Commercial Auto Insurance 101

Commercial Auto Insurance 101

Coastal Oak Insurance Blog-Commercial Auto InsuranceBusinesses across the country rely on vehicles to keep operations flowing. No matter the type of vehicle, this essential business equipment represents a significant investment on the part of business owners. Whether your clients operate machinery, delivery vans, passenger cars, or trucks, protecting that investment is critical. Commercial auto insurance is designed to provide robust coverage against a wide range of operational and liability risks. Here is the information you need to know about commercial auto insurance – designed to help your clients select the right policies and features to fit their needs.

The Purpose of Commercial Auto Insurance

If you drive on American roadways, you know that auto insurance is required to operate a vehicle. The same applies to most business owners who use vehicles as part of their operations. Commercial auto insurance is a type of policy expressly designed for commercial operation of vehicles for business purposes. These policies will be familiar to most, as they are often quite similar to the auto insurance policies private vehicle owners must obtain. There are critical differences, however, and many commercial auto policies include additions and endorsements for business vehicle owners. Because of the coverage, a commercial auto insurance policy serves as the foundational element of risk management for business owners with a single vehicle or a fleet of vehicles.

Primary Coverages for Commercial Auto Policies

Available to business owners who use cars, vans, or trucks as part of their operations, commercial auto insurance policies are characterized by four primary coverage areas. These coverages include:

  • Liability Coverage – this aspect covers business owners against expenses – including legal costs in lawsuits — related to property damage caused by the owner or his/her employees.
  • Collision coverage – helps to pay for repair or replacement of vehicles damaged or lost in collisions with other vehicles or objects.
  • Bodily injury coverage – covers the medical expenses associated with a vehicle collision, particularly for the driver and passengers of a commercial vehicle.
  • Comprehensive coverage – provides reimbursement for repairs/replacement of vehicles involved in a collision, regardless of who is at fault.

These four coverages provide a robust blanket of insurance protection for business owners. Business owners with commercially-operated vehicles often experience risks that private vehicle owners do not; this fact alone means that a commercial auto insurance policy is an essential component to protect business interests and assets.

Specialized Coverages in Commercial Auto Insurance Policies

Companies use vehicles in many different ways as part of business operations. One business may operate a fleet of vans or delivery trucks, while others operate heavy equipment, executive passenger cars, or tractor-trailers. Because every business is different, commercial auto insurance policies are designed to be flexible, providing the coverage that is needed to protect vehicle assets. Specialized coverages are available for business owners, including:

  • Hired and non-owned auto coverage – some businesses require their employees to use their own vehicles for business purposes. Others may lease vehicles from a third-party vendor. Even though the business does not own the vehicles, they may be held liable if involved in a collision. Hired and non-owned insurance is designed to provide liability protection for these businesses.
  • Trailer interchange coverage – freight companies often lease trailers for use. This type of insurance coverage provides protection for the trailers even though they are owned by other business entities.
  • Equipment coverage – certain equipment is essential for business operations and includes forklifts, tractors, cranes, and trucks. This additional equipment needs protection just like any commercial vehicle.
  • Rental reimbursement coverage – if a company vehicle is damaged or destroyed in a collision, a temporary replacement may be needed. This coverage provides reimbursement costs for vehicle rentals while the damaged vehicle is repaired or replaced.

Valuable Protection, Valuable Benefits

Commercial auto insurance is a vital part of risk management for business owners who own and/or use vehicles in their operations. These policies provide coverage against a broad range of risks. This is not their only benefit; a commercial auto policy includes benefits like:

  • Tax savings – policy premiums for commercial auto insurance policies may be tax-deductible.
  • Improved flexibility – these policies can be adapted to the specific needs and risk exposures of business owners who use vehicles as part of their operations.
  • Higher coverage limits – commercial vehicles often represent significant business investments. Because of this, commercial auto insurance policies typically have higher coverage limits to protect expensive vehicles and equipment.

Commercial auto policies are not only required to operate vehicles for business, but they can also provide robust protection and benefits for business owners.

About Coastal Oak Insurance Services

At Coastal Oak Insurance Services, we strive to protect your personal and business assets from coast to coast. When you work with us, you’re family. Contact us today at (949) 519-3738 to learn more about how we can provide you with comprehensive and tailored insurance coverage.

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