What is commercial auto insurance?

Regardless of whether your business owns any vehicles, you still face a certain level of auto risk as a business owner. If you or any of your employees get into an accident while driving on company business – even in a personal vehicle – your business could be liable.

Commercial auto insurance offers protection from such unfortunate incidents, covering physical damages as well as medical costs in the event that someone is injured in an accident. 

What does commercial auto insurance cover?

Different businesses have differing needs when it comes to commercial vehicle insurance – some may have a whole fleet of cars or trucks that need to be covered, while others may only ever need to occasionally hire or rent transportation. Depending on your situation, you can select insurance coverages for both owned and non-owned vehicles.

Hired and non-owned vehicles

Even if your business owns a fleet of vehicles that are all properly insured, there may be times when an employee needs to run an errand or travel to a client site in their own personal vehicle. Since they are traveling for business purposes, you could be found liable if they happen to get into an accident along the way.

Non-owned and hired commercial auto liability insurance can help cover bodily injury and property damage in this scenario. It can also cover similar damages in the event that a vehicle that your business hires or even borrows gets into an accident.

Rental cars

When you rent a vehicle for business purposes, you will undoubtedly be offered “insurance” by the rental agency to protect your rental. The problem is, this coverage can vary wildly from agency to agency, and these policies often include provisions that can void coverage. 

To eliminate the risk that you may still end up liable in the event of an accident in a rental car, you should consider adding hired car physical damage coverage to your commercial auto insurance policy. 

Personal automobiles for business use

If your employees use their own vehicles to conduct business in some way – even something as simple as running deposits to the bank or picking up supplies at the store – your business faces a considerable amount of risk as soon as they hit the road.

Although business use of a personal vehicle is typically covered by an employee’s own personal auto policy (PAP), some of these policies may specifically exclude coverage for business use. And even if their PAP does cover business use, you and your business may still be at risk of getting sued. To protect yourself against this risk, you can – and should – add coverage to your own business auto policy (BAP) to protect yourself from liability.

Protecting your business from auto liability 

Whether your employees are operating vehicles owned by your company or utilizing their own personal vehicles, there are several ways that you can mitigate your risk of liability during the times they are traveling on business.

Establishing a clear company policy that sets guidelines for the use of personal vehicles at your business is important. This is especially true if you compensate your employees for time spent driving or if they regularly use their personal vehicles for business. This company policy can include guidelines for maintaining personal vehicles used for business purposes, as your business is still at risk if the employee has not properly maintained their own car. Some carriers are now offering free vehicle monitoring system, which you can install in employees’ vehicles. These systems can track location and different driving habits to help curve your business’s exposure.

If your business frequently rents transportation, a rental vehicle policy may also be necessary. This can include guidelines for employees when it comes to opting in to any rental car insurance coverage offered by a rental agency, as well as guidelines for conduct when operating a rental car contracted under the company’s name.

Personal Injury Protection

Also known as PIP coverage, personal injury protection is a commercial auto insurance benefit that, depending on the state in which your business is located, may be a requirement of your commercial auto insurance policy, or else is offered as an add-on benefit. In either scenario, PIP insurance covers medical expenses if you or one of your employees is in a car accident while on the job, regardless of who’s at fault. It also often includes lost wages.