As a business owner, you know that it is important for you to carry several types of commercial insurance. If you own vehicles for the business, then you will need to buy commercial auto insurance. Not only is it required by most states, including Illinois, but it can also provide multiple benefits for your company if problems arise involving the vehicle. Don’t hesitate to work with your insurance agent to set up the right policy as soon as you buy your first company car.
Understanding Commercial Auto Insurance
Most private auto insurance policies explicitly do not insure vehicles owned by businesses. The business is the owner of the vehicle, and its operations are liabilities to the business. Commercial auto insurance will better apply. It can cover costs the business might face following vehicle wrecks, theft, vandalism, severe weather and a variety of other losses.
Suppose that while driving your company car one day, you collide with another vehicle. The authorities determine that the accident was your fault. As a result, you will have to use your own auto insurance policy to pay for your vehicle repairs. Not only that, but you also might have to pay for the vehicle damage and injury costs you caused to the other driver.
Because you were driving a business vehicle, you were driving on behalf of the business. Therefore, the business still has a stake in both the accident and the recovery process. Commercial auto insurance will create a critical safety net to help with that recovery. The right policy can pay for both your own vehicle repairs and any costs you owe others. The business therefore won’t suffer exceptional financial losses due to the accident.
Your Required Coverage
All auto insurance, private and commercial, goes a long way towards protecting drivers and others on the road. Therefore, by law, most businesses that own vehicles must buy policies.
Depending on your line of business, your commercial auto insurance requirements might vary. However, most requirements center around liability insurance. Liability coverage will pay for third-party losses caused by the policyholder. In other words, if you cause a wreck in your business vehicle, then your commercial auto insurance policy’s liability coverage can pay for the other driver’s losses.
Under Illinois law, drivers must have at least the following coverage:
- $25,000 per person / $50,000 per accident bodily injury liability coverage
- $20,000 per accident property damage liability coverage
- $25,000 per person / $50,000 per accident uninsured motorist coverage
When an accident is your fault, bodily injury liability coverage will pay for third party injuries. Property damage liability coverage pays for damage to their property (aka, their vehicle).
Uninsured motorist coverage is separate coverage that pays when the insured driver is not at fault for a wreck. However, the at-fault driver does not have liability insurance to compensate the business. This coverage compensates the insured business instead.
Keep in mind, these are only the limits required of standard company vehicles. Vehicles that carry passengers, cargo or hazardous materials might need more specialized coverage. Large commercial vehicles and trucks might also need specialty coverage. Work with your agent to determine the appropriate coverage requirements based on your operating risks.
Optional Coverage for Your Policy
Once you have your required commercial auto coverage, there is no restriction saying that you cannot carry other protection. The more coverage you buy, the more protection you will have in case of costly losses. Optional coverage to consider includes:
- Comprehensive coverage: Hazards like fires, vandalism, theft or severe weather might damage a company vehicle. Comprehensive coverage will help repair your vehicle damage.
- Collision insurance: When a company driver hits another vehicle or object while operating a vehicle, then collision insurance will pay for the vehicle’s repairs. Collision coverage is separate from comprehensive insurance.
- Medical payments insurance: Coverage will help the employee driver and their passengers pay for their medical bills following accidents. Keep in mind, this does not replace an employee driver’s eligibility for workers’ compensation.
- Roadside assistance and rental car reimbursement coverage.
There are several other policies that you can buy along with commercial auto insurance. These can help enhance your overall protection against the ramifications of accidents.
- Inland marine insurance: Coverage insures business materials, equipment and cargo when carried within your company vehicle.
- Hired/non-owned auto liability coverage: If you ever need to rent a vehicle or insure an employee-owned vehicle, then this coverage can extend liability coverage to those vehicles when someone operates them for business purposes.
- Umbrella liability insurance: Your commercial auto liability insurance will include a maximum limit. However, if a claim ever exceeds these limits, then umbrella liability insurance often can step in to cover the exceptional costs of your claim.
Remember though, that all commercial auto policies will include limits, exclusions and deductibles. Therefore, you probably won’t receive compensation for 100% of your losses in these losses. However, you can work with your agent to determine the coverage that will maximize your benefits in any eventuality.
Also Read: Signs You Need to Insure Your Car with Business Auto Insurance