Whether your employees haul loads between states or make deliveries around town, when they are on the road for work you need to protect them — and yourself. Investing in a comprehensive commercial auto insurance policy is not only a smart business decision, but it’s also required for many industries and businesses. Where to start? Here are some important aspects to understand when it comes to commercial auto coverage.

What Is Commercial Auto Insurance? 

Commercial auto policies protect your business from an array of liabilities associated with your company’s vehicles, whether they are owned, leased, non-owned, or hired. Key areas of coverage include:

1. Physical Damage

Your auto policy will reimburse you for damages to or the loss of your vehicle(s) as a result of collision (your vehicle hits another, another vehicle hits you, you are involved in a rollover, etc.). Coverage also protects you in the event other incidents — such as theft, vandalism, collision with an animal, or fire — cause damage to your vehicle. Reimbursement can range from paying to replace your cracked windshield to covering the market value of your vehicle.

2.Liability Protection

If your vehicle is in an accident, your policy helps protect you against liability related to:

  • Bodily injury: If you injure someone else, coverage will help cover costs, such as medical bills and lost earnings, that you are legally bound to pay to the other party.
  • Property damage: If you cause an accident, your policy will help cover damages to someone else’s property (another vehicle, a building, fencing, land, trees, etc.).
  • Uninsured/underinsured motorists: If you are in an accident with an uninsured/underinsured driver and he or she is at fault, coverage pays for injuries to you and your passengers and any damage to your vehicle.

If you are sued as a result of an accident, coverage also pays expenses to defend you in a lawsuit, including legal fees, court costs, and more.

3. Other Coverage Options

Your commercial auto policy can also be tailored to include additional coverages, such as:

  • Loan/lease gap coverage: If your vehicle is considered a total loss after an accident, coverage pays the difference between the unpaid amount on the loan or lease and the vehicle’s actual cash value.
  • Hired auto: Insurance covers any liability you may face if you are in an accident while driving a hired/rented vehicle.
  • Hired auto physical damage and loss of use: Insurance covers any physical damage to a hired/rented vehicle if you are in an accident and reimburses the vehicle’s owner, such as a rental car company, for the loss of use of the vehicle while it is being repaired or replaced.
  • Medical payments: Coverage helps pay for injury-related costs not covered by health, workers compensation, or other insurance if you or your passengers are hurt — whether or not you are at fault for the accident.
  • Rental reimbursement: Coverage helps pay for a rental car if you are unable to use your vehicle after an accident.
  • Towing and labor: Coverage reimburses you for the cost to tow your car to a repair shop and any roadside labor charges (such as for changing a tire or jump-starting a battery).

You may be able to package many of these coverages together for a relatively small increase in premium, so talk with your independent agent to find out more. 

When to Buy Commercial Auto Insurance

If you’re a small business owner who uses the same vehicle — and the same auto insurance — for both personal and business driving, you might not be fully covered. Numerous factors can trigger the need for commercial coverage, such as having employees drive your vehicle for work, transporting work-related items, and more. If you’re not sure whether you need commercial auto coverage, it’s best to check with your insurance agent or provider.

Ways to Reduce Your Risk

Your commercial auto coverage needs and costs depend on a great many variables. As you build your fleet, implementing a safety program and addressing the following areas can help reduce your risk:

  • Driver selection: For a small fee, your state’s department of motor vehicles (DMV) can provide you with your employees’ driving records. By hiring drivers with solid records, you can reduce the risk of accidents.
  • Employee training: Whether your employees are driving dump trucks or delivery vans, make sure they are well-versed in your company’s safe driving policies, how to load and unload their vehicles, and any other job-related activity that can result in accident or injury.
  • Dangerous routes: If your drivers have to navigate difficult road conditions or even neighborhoods with high crime rates, it might be a good idea to upgrade safety and security equipment — as well as increase your coverage limits for theft or damage to your vehicles.
  • Problematic cargo: Some kinds of cargo and equipment could increase your risk in the event of an accident. Whether you’re transporting ladders, appliances, or other heavy or oversized equipment, take the necessary precautions to secure and flag these items. Make sure your cargo and any lost business you might experience are covered in the event of a loss or theft.
  • Maintenance: Well-maintained vehicles have a lower risk of breaking down and causing accidents. Follow manufacturer recommended maintenance schedules, and keep records of all servicing and repairs. Pay special attention to older vehicles, and regularly inspect tires, brakes, and all turn/brake signals.

By keeping these factors in mind, you can keep your business moving and your drivers and vehicles safe, which can help reduce your risk of accidents and claims.

Understanding Limits

Every state defines the minimum mandatory amount of commercial auto coverage required for businesses. To comply with state law, you’ll need to purchase adequate coverage. But these minimums might not be enough. If you’re in a high-risk industry, have a large fleet of vehicles, or don’t have the capital reserves to cover expenses that might spill over the limits of your coverage, consider purchasing additional coverage. You may also want to consider an umbrella policy, which provides an additional layer of protection over your commercial auto policy and other business liability policies for a reasonable price.

If you’re unsure of your needs, err on the side of caution. Reach out to your independent agent today for more details — or learn more about how Liberty Mutual’s commercial auto coverage can help protect your business on the road.


Was this relevant to your business?

  • Yes
  • No