Commercial Auto Insurance

What Does Commercial Auto Insurance Cost?

Cost for commercial auto insurance varies based on the size of your business, the number and types of vehicles you need to insure, your risks and symbols used/coverage needed. The cost of insurance is also affected by the driving records of anyone operating a business vehicle. The Insurance Shop can provide quotes for a stand-alone commercial auto policy or a hired and non-owned policy, but it is often more cost efficient to bundle policies, as many carriers have multi-line discounts and credits for additional coverages. Adding commercial auto onto a packaged policy is common practice, whether it is a general liability, professional liability or business owners policy (BOP). There are also discounts when purchasing in bulk, such as coverage for a fleet of vehicles, and some carriers give good driver discounts.

There are several factors used to rate the cost of commercial auto insurance:

• Business Location: the likelihood of theft or damage.
• Vehicle Type: cost and type of vehicle.
• Driving Records: prior accidents or tickets per driver.
• Policy Deductible: the amount of risk you self-insure.
• Coverage Limits: the amount of total coverage.
• Credit Worthiness: your credit scores.
• Safety Devices: alarms, airbags, GPS and more.

What are Common Commercial Auto Claims?

The first step to take when you think you have a claim is to call your agent. Your agent will help you organize your information and guide you through calling the insurance carrier who will process your claim. There are five types of claims common in commercial auto:

1. Accident: Employee at fault

In this case, the other driver’s insurance company will file a claim with your insurance company. An accident will be covered by collision coverage. Liability coverage will cover the claim if there are special circumstances or there are medical payments.

2. Accident: Another driver at fault

In this case, your insurance company will file a claim with the other driver’s insurance company. The other driver’s collision or liability coverage will pay for the claim. Uninsured/underinsured coverage will help cover the claim if the other driver’s insurance is inadequate.

3. Accident: Single car

A single-car accident could include a vehicle hitting a deer, a vehicle backing into a lamp post or even a vehicle swerving to avoid collision with another vehicle and hitting a tree instead. In these cases, you will be held at fault, but with comprehensive coverage, your claim will be covered.

4. Weather damage

If your commercial vehicle is damaged by a severe hail storm, or other covered inclement weather occurrences, your comprehensive coverage will pay for the claim. It is important to know what type of weather is and is not covered, in your policy. If you live in an area prone to hail storms, for example, you will want to make sure hail damage is covered and your limit is appropriately negotiated.

5. Nature

If your windshield gets cracked by a rock or falling branch, nature is usually to blame. In these cases, comprehensive coverage is used to cover the claim. However, some business owners, especially those with more than five commercial vehicles, purchase special auto glass coverage that will cover these types of claims. You’ll have a separate coverage limit from your auto policy and thus will not eat away at your auto policy limit by replacing windshields. So if you have a large fleet and work in an industry with a lot of debris, or windshield hazards, then you would benefit from higher limits for replacing windshields.

How Can I Reduce my Risk?

Want to avoid filing claims altogether? Once you are covered by a commercial auto insurance policy there are a few steps you can take to reduce risk and reduce claims filed. Reduced claims will save you money on policies in the future—insurance companies love clean claims records. While driving in the U.S. is a defensive sport and not all accidents can be avoided, there are some measures you can take to help your employees be safe and courteous drivers. (Don’t forget that having safe and courteous drivers will benefit your business in more than one way!)

Before hitting the road:

• Check driving records! An employee with a poor driving record can be a big liability and will be more expensive to insure.
• Require safety training. Depending on your business this training could be a one-time course on road safety for employees who occasionally drive company cars. However, it could also be a monthly module for employees who use company trucks to deliver goods to customer homes. In this case, the training would include road safety, loading and unloading safety, customer care tips and more, reducing risk from many angles.

Once on the road:

• Keep vehicles in good condition. Check your vehicles often. Oil changes, tire pressure, fluids and other important upkeep services should be done on a regularly scheduled basis.
• Create a safety checklist for drivers. Keeping a list in each vehicle to remind drivers to turn the phone off, buckle seat belt and check gauges will help drivers to remember your safety rules.

Avoid:

• Avoid giving delivery incentives. Incentivizing your employees can be a great management technique. However, when you motivate them to increase speed and frequency of deliveries, or other driving tasks, the risk for unsafe driving rises. Taking shortcuts, exceeding the speed limit and running red lights/stop signs are all ways drivers try to shave time off their deliveries.

Frequently Asked Questions

1. Is commercial auto insurance tax deductible?

Yes, commercial auto coverage is tax deductible. The IRS allows for several types of deductions regarding the use of vehicles for commercial or business use. Even employees, those which do not receive mileage or expense reimbursements from their employer, may receive deductions. It is best to contact the IRS, or a tax advisor, regarding your business before filing your taxes.

2. How does commercial auto insurance work?

Commercial auto insurance, once purchased and in place, works a lot like personal auto insurance. In the event of an incident, you will file a claim with the insurance carrier and receive compensation to help cover any costs of repair. If you or one of your drivers are at fault in an accident that causes bodily injury or property damage to another person then that person can file a claim with your insurance company. Keep in mind that the insurance company will pay, as long as the event is covered, and only up to the limit written on the policy. In some cases that may leave a hefty balance for the business to pay. Many business owners choose to buy a commercial umbrella policy which extends over all your commercial insurance policies and raises limits to prevent high out-of-pocket payments.

3. Does commercial auto insurance cover personal use?

If your business is protected by commercial auto insurance then the personal use of a company-owned vehicle will be covered. A personal vehicle, not used for business purposes or listed on the commercial auto policy, will NOT be covered. If you are using your personal vehicle for business then you may consider adding it to your commercial policy or adding additional liability coverage to your personal auto policy.