If you’re a small business owner, the idea of needing commercial auto insurance may seem overboard. The reality is quite the opposite. As an up-and-coming company, you have a lot invested in your venture, and any financial disaster could seriously hamper your goals for long-term success. Even if you only have a couple of employees, don’t hesitate to purchase coverage to ensure maximum protection against costly accidents.
Not sure what a commercial auto policy covers compared to personal coverage or why it’s so important in the first place? You’re not alone! Read on to learn more about this vital type of insurance and the role it plays in safeguarding your business.
Why Your Personal Auto Insurance Policy Doesn’t Cut It
When an employee runs to the bank and deposits the day’s received payments, do they take their own or a company car? Believe it or not, determining the line between personal and commercial use of a vehicle can get blurry. It’s not uncommon for small companies to rely on their employees to travel for business purposes, such as:
- Visiting job sites
- Transporting equipment
- Delivering products
- Conducting sales meetings with clients
- Handling banking needs like making deposits
- Picking up supplies for the office
- Going to the post office
Personal insurance coverage is meant for regular commuting and not business travel. Plus, commuters spend less time on the road compared to commercial drivers, so vehicle maintenance costs are usually less. This translates to less risk for the insurer, so rates are cheaper.
Those driving their cars on for company purposes need additional coverage theft and property damage risk and higher insurance limits for the passengers traveling with them. This is because your small business is liable for the products, employees, and additional riders in the car if on the road while working.
But, what if your team relies on their own vehicle and not one that you own? Should they end up in a car accident while making a delivery or going to a sales presentation, their personal insurance may not cover the damages or be insufficient. A commercial auto policy for a small business provides a solution to this situation with additional coverage called Hired and Non-owned Liability Coverage. These policies offer much-needed liability and damage benefits when employees use their personal vehicles for work purposes.
What’s Covered by Commercial Auto Insurance?
Now that you understand why personal auto policies don’t cover most work-related driving situations let’s dig into exactly what commercial auto insurance covers.
Comprehensive
Unfortunately, when it comes to damages involving fallen trees, certain types of theft, and even vandalism, you can’t be sure personal coverage will handle it all. Commercial auto policies provide a higher level of comprehensive benefits to mitigate these risks to your business.
Collision
While accidents can happen, don’t let a distracted driver situation leave your company shouldering the costs that result. Commercial auto policies ensure that you don’t pay for out-of-pocket repairs to your fleet after a collision.
Loading/Unloading Goods
Many commercial vehicles serve the purpose of transporting goods and equipment. This means loading and unloading are necessary and carries the risk of someone getting hurt carrying out these tasks. Commercial insurance covers these incidents and can save your business from financially devastating personal injury claims.
Medical Coverage
Much like personal insurance, commercial policies can provide medical payments to those injured during a motor vehicle accident while on the clock. This essential coverage ensures your employees get the prompt medical care they deserve after getting hurt in a collision.
Uninsured/Underinsured Motorists
The worst nightmare for anyone involved in a car accident is the liable party not having adequate insurance coverage or a lack thereof altogether. In these circumstances, it’s often the company’s responsibility to cover the damages and injuries inflicted and sue the responsible party later. With uninsured/underinsured motorist coverage, this liability is handled by your insurer instead.
Why Small Businesses Need Commercial Auto Insurance?
As you can see, commercial auto coverage provides business-level coverage that personal policies can’t and won’t address. So whether your employee was rear-ended while going to the post office with your invoices or you have a business vehicle stolen, as a small business, you need to be able to recover from these losses quickly at a minimal cost.
Still not sure you need commercial auto insurance? Worried about the expense? First, consider that you have a duty as an employer to ensure your staff not only has fair pay and benefits. As a small business owner, you also owe it to yourself to protect yourself financially. Purchasing a policy that helps you achieve these goals is worth the cost and much more affordable than paying for an accident out-of-pocket.
Additionally, you might be surprised at just how affordable commercial coverage actually is! Many insurers also offer discounts when small business owners bundle their insurance needs into a single package.
Before you decide to opt-out and rely on personal coverage, keep in mind that many states now require some businesses to carry commercial auto insurance. Failing to comply could result in fines and suspension of your operations until you have a policy in place.
The Bottom line
Commercial auto insurance is a necessary purchase that will ensure your employees and property are against risk while traveling for your business. No matter how careful your team might be on the road, it won’t always be enough when mother nature or other drivers cause dangerous situations. With a business-level auto policy, you minimize these risks and keep everyone on the job safe and your equipment and goods secure.
