Most countries have laws requiring business vehicle insurance, sometimes called commercial vehicle insurance. If you drive a car or a van for work, it safeguards you.
It’s a common misconception that basic personal auto insurance coverage also covers use for business purposes. The amount of protection provided by standard policies is less than business vehicle insurance.
Read on to learn more about business vehicle insurance and all it entails.
About Business Vehicle Insurance
You need some of the same insurance protection as a company owner for the automobiles, trucks, vans, and other vehicles you use for work as you do for personal use.
You need a different vehicle policy because your Businessowners Policy (BOP) does not cover them.
Most states mandate that you have liability insurance to cover any bodily injury and property damage that may result from a car accident while you or a member of your firm is driving for work. Most states have regulations that mandate you have medical payments insurance. Plus, uninsured/underinsured motorists coverage, and, in some circumstances, personal injury protection (PIP). Additionally, they offer physical damage insurance for vehicles that your business owns, leases, or rents.
They often use the standard insurance form (Business Auto Coverage Form (BACF)) to provide commercial auto coverage. They define autos as any vehicle designed for public roadways, including cars, lorries, trailers, and vans, even if the form mentions “autos.”
It is possible to “schedule” or list any car you use for work reasons on your insurance with the proper coverages. In other words, you can select multiple coverages for your various automobiles. However, this depends on their features (size, age, theft rating, and safety rating) and the coverage you need.
What Vehicles Does Business Vehicle Insurance Cover?
The extent of coverage under the business auto policy will depend on the options you select. For instance, it might just apply to one specific auto that is well explained. The named insured’s liability risks from using any vehicle may also be covered by the insurance. But it would be exceptionally thorough coverage.
For the vehicles you choose to cover, you typically have three options:
- Every car that your company owns, leases, or employs
- Vehicles that your business rents, owns, or hires
- Autos owned by your business
- All vehicles you use for business purposes. And this includes those your business owns, rent, or lease.
The third type is the one that most businesses should purchase because it is the only one that shields them from responsibility. Especially when an owner or employee uses a personal vehicle while working.
Would I Need a Business Auto Policy?
Your insurance agent will specifically ask you how you use vehicles in your business, who will drive them, whether you own, rent, or lease them, and whether you and your staff will probably use their personal vehicles while working for your company. Your answers to these questions will show what kind of coverage you need.
Do Personal Auto Policy Cover Business Use?
Your personal auto policy normally covers some business uses of your vehicle. Similarly, certain work use of your employees’ automobiles is also covered by their personal auto policy (depending on the type of business).
The manner you operate your car may not provide a risk the insurance company is ready to accept under a personal auto policy, even if they don’t specifically prohibit it. The insurance company may raise costs, refuse coverage, or cancel policies if they think the usage is too risky. In these situations, a commercial auto policy may be the best choice.
If you mostly use a car for work, it’s likely that a personal auto policy won’t offer coverage. If you occasionally use your personal vehicle for work, your personal insurance company might adjust your policy to reflect this. A personal auto policy does not cover the car if a business owns the car. A commercial auto policy would become necessary.
It’s likely that your or an employee’s personal auto policy won’t offer your business enough security. Imagine, for instance; you are on the phone with a salesperson while driving to a business meeting. When you realize the vehicle in front of you has stopped to make a left turn, it is too late to avoid a collision. The collision also injured the driver and five passengers. Both your company and you are being sued.
If you only have personal auto insurance, your insurer will probably represent you in court and pay the claim up to the policy’s maximum. However, your personal auto insurance provider will not defend you or pay damages to your business.
Read also: Warehouse Insurance
If you or your employees use company-owned vehicles, your business likely needs commercial auto insurance. If you use your own vehicle for work-related activities like client meetings, company errands, or deliveries, you may be required to have hired and non-owned auto insurance.
Also, if a catastrophic accident or one that injured many people, your personal auto policy might not be adequate to pay the costs. In that situation, the injured individuals will undoubtedly launch a lawsuit to seek compensation from your business.
Don’t expect to rely on a personal umbrella policy to cover any claims brought about by using a vehicle for business. Typically, the personal umbrella does not apply to every disagreement resulting from a business transaction.
Coverage You Need if Employees Use Company Vehicles for Personal Use?
Some employers allow staff to drive business vehicles home in the evenings or on the weekends for personal usage. As long as they mention these vehicles on your business auto policy and the necessary “coverage auto symbols” are displayed on the “Declarations” page. It covers you for owned automobiles driven home by employees.
Personal auto plans for employees do not cover their use of company vehicles. Unless they have specifically leased the vehicle as a temporary replacement for the employee’s vehicle while it is unavailable. Additionally, if employees lease, hire, rent, or borrow vehicles for personal use, their employer’s commercial auto policy doesn’t cover them.
Business vehicle insurance is necessary for any business that uses vehicles for work-related purposes. It provides coverage for damage or injuries because of a vehicle accident and can help protect your business from costly legal fees and damages.