Commercial auto insurance is required any business that owns or uses vehicles for work purposes. This insurance is often associated with company vehicles and fleets, but what
about employee vehicles?
If your employees often use their personal vehicles for work purposes, you may need extra coverage on your commercial auto insurance policy.
What Does Commercial Auto Insurance Cover?
Commercial auto insurance offers a range of coverages similar to personal auto insurance.
- Comprehensive coverage covers damage to the vehicle caused by fire, wind, hail, theft, vandalism and more.
- Collision coverage covers damage due to a collision with a vehicle or object.
- Liability includes bodily injury liability and property damage. This provides compensation if the driver of the insured vehicle causes an accident that results in bodily injury or property damage to a third party.
- Medical payments coverage covers medical expenses for the driver and passengers no matter who caused the accident.
- Uninsured/underinsured coverage covers damages that occur from accidents when the other driver doesn’t carry insurance.
In general, these coverages only apply to vehicles owned by the policyholder (in this case, the business). Some businesses may want to save money by requiring employees to drive their personal vehicles, but this comes with its own dangers. Even though the company doesn’t own the vehicle, it can still be held liable for an accident that occurs while the employee is driving for work purposes. Personal auto insurance typically won’t cover accidents that occur in the course of work-related activity.
In these cases, you’ll need hired and non-owned auto insurance. This insurance does not come with a typical commercial auto insurance policy but can be purchased separately. This policy also covers leased vehicles. Hired and non-owned auto only covers liability unless you also add a hired auto physical damage endorsement, which adds compensation for damage to the vehicle.
How Much Does Commercial Auto Insurance Cost?
There are many factors that go into the cost of your commercial auto insurance policy. This includes:
- Company’s industry
- Distance being traveled
- Claims history
- Credit score of the insured
- Number of vehicles
- Policy limits
- Vehicle make and value
- Driving records
On average, commercial auto insurance costs anywhere between $900 and $1,200 per vehicle. Choosing a higher deductible can make your monthly premiums cheaper, but this also means that you’ll owe more if an accident happens.
Does Commercial Auto Insurance Cover Personal Use?
There are some gray areas where it may be uncertain whether or not a vehicle should be insured with a commercial auto insurance policy. Commuting to and from work does not count as work-related and should be covered under a personal auto insurance policy. If the vehicle is constantly used for transferring products, equipment or people, it should be covered under a commercial auto insurance policy.
Luckily, commercial auto insurance can cover personal use. Speak with your insurance agent about tailoring your business’ policy to cover personal use for work vehicles. Adding this extra coverage may cost more, but it’s usually only $50 more a year. Keep in mind, however, that each person with access to these vehicles may be required to be listed on the insurance policy.
The driving record of your employees matters when it comes to the cost of your auto insurance as well as the risk related to allowing them to drive for your company. A bad driving record on your policy and make your premiums jump higher, so it’s important to ask for a driving record when considering employees for driving positions. An example of a bad record could include a DUI or even multiple traffic tickets.
ALSO READ: Will Commercial Auto Insurance Cover a Replacement Vehicle While Yours is in the Shop?