Commercial Auto Insurance

Commercial Auto Insurance for Small Businesses

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Commercial Auto Insurance for Small Businesses

What is commercial auto insurance?

Commercial auto insurance from AmTrust covers vehicles designated for business use and covers both property damage and liability. Commercial auto insurance is important for businesses because it protects the business from catastrophic financial loss. It is also necessary if you lease, rent, or own any commercial vehicles.

Commercial auto insurance works by providing coverage on vehicles owned by a business and used for business-related activities. This type of insurance can even cover certain personal uses of vehicles. Business owners typically acquire coverage for a single vehicle or a fleet of vehicles, in the case of a taxi business.

In the event of an accident, damage to the vehicles due to weather or other external causes, a business files a claim and receives compensation to make the business whole for the loss. Losses are covered in full, up to the maximum annual or lifetime limits of the insured's policy. In most states, this type of insurance is required to protect both a business and the general public.

Each state sets minimum coverage guidelines, however, most companies opt for coverage that is higher than the state minimum because if an injured party sues for an amount larger than the minimal amount covered in the policy, the business must pay for the remaining amount. 

Aside from basic liability coverage, several other coverages are typically bundled with commercial auto coverage.  

Comprehensive coverage 

Comprehensive coverage covers non-collision risks and damage and covers damage related to theft, falling debris, damage from hitting animals while driving on the road, glass breakage, vandalism, and many other types of damage caused by non-collision accidents.

Medical payments coverage 

Medical payments coverage pays for injuries should you or your employees suffer in an accident.

Uninsured motorist coverage 

Some motorists do not have auto insurance, and even those who are can have different levels of coverage. Uninsured and underinsured motorist coverage protects your company if you or your employees are hit by another driver who either has no insurance or not enough insurance to pay for the damage to the vehicle, your medical bills, and any property damage.

Collision coverage 

Collision coverage protects a business if you or an employee collides with another vehicle by paying for damage to the insured business's vehicles.

Loading and unloading coverage 

Loading and unloading insurance is for businesses that have loading docks. The liability coverage protects workers in the event they are injured while loading or unloading merchandise.

How can you obtain commercial auto insurance?

Commercial auto insurance is purchased through a broker or agency. An insurance agent is responsible for basic field underwriting and must also take an application for coverage. Some companies operate online so interested parties can receive preliminary quotes or information. However, in all cases, an agent will be handling the processing of your application and initial underwriting.

Once the field underwriting is complete, paperwork is handed over to one of the company's underwriters for review. The underwriter or team of underwriters will try to assess the risk you pose to the insurer. This is important because risk analysis is what determines your premium and whether or not you qualify for coverage.

Commercial underwriters also predict losses and profits to determine the likelihood of certain events occurring. Commercial underwriters also look over liability policies and make decisions about losses by analyzing data about individuals and businesses and look at trends over time. This may include reviewing an individual’s driving records, claims experience for a company, and credit scores.

With this data, underwriters can determine the relative risk a company poses and charge the correct premium.

For example, an underwriter may determine that it is more expensive to insure a construction company or a taxi service than it is to insure an accounting firm or web development company.

Is commercial auto insurance different than personal auto insurance?

Commercial auto insurance is for businesses, while personal automobile insurance is reserved for individuals. Some business owners mistakenly choose to use personal insurance policies in their business, which can lead to legal issues in the future.

Insurance companies only insure for the types of risks named in each individual policy. If a business uses a personal insurance policy to insure for commercial risks, an insurer can deny any claim that arises as a result of a loss while engaged in business activity.

For example, if an employee gets into a car or truck accident while making a delivery for the business and the vehicle is insured under a personal insurance policy, the insurance company would deny the claim because the vehicle is not properly insured. In this case, the insurance company would only pay a claim for accidents that happen while the vehicle is not used for business purposes.

Commercial insurance law and personal insurance law may also differ from state to state and the rules for claims processing can be different as well, however, commercial insurance generally covers personal claims.

For example, if an employee uses a company vehicle for personal use and is involved in an accident, the insurer is likely to cover the claim. Traveling to and from work in a personal vehicle would be covered under personal insurance, not the company's commercial policy.

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