What Commercial Auto Insurance Coverage Do You Need?

Are you a business owner and looking for commercial auto insurance coverage for the vehicles used for transportation in your business? Well, you need to understand the basics of a commercial auto insurance policy. In this article, we have made it easier for you to understand commercial auto insurance along with the add-on covers you can buy with it. Read on. Read more

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Understanding Commercial Auto Insurance Policy

It is a type of insurance policy that financially protects various types of transport vehicles like vans, pickup trucks, autos, three-wheelers vehicles, etc. used in a business. It protects your vehicle from usually five types of damages-

1. Physical damage coverage-

It protects your vehicle against physical damage caused by natural or man-made disasters, collision damages, and theft.

For example- In a thunderstorm, a tree falls on your auto and breaks its windshield, but with the help of three-wheeler insurance coverage, you will get compensation for the replacement or repair for the damages.

2. Liability coverage-

It helps you in paying for the damages incurred to the third party in an accident due to your vehicle. It includes repair costs for the damaged third-party vehicle and legal expenses.

For example- Your auto meets with an accident with a car. The accident is your employee's fault. With the help of a commercial auto insurance policy, you can cover all the expenses for repairing it. Also, you are liable to pay for the third-party driver's medical expenses in case of injury. It can also be compensated from your commercial auto insurance policy.

3. Other coverage-

It includes other coverage like- medical expenses if you are injured during an accident, for the injured passenger in your vehicle, towing charges, rental reimbursement, etc.

4. Uninsured motorist cover-

It pays you for the injuries or property damage when you are hit by an uninsured driver.

5. Underinsured motorist cover-

It gives you a financial shield if the faulty driver has not had the right insurance to cover your expenses.

Below we have mentioned some of the other coverages under the uninsured and underinsured motorist property damage and bodily injury-

  • Repairing cost for the damages to your vehicle and home.
  • Hospitalization expenses in case of injury.
  • Lost wages in case your employee is unable to work due to an injury.

Types of Vehicles Insured Under Commercial Auto Insurance Policy

Service utility vehicle used in businesses for transporting various materials comes under this policy. These vehicles include- three-wheeler vehicles, food vans, box trucks, autos, etc. It also offers coverage for the employees operating the vehicle.

While commercial vehicle insuranceis popularly known for trucks, tractors, or any other recognized utility vehicle, this insurance policy is also used for three-wheeler vehicles if they are used for business purposes.

Who Should Buy Commercial Auto Insurance Policy

Below are some of the common businesses that purchase commercial auto insurance policies-

1. Businesses rely on home delivery or couriers.

2. Businesses using three-wheeler vehicles for public transport.

3. Businesses use a vehicle for transporting materials within the work sites.

4. Businesses that transport equipment and tools to others using a three-wheeler vehicle.

Add-on Covers for Commercial Auto Insurance Policy

Beyond the basic coverage, you can also buy the add-on covers to strengthen your commercial auto insurance policy. Below we have discussed some of them-

Roadside assistance cover

If your auto is stuck in a situation of mechanical or electrical breakdown like a flat tyre or dead battery, this add-on cover will assist you. It protects you in a situation where your commercial auto insurance policy cannot help you.

Expanded towing cover

Here the term towing is self-explanatory. This add-on cover provides you towing coverage when your vehicle needs to be sent to the garage for repairs.

Auto loan or lease cover

It covers the unpaid amount on the loan or lease and the actual cash value of your auto if it turns out to be a total loss after a crash. Usually, this cover is useful for those who have leased autos in their business or purchased them on loans.

Rental reimbursement cover

It pays for the rental expenses that might occur to transport you from the place of the event to another place after an accident.

New vehicle replacement cover

If your vehicle is a total loss, this cover replaces your new vehicle with a comparable vehicle.

Hired or rented auto cover

It compensates for the comprehensive and collision damage to your leased or rented auto under the contractual obligations of a rental company.

Exclusions of Commercial Auto Insurance Policy

Your commercial auto insurance does protect personal vehicles. In case you or your employee is using their private wheels for business purposes, it will be excluded from the policy, and no compensation is guaranteed during any loss.

Below we have some other exclusions under your commercial auto insurance policy-

  • Employee-owned private vehicles
  • Leased vehicles used in the business.
  • Rented vehicles used by the business.

Are Employees of Your Business Insured Under Commercial Auto Insurance Policy?

Generally, most commercial auto insurance policies cover the employees who drive the insured vehicles. According to the policy's terms, personal vehicles are excluded from it. Also, you must add those individuals as a driver to your policy if they are driving the vehicle occasionally.

Cost of Commercial Auto Insurance Policy

There are various factors determining the cost of a commercial auto insurance policy, including-

1. Number of vehicles being used in a business

2. Model of the vehicle and its market value

3. Risk factor

4. Claim history of the business

5. Driver's driving history

6. Deductibles and limits of the policy

All of the above points are considered when deciding the premium amount.

Summarizing

Your commercial auto insurance policy covers the property damage and medical expenses that might arise in an accident. It also pays for third-party liabilities and legal expenses, if any. You can choose a policy depending upon the coverage you want according to your business and the type of vehicle you have. Also, you can buy add-on covers to enhance your comprehensive coverage.

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