Unlike a personal auto insurance plan, commercial coverage is designed for the needs of businesses that have several drivers and multiple cars. It works around the possibility that every employee within the company will drive the vehicles, so the liability protection is usually greater than the amount provided under a personal plan.
Commercial auto insurance policy basics
There are four basic parts to a typical commercial car policy:
Liability: Injuries or damage that you cause
Medical Payment: Injuries to your drivers
UMBI / UMPD: Injuries and damages caused by uninsured or underinsured drivers
Collision and Comprehensive: Damage to or theft of your vehicle.
The liability portion of your policy coversbodily injury to others and any property damage to another vehicle if you are at fault in an accident.
Medical Payments covers any medical expenses if you or your passengers’ health care insurance does not cover the costs.
Uninsured motorist and Underinsured motorist coverages will protect you in the event that you suffer any injuries in an accident caused by a person who either does not carry enough insurance or does not have insurance at all.
Comprehensive and Collision insurance pay for the damage incurred by your vehicle. Collision insurance pays for damage to your vehicle if you hit a vehicle, another vehicle hits you or your vehicle rolls over. Comprehensive covers you from causes other than an accident including theft, flood, vandalism, earthquakes, fire or damage from a bird or animal.
So how do these coverages work?
Coverage for Injury or Damage That You Cause to Someone Else:
Often referred to as Bodily Injury and Property Damage liability (BI/PD); this coverage pays for the cost to replace or repair damaged property, the medical bills and wage loss incurred by an injured person, and other damages you are legally obligated to pay as a result of an accident. However, it does NOT cover your injuries, if you are the driver of your vehicle, or damage to your vehicle. If your insurance carrier covers an accident for which you are sued, they should also pay for a lawyer to defend you.
These coverages are subject to the "limit of liability" that you select. 100/300/50 means your carrier will pay $100,000 for bodily injury per person involved in a claim, $300,000 for bodily injury per accident and $50,000 for property damage. You may instead choose "combined single limits," (CSL) where your are given a single amount your insurance carrier will pay for the total of all damages Bodily Injury and Property Damage resulting from any one accident.
Coverage for Your Injuries:
These types of coverage vary by state. Medical Payments covers the cost of reasonable and necessary medical care provided to you as the result of a motor vehicle accident and applies no matter who is at fault.
Personal Injury Protection (PIP), available in some states, generally covers medical bills and often covers wage loss and other costs. PIP coverage is subject to a limit often set by the state and applies no matter who is at fault.
Coverage for Injuries and Damages Caused by an Uninsured or Underinsured Driver:
Uninsured Motorists Bodily Injury and Property Damage covers medical treatment and damage to your vehicle (and sometimes other property) caused by someone who doesn't have insurance.
Underinsured Motorist Bodily Injury generally provides protection when the other person has liability insurance, but not enough.
Coverage for Damage to or Theft of Your Vehicle(s):
Collision and Comprehensive coverages will pay for the cost to repair or replace your vehicle if it is stolen or damaged in an accident, regardless of who is at fault. Collision covers you if your vehicle collides with another vehicle or object (other than an animal) , whereas Comprehensive Coverages applies to damaged caused by an event other than a collision, such as fire, theft, vandalism and weather-related damage as well as crashes with animals.
Business auto policy options
In addition to these fundamental components, you can customize your business auto insurance policy with the following coverages (also known as endorsements):
Provides protection for problems that are not typically handled by your commercial auto insurance policy, such as being locked out of your car, needing a battery re-charged or inflating a flat tire.
New vehicle replacement cost coverage
Replaces your new vehicle under a total loss with a new or comparable vehicle. Also provides gap coverage for any amount you may owe that’s above your car’s actual cash value.
Hired auto physical damage with loss of use coverage
Covers comprehensive and collision damage to a leased or rented vehicle, as well as additional contractual obligations to the leasing or rental company.
Auto loan or lease coverage
Covers the difference between the unpaid amount on the loan or lease and the actual cash value of the vehicle, if your vehicle is a total loss after an accident.
Provides towing coverage for pick-up trucks that’s not part of your standard business auto policy. It also covers towing, jump starts and minor roadside repairs.
Pays for a rental car up to the limits of your policy so you have transportation after an accident.