With more than 30,000 traffic accidents occurring every day in the U.S. alone, auto liability can impact your company’s bottom line. But how do you know if you need commercial vehicle insurance, or if a personal liability policy will suffice? We’re here to help.
A commercial auto policy is generally needed when company vehicles are used in tasks related to the operator’s role or responsibilities. If the employee needs his/her vehicle to perform their job, commercial vehicle insurance is usually a necessity.
Sometimes your situation may not be that simple. Consider the following questions when deciding if you need to get commercial vehicle insurance:
1. Who owns and drives the vehicle?
If your business owns the vehicle, you will most likely need to purchase a commercial policy. Any time an employee is driving a business-owned vehicle, your company is liable. If you are a sole proprietor, personal coverage may be adequate. Contact an agent to get specific details based on your usage.
2. How is the vehicle used?
A vehicle getting regular business use is defined as ‘one that is used for commercial purposes, on average, more than 3 times in a 1 month period’. If your vehicle is used at least that often for business purposes, commercial vehicle insurance is right for you. If you are a sole-proprietor who rarely uses the vehicle or does so simply for commuting purposes, company coverage may not be necessary.
3. What types and weights of vehicles does your company use?
Any time a work vehicle weighs more than a standard size truck or SUV, a company auto insurance policy will cover the additional liability assumed for vehicles of this magnitude. Heavy duty vehicles have a tendency to cause greater damage, and you do not want to be liable for costs that are not covered by a personal policy.
4. Does your vehicle require higher liability limits?
If you prefer a higher liability limit or your vehicle requires one, your best bet is to get a commercial vehicle policy.
If you do any of the following with your vehicle(s), don’t hesitate. You need commercial vehicle insurance to protect your company.
- Transport Goods
- Transporting People
- Carry Service Tools
- Carry Equipment
- Carry Hazardous or Flammable Material
- Service Vehicles Equipped with Cranes, Plows, Etc.
- Towing for Service
- Towing a Trailer to Conduct Business
There are a few instances where company coverage may be unnecessary. This may include the following circumstances. We recommend speaking with an agent to discuss your own situation and usage to ensure proper coverage:
- When the business use is part time and does not require vehicle usage to provide the service. For example, a Mary Kay or Tupperware business where a vehicle is used to attend parties or meet clients.
- Professions which do not necessarily need a car to provide service, but may be used to transport the professional and a client to a location (real estate agent, clergy, consultants, etc.).
- Home Health or Social Worker’s vehicles, not registered under a business name, which is not used to transport patients or individuals in their caseload.
If you still have questions about vehicle insurance, reach out to a Beehive agent today.
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