accidents that occur when you’re driving a vehicle for business purposes. Commercial auto insurance is a type of small business insurance that can pay to repair damage to your vehicle or other vehicles when you’re involved in an accident. This is also a form of liability insurance, which can pay for medical expenses and legal fees if another driver sues you.
Do I Need Commercial Auto Insurance?
Commercial auto insurance, also known as business auto insurance, covers trucks, vans, and other vehicles that you use for business purposes. This coverage can be used to cover losses if your vehicle is stolen, vandalized, or involved in a collision.
Not only is commercial auto coverage helpful, but it is also legally required in nearly every state except New Hampshire and Virginia. In those states, you need to be able to show that you have enough money, through insurance or on your own, to pay for damages if you cause an accident.
The minimum coverage requirements for commercial car insurance vary by state, but they are generally at least the same as personal car insurance requirements. If you regularly transport passengers or carry cargo, then your insurance requirements could be higher.
You should purchase commercial auto insurance if:
If any of these situations apply to you, your personal auto insurance policy won’t provide enough coverage.
Is My Personal Car Insurance Enough?
When an insurance company issues a personal auto policy, they don’t agree to take on the additional risk that comes with driving a vehicle for commercial reasons. If you get into an accident while driving for business and only have a personal auto policy, most likely your insurer will not cover the damages. They might even cancel your policy if you make a claim related to the business use of a vehicle.
Unfortunately, in some cases, the line between what’s covered by commercial car insurance and personal car insurance is blurry. You need commercial car insurance if you have a company-owned car or regularly use your personal car for business reasons. On the other hand, if you’re just commuting to your office or business location or meeting a business partner for lunch, your personal auto policy might cover that.
Here are some examples of when you need commercial auto insurance and when your personal policy will suffice:
