Commercial Auto Insurance

This type of insurance is also referred to as Business Auto Insurance. When you run a business that utilizes one or more vehicles for business purposes, you are going to need adequate auto insurance for your business vehicles. Business vehicles are used in commerce, hence the terminology - commercial auto. Regardless of the size of your vehicles, insurance is essential if you are in business, and business auto insurance is necessary if you use a vehicle to conduct any part of your business. Coverage for commercial auto differs from state to state in most cases. You have to do your research as well as gather as many comparative quotes as possible so that your company gets proper coverage at a fair value.

Applying for Commercial Auto Insurance

Despite the size of your commercial vehicle, if used to make money, the proper insurance applications are the initial starting point when applying for insurance. However, researching and gathering information from quotes and policy specifics is the primary goal.

You do not want to overspend nor do you want to be over insured. However, there is no such thing as "too much" insurance if you can afford the coverage. You may wish to adjust coverage amount at a later date.

Once a decision about which insurance company you plan on utilizing has been reached, the insurer will require an application process. The process may affect the rate of your insurance because you will be listing workers, vehicles, family, etc. However, the insurance company needs the accurate information in full to cover you and your employees wholly.

Most insurers require you to provide a list of employees, fleet vehicles, and their corresponding information, as well as those who drive personal vehicles while on the clock. The insurance application will either be accepted or denied depending on their underwriting guidelines and the history of insurance claims made by you, your business partners and your business. Do not hesitate to call your insurance agent with questions about the process. There are no stupid questions, and insurance agents are trained to help you understand and manage risk protection for your company.

Insurance Premiums and Payments

The full insurance premium payment (annual, 6 month or quarterly) is going to be due with the application, or when you approve the quote - unless there has been an alternate payment plan agreement set in place by the insurance agent. Renewal notices, premium changes, changes in insurance coverage, and payment reminders will come in the mail and email so that your company does not find itself without insurance and breaking both the law and endangering your employees.

The minimum of the initial premium payment differs from company to company and state to state. Regardless, keeping up with renewal notices will save future headaches for both your business and the insurance agency. No one wants insurance to lapse. Not merely because of the cost but also the danger and hassle to get it back running without further hesitation.

Personal Use versus Business Use

Many small business owners mistakenly assume that private insurance will cover commercial related accidents and claims. The assumption is not accurate. A vehicle involved in an accident while being used for business purposes must have a commercial auto policy/coverage. Even if you have personal umbrella liability coverage, if a critical accident occurs, the claim will be denied if found you were using your personal equipment for work purposes.

The chance of a mishap outweighs procrastinating when it comes to calling around for quotes and information. You do not want to be the one left holding the bill for something that is insurable.

Possible Policy Procedures or Problems

All insurance policies have specific terms. The coverage limits can range from a year to whatever your insurer and state allow. When shopping around for insurance, terms are something you will want to bring up and discuss with your insurance agent or insurer.

In order to renew insurance, most companies will send a renewal certificate/proposal that will need filling out fully and accurately. The due date to return the certificate is necessary and complied with in a timely manner, or you risk your insurance lapsing and costing you more money and time.

You should always receive copies of your original policy. If for some reason you do not, do not hesitate to contact your insurer to obtain copies. When you renew, the same policy and procedure are applied and given a Declaration, new copies of germane cards, and any paperwork that involves changes to your policy or contact and employee information. Premiums and fees are generally rounded up to the nearest dollar. The quotes you may gather may not have the price to the cent.

If you decide to cancel your current insurance to perhaps shift to a cheaper route, you will likely need to request the cancellation with a written notice. Depending on your paperwork, you may or may not receive a refund for your unearned paid premium.

Reasons for Lapse/Suspension of Insurance Policy

Human error is often the primary reason as for auto insurance lapses and suspensions.

You can also request to suspend portions of your plan specifically. The suspension of unrequired parts could be useful for businesses that are seasonal, or going through expected and periods where insurance may not be recovered as the fleet is not in operation or undergoing scheduled maintenance. The suspension's timetable revolves around the agreement you and your insurance Carrier/Insurer makes. The suspension of coverage endorsement allows you to suspend parts of your insurance coverage on vehicles that will go unused for thirty days or more.

Sometimes a piece of mail gets lost or shredded by mistake, and with any business, there are numerous things happening at once. Sometimes that overlooked item is a reminder to pay a premium or your annual renewal agreement. If it is too late to keep your insurance from lapsing, reinstatement is generally offered and effective the day you request and pay for the restoration of coverage.

Coverage Types

Physical damage coverage is self-explanatory in that it covers physical damage to an insured vehicle. Mistakes happen because we are only human and having physical damage coverage will ensure your fleet stays intact and in working condition. Quotes from insurance agents start with physical coverage since it covers standard, non-specific human errors.

Auto loan or lease gap coverage requires negotiating by endorsement to your commercial auto policy that applies to the increase in the amount of coverage in the event of a total loss to a covered auto that you are responsible for replacing. Generally, insurance companies only offer the gap insurance if already are under the physical coverage umbrella.

Special or customized equipment coverage is different coverage for additions to vehicles, such as tool boxes or pick-up toppers. It also comes in handy to have in the event of weather disasters. Special or customized equipment on a pickup or other vehicle insured for physical damage coverage reducing your stress about modifications made to your equipment and how best to protect their quality.

Airbag coverage is defined by how it sounds. It protects you from any physical damage an airbag does to a passenger but also pays to replace the airbag. It may not seem like something you may require, however, it is better not to get stuck with a bill for the installment and computer reset of an airbag.

Windshield coverage covers you when a bird flies into your windshield or if a missile object, for instance, a rock was thrown up from the highway, the coverage will either repair the crack or replace the entire windshield. It may seem minor until you have replaced several windshields and received the bills.

The Insurance Services Office, Inc. (ISO) sets the standard for certain types of coverage on your vehicles.

ISO's are a designated symbol system that signifies the types of insurance that apply to each of your vehicles or piece of equipment. The symbols are the numbers at the end of each category of fleet insurance coverage types.
  1. Owned Autos Subject to No-Fault - The ISO that correlates with no-fault applies to vehicles owned by the insured that remain stationary or licensed in another state that is a no-fault state. (5)
  2. Owned Autos Subject to Compulsory Uninsured Motorist Law - The designation applies to vehicles that are parked or licensed in a state where uninsured motorist coverage is mandatory. (6)
  3. Specifically Described Autos - The ISO number refers to vehicles listed on the policy and covered by your insurance policy. (7)
  4. Hired Autos Only - The Insurance Service Office designation includes vehicles that you lease, hire, rent or borrow for your use. However, the policy will not cover family members who use the automobiles, only employees that have the status of hired. (8)
  5. Non-Owned Autos Only - The non-owned vehicles' designation includes cars, trucks, trailers, etc. that you do not own, lease, hire, rent or borrow, but are utilized for the business' benefits. The insured autos may all be owned by employees or family. Nonetheless, the person driving is obligated to do only business or your personal errands while in control of the vehicle. Any claims made outside of those standards risk denial because you are the one that is insured and thus responsible even when a member of your family is using the work-related equipment. (9)
  6. Mobile Equipment Subject to Compulsory or Finance Responsibility or Other Motor Vehicle Insurance Laws - The ISO symbol covers mobile equipment that you do not personally own but used for business reasons. The vehicles can be owned by employees or family but utilized for your business or personal errands on a regular basis. (10)
Other Things to Remember

Any insurance agent or insurance company must advise you of your different options when applying for coverage. You have the right to know how every decision influences what you pay and what your advantages are with every payment.

Agents and companies must inform you of your coverage options when applying for a new policy, or at any time upon your request if you already have insurance. You have the right to know how each choice may affect what you pay and what your benefits would be in the event of an accident. You always have the right to ask about additional options.

You have the right to change your insurance strategy whenever, regardless of the possibility that you are not close to your renewal date. Changes may include coverage, change in employment structure, or fleet equipment changes. Depending on your agreement with your insurance agency; you may receive unused premiums if you do choose a different insurer.

What Affects the Cost of Business Auto Insurance?

Driving record


If you have a negative driving record such as suspensions, the cost of insurance is affected and could be higher. Insurance agencies may think of you as a high-risk driver and charge a higher rate than a driver with a clean record. Every insurance company has their way of deciphering costs versus at-risk drivers. A primary discussion between you and your agent likely will reference your driving record as well as employees or contract drivers.

Vehicle Type

The make, model and estimated cost of your vehicle influence the cost of your auto protection premium. The cost to protect different makes and models of vehicles can fluctuate among insurance carriers, so remember to add that to your list of things to ask when you research insurance for commercial vehicles.

Vehicle Use

How you use your vehicle: work, pleasure or school may influence the cost. Regardless of whether you utilize your vehicle for individual use or business utilization may likewise affect your rate.

Claim History

The claim history of the company and its majority shareholders (owners) is reviewed at the time of underwriting a commercial insurance policy.

Credit scores (FICA)

In many cases the majority shareholders (owners) is credit reports are pulled and reviewed at the time of underwriting a commercial insurance policy. And oftentimes at the time of evaluating the insurance application and providing a quote for insurance coverage for the business.

Shopping Around

Before shopping around, take a moment to consider what coverage options you require – how much liability insurance, collision and comprehensive coverage you are responsible for in regards to your fleet so that they qualify as adequately protected. This preparation could help lower your costs.

Agents, brokers, and companies must inform you of your coverage options when inquiring about policy. You have the right to know how each choice may affect what you pay and what your benefits would be in the event of an accident. You always have the right to ask about additional options.

Finally, remember, there are no stupid questions. Do your research; find the right agent – an expert that can help you; and be your own advocate because you know what is best for you and your business.
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