Understanding Commercial Auto Policies
If you’re considering auto insurance coverage for your business, it’s important to understand the basic elements of a commercial auto policy. The more you know, the easier it is to compare coverage and make an informed choice.
Commercial auto insurance definition
Commercial auto insurance provides a variety of coverages for cars, trucks, vans and other vehicles used by your business. There are three basic parts of every commercial auto insurance policy:
Physical damage insurance − includes collision and comprehensive coverage
Liability insurance − includes bodily injury, property damage, uninsured motorist and underinsured motorist coverage
Other coverage − includes medical payments, towing and labor, rental reimbursement and auto loan or lease gap coverage
What does commercial auto insurance cover?
Collision insurance
Pays for damage to your vehicle if you hit another vehicle, another vehicle hits you or your vehicle rolls over, regardless of who is at fault. Collision coverage may be required if your vehicle is financed or leased
Comprehensive insurance
Pays for damage to your vehicle from causes other than an accident. Such causes may include theft, flood, vandalism, earthquakes, fire or damage from a bird or animal
Liability insurance
Covers bodily injury to others and any property damage to another vehicle if you are at fault in an accident. Bodily injury pays others’ medical costs and lost wages, and your legal expenses if a lawsuit is brought against you due to an accident
Uninsured motorist coverage
Pays for your injuries or property damage if you’re hit by an uninsured driver or, in some states, an unidentified driver
Underinsured motorist coverage
Protects you if the at-fault driver doesn’t carry enough liability insurance to cover your bills – unless you live in a no-fault state, where each driver’s auto insurance policy responds to their own losses
Options & add-ons
Beyond these basic components, you can customize your business auto policy with the following coverages (also called endorsements):
Roadside Assistance
Protects you when problems arise that are not typically handled under your commercial auto policy. This could include being locked out of your car, dead batteries and flat tires
New vehicle replacement cost coverage
Replaces your new vehicle under a total loss with a new or comparable vehicle. Also provides gap coverage for any amount you may owe that’s above your car’s actual cash value
Hired auto physical damage with loss of use coverage
Covers comprehensive and collision damage to a leased or rented vehicle, as well as any other contractual obligations to the leasing or rental company
Auto loan or lease coverage
Covers the difference between the unpaid amount on the loan or lease and the actual cash value of the vehicle, if your vehicle is a total loss after an accident
Expanded towing
Provides towing coverage beyond what’s covered by your standard business auto policy. It also covers towing, jump starts and minor roadside repairs
Rental reimbursement
Pays for a rental car up to the limits of your policy so you have transportation after an accident
Medical payments or personal injury protection coverage
Pays for medical expenses if your health care insurance – or your passengers’ – doesn’t cover the costs
Dan Zeiler
dan@zeiler.com
877-597-5900 x134