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What You Need to Know about Commercial Vehicle Insurance
Business owners not only seek to maximize their profits from a commercial
When vehicles are involved, there is a new element of risk introduced in business operations. To mitigate this risk for business owners, commercial vehicle insurance becomes an essential requirement.
Commercial Auto Insurance FAQ’s
<strong>01</strong>Why You Need Commercial Auto Insurance for Your Business
If a company vehicle is involved in any kind of an accident during business
Secondly, a vehicle involved in an accident might lead to heavy collateral damage, such as injury to co-passengers, damage to public property, even lawsuits – all of which can be a very hefty expense for the owner to bear. Not only that, but some states might even have a minimum liability insurance requirement for commercial vehicles. If your business has a vehicle and you are using personal insurance to cover it, you might very well be breaking the law.
It is therefore advisable that business owners who use vehicles – be it for delivery, travel, transport of goods or any other purpose – should get their vehicles duly insured.
<strong>02</strong> What Does Commercial Vehicle Insurance Cover?
Liability refers to the expenses that are raked up when you or your employee causes an accident. These include medical expenses, loss
Commercial vehicle insurance covers any medical expenses that you might incur for treating injuries sustained by you or your employee, as well as any co-passengers in the vehicle at the time of the accident.
Coverage – Collision and Comprehensive
Collision coverage covers your vehicle when an impact caused by another object or vehicle damages it. Comprehensive coverage includes the non-accidental risks to your vehicle such as theft, intentional damage or damage due to weather.
In the event that the accident you or your driver have met with was caused by a motorist with insufficient or no insurance coverage, the damages are paid for as part of your insurance policy.
<strong>03</strong> Types of Vehicles Covered by Commercial Vehicle Insurance
<strong>04</strong> Industries That Need Commercial Vehicle Insurance
Typically, commercial auto insurance is a must-have for companies such as taxi-on-demand or ridesharing providers, any kind of delivery services (food/liquor/groceries/medicines), e-commerce firms that have a shipping department, snow plowing services, premium limousine fleets or chauffeur services, packers and movers, vehicles transporting hazardous or flammable material and freight transportation.
It is also important for independent contractors using their own car for work – such as Uber or Lyft drivers, or small business owners (for instance on-call beautician, stylists, event planners or housekeeping professionals) to cover their vehicle using commercial car insurance if it is not already provided by the firm with which you have a contract. It is especially such professionals who are vulnerable to heavy losses if they find themselves in an accident, and commercial vehicle insurance gives them some cushion against such eventualities.
<strong>05</strong> How Much Does Commercial Auto Insurance Cost?
Having understood the necessity of commercial auto insurance, it now becomes pertinent to ask how much a business might have to pay for it. This is a rather complicated question, however, because no two insurance packages are alike when it comes to commercial vehicles.
The total cover cost depends on a number of factors, and nearly every commercial vehicle insurance will be customized to suit your requirements. Some of the factors that decide the cost of commercial auto insurance are as follows.
- Are you an independent contractor, a small business or a listed company? In other words, what is the size of your firm?
- Description of the vehicle (or vehicles) that you intend to cover – their model, make, history, general accident record, resilience, predicted life and so on. This information allows insurers to estimate the kind of costs the vehicle might incur in operation and evaluate the compensation accordingly. Typically, heavy-duty vehicles cost less in insurance than, say, limousines which are not as sturdily built and would demand a higher cover.
- Ownership of the vehicles.
- Who will the vehicles be driven by? If there are multiple drivers, the insurance companies will ask for license information for each one of them and also get their driving records.
- Any risks specific to the business i.e. fire hazards, weather damage and so on.
- State regulations for minimum commercial vehicle accident coverage.
These are some of the factors which are taken into account while putting together an insurance policy for commercial vehicles. Looking for standard insurance quotes is often misleading as they do not factor in all the business-specific criteria. Such quotes can be highly inaccurate and you might end up paying a lot more than is feasible.
<strong>06</strong> Commercial Vehicle Insurance Discounts
Commercial auto insurance can be a significant cost to the company. The good news is that you can offset some of it by using discounts which are available to different establishments and situations.
If you opt for a business owner’s discount from your commercial vehicle insurance company, you might be eligible for a bundling discount on buying both vehicle and owner’s insurance together from the same company.
If you pay for your entire policy upfront instead of paying intermittent premiums, your insurers might offer you a “paid-in-full” discount. This is profitable for you as well as the insurance company, as it saves on the cost of following up and issuing you regular bills over a long period of time. You save on the main cost, as well as the additional opportunity cost of arranging to pay the premium regularly.
Some vehicles require the driver to have a commercial driver’s license (CDL) by law. Often, insurance companies might offer a CDL discount of up to 20% for drivers who hold a valid CDL license.
When you go for a commercial vehicle insurance policy, always ensure that you are properly informed about the regulations, provisions
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