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Commercial Auto Insurance

Frequently Asked Questions About Commercial Auto Insurance

Do I Need A Commercial Auto Policy?

Yes – if you have vehicles used for your business, you need a Commercial Auto Policy, because your Business Owners Policy (BOP) does not provide any coverage for vehicles driven for business purposes. Your separate Commercial Auto Insurance policy will have some of the same coverages you would have for a personal vehicle.

Your insurance agent will ask, in detail, how you use vehicles in your business; who will be driving them; whether you own, rent or lease; and whether you and your employees are likely to be driving their own cars for your business. The answers to these questions will indicate the types of coverage you need.

Each vehicle you use in your business can be separately “scheduled,” or listed on your policy. You can choose different coverages for each one, depending on how you use them.

Will My Personal Auto Policy Cover Business Use?

It will not provide coverage for any vehicle owned by a business. Your personal auto policy provides coverage for some
business use of your vehicle. Similarly, your employees’ personal auto policies may cover some business use of their vehicles too.

Generally, a personal auto policy is unlikely to provide coverage if the vehicle in question is used primarily in business. Further,
a personal auto policy – whether yours or your employee’s – may not have enough coverage to protect your business in the
event of a claim.

So, if you or your employees are driving personal vehicles on business, and relying on your personal auto policies, be sure
you and they have sufficient liability coverage to protect your business in the event of a serious auto accident. We will help
you determine the type of policy and coverages that are best suited to your business.

What Types of Coverage Are Normally Purchased?

Most states require you to purchase Liability Insurance for bodily injury and property damage that may result from an accident
while you or someone from your organization is driving on business. You may also be required to have Uninsured/Underinsured
Motorist coverage and/or Medical Payments coverage. You can also purchase Physical Damage coverage.

What Vehicles Are Covered?

The Business Auto Coverage Form (BACF) is the most commonly used contract for providing business auto liability insurance. Although the form refers only to “autos,” autos are defined to include cars, trucks, trailers, vans or other vehicles designed for use on public roads.

In general, you have three options for which vehicles you choose to cover.

• Autos your business owns
• All autos your business owns, hires or leases
• All autos used for the business, including those that your business does not own, hire or lease

Most businesses should buy the third type, since that is the only coverage that protects the business from liability when an employee or owner is driving a personal vehicle on business.

How Much Liability Coverage Does My Business Need?

Many insurers recommend a business auto coverage limit of $1,000,000, with $500,000 as the minimum. Considering
the amount of additional protection it provides, the higher limit does not add a great deal to the premium.

What Coverage Do I Need if My Employees Use Company Vehicles for Personal Business?

Some businesses let employees drive company vehicles home and use them for personal purposes in the evenings or on weekends. So long as these vehicles are scheduled on your business auto policy, and the appropriate coverages are shown on the “Declarations” page, you have coverage for those autos.

In contrast, an employee’s personal auto policy will not cover the use of a company car unless the car has been specifically borrowed as a temporary replacement for an employee’s car that is unavailable. In addition, employees who lease, hire, rent or borrow autos for their personal use are not covered by their employer’s business auto policy.

What Coverage Do I Need if Employees Drive Their Personal Vehicles on Business?

If your employees drive their own cars for business purposes, your business could be liable for property damage and bodily injuries resulting from a traffic accident in which an employee was at fault.

Sometimes business owners don’t notice they have this exposure, but it is important to know about. Consider these scenarios:

•  Your office manager stops by the office supply store to pick up some items for work on her way back from lunch.
•  On the way home, a supervisor stops by a client’s office to leave a product sample.
•  While on vacation, a salesperson driving his personal vehicle makes a brief stop to visit a customer.

These are all situations where a business can find itself liable for an auto accident when employees drive their own cars. So companies have to be aware that resulting damages may exceed the policy limits in employee personal auto policies.

To protect your business from these liability risks, you can add the “Non-owned Auto Liability Endorsement” to your business auto coverage. It provides coverage when employees drive their own vehicles on business. This coverage exceeds the limits provided by the employee’s personal auto coverage.

When Your Business Vehicle Is Also Your Personal Vehicle?

Sometimes employees or executives of a company or other persons are supplied with a vehicle owned by the company, and it is the only vehicle they own and use. Commercial Auto Insurance policies do not cover personal use of a vehicle in this situation. To close this coverage gap, you would need to add the “Drive Other Car Coverage” endorsement to your policy.

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