What Every Mover Should Know About Commercial Auto Insurance
by Casey Myers
This is the first in a series of articles from Champion Risk & Insurance Services to provide IAM’s DAB group important information about types of insurance coverage that can help you mitigate risk for your business. In future articles, we’ll share information about Warehouse and Cargo liability, Workers’ Comp, Employment Practices Liability Insurance (EPLI) and Cyber coverage among others.
What is Commercial Auto Insurance?
Commercial auto insurance is a policy of physical damage and liability coverages for amounts, situations, and usage. Although “auto,” is in its name, it refers to many types of commercial vehicles—from automobiles used for business purposes to a wide variety of commercial vans, trucks, tractors, and trailers.
There are two primary components of a commercial auto policy: liability (BIPD) and physical damage. Whether it’s owned or leased, at least one commercial vehicle must be on the insurance schedule.
What is Commercial Auto Liability?
Liability covers damage to property or injuries to others caused by the insured vehicle or during loading and unloading. This coverage is required by regulatory agencies such as the FMCSA and state authorities to operate legally. Insurance carriers typically submit evidence of a policy on behalf of their policy holder.
Each insurance carrier has its own set of standards regarding acceptable drivers.
- Every driver needs to be approved before they get behind the wheel.
- Drivers who are involved in an accident not previously approved may not be covered.
- Your coverage may not be renewed if an unapproved operator was driving the vehicle.
Driver standards are in place to help reduce claims, but also to protect you and your business. In several states, punitive damages are not covered by insurance. If you allow someone with a bad driving record to operate a business vehicle and they cause an accident, you could be sued for negligence.
How Much Liability Coverage Does My Business Need?
The industry standard is $1,000,000. To understand your company’s required limits, review van line agreements (if applicable) and contracts. Check with appropriate state and federal regulatory agencies.
You’ll also want to address whether coverage applies for any vehicles used for your business or only for those on the insurance schedule.
What is Commercial Auto Physical Damage Coverage?
Physical Damage coverage is for damage to your vehicle. There are three options: collision, comprehensive and specified perils.
It may be more cost effective to carry physical damage coverage only on newer or more valuable vehicles, or those you are required to cover under the lease or finance contract. In the event of a claim, your insurer may:
- Pay to repair or replace a damaged or stolen vehicle based on its current market value.
- In case of theft, return the stolen vehicle to you with payment for any damage caused.
How can I Keep My Premiums Down?
Some ways you can keep costs down are by avoiding accidents, performing regular and routine maintenance, emphasizing driving safety and having documented policies regarding hands-free devices and texting while driving. Perhaps most importantly is documenting driver training courses. Although many movers hold regular safety meetings, the content is not always documented. Handouts, emails or a presentation about specific seasonal road hazards, defensive driving or avoiding accidents go a long way to ensuring that your van operators and others recognize your company’s commitment to safety. Your insurer can also point you to helpful driver safety resources.
Other ways to save money include:
- Hiring employees with good driving records.
- Bundling commercial auto with other policies.
- Use telematics and/or cameras on your vehicles.
- Keeping vehicles secure.
- Increasing your commercial auto insurance deductible.
Does a Business Umbrella Cover Autos?
A business umbrella policy provides protection for owned, hired and non-owned autos only when the auto liability policy is an underlying policy.
What if My Business Vehicle is Also My Personal Vehicle?
Usually, the vehicle must be registered to the company to add it to your commercial auto policy. You can add a “Drive Other Car” coverage endorsement if your primary vehicle is on the policy. This provides coverage for non-owned autos that you drive for personal use.