Operating a vehicle for business purposes is a potentially-hazardous endeavor. You never know if one of your vehicles or drivers will experience an accident. You also might not like the legal challenges and costs that might pop up if one of your drivers is deemed responsible for a wreck. That's why you need commercial auto insurance to back you up. More importantly, you need auto liability coverage. What is this protection, and how can it help your business?
Businesses that operate vehicles need commercial auto liability coverage. Yet, how much coverage you specifically need will vary. Work with your Auto Insurance Discounters agent to determine the right liability limits for your needs.
Commercial Auto Insurance In Brief
If you or others drive for business operations, you likely need commercial auto insurance. Policies specifically insure a business's interests in vehicles and drivers. This is coverage not provided by most standard car insurance policies. So, if you use a vehicle for business, you usually can only qualify for commercial auto policies.
Qualifying parties might include:
- Businesses that own a fleet of vehicles or a single vehicle. Coverage might also apply to rented or leased vehicles.
- Business owners or employees who drive their personal vehicles for business.
- Drivers who use company-owned vehicles for both business needs and personal driving.
Commercial auto insurance will generally look a lot like a standard auto policy. It will contain coverage specially tailored to the business investment in the vehicle. Many coverage policies will contain liability coverage. Do not drive without liability coverage.
What Is Liability Insurance?
A liability is a risk of harm or damage that one party causes to another. Auto liability insurance, therefore, covers the policyholder if they harm others while driving.
Most states will assign fault following wrecks. The party at-fault will usually have to let parties the they harmed make a claim against the at-fault driver's liability coverage. The coverage will usually help the affected person pay for their bodily injuries and property damage.
Let's say your delivery van rear-ends another car. The other vehicle sustains damage, and its driver suffers several injuries. Bodily injury liability coverage will help pay for most or all their medical costs. Property damage liability coverage might help them pay to have their vehicle repaired. Your policy will help parties you harm feel more secure.
How Much Coverage Do Commercial Autos Need?
In most cases, liability insurance is not optional. However, you might have leeway in determining the financial limits your policy provides. Determining this might seem tricky, but it doesn't have to be.
- Nearly all states require all drivers to carry minimum levels of liability insurance. The rule exists to protect both the insured and others against financial losses. You will need to carry at least these minimums to legally drive. Check with your state to learn more about this requirement.
- In most cases, commercial drivers should carry higher liability limits than the minimums. Property damage coverage of $100,000 might pay for costlier losses than a $20,000 policy, after all. Let's say you only have $20,000 in coverage, but cause someone $60,000 in damage, you might have to foot a $40,000 bill on your own.
- Certain insurers will require commercial auto policyholders to carry minimum liability options. For example, your state might only require you to carry $30,000 liability coverage. However, some insurers will only offer policies with at least $100,000 coverage. They might do so to help commercial drivers assume more practical coverage levels.
Choosing Your Limits
Determining your commercial auto liability coverage limits isn't a hard and fast rule. However, one way to approach the decision is to think about your existing assets.
Do you have enough money on hand if you only have $25,000 liability coverage? What if cause someone $300,000 in losses? You might have to pay the other $275,000 out-of-pocket. That might be a fund that no business can afford. You might run the risk of financial peril if you face such a problem.
Let this thought process be your guide as you begin to search for liability coverage.
Umbrella Coverage Provides More Coverage
Even if you carry high liability limits, you might think you need more liability coverage. In this case, you might also benefit from umbrella liability insurance.
Umbrella coverage essentially will pick up after your initial policy pays its greatest limits. Policies might offer well over $1 million in extra assistance, for example. Thus, it can help you cover the rest of liability claims for which you might not have standard coverage. Keep in mind, you will usually need to carry the maximum limits on your initial policy to qualify for umbrella coverage.
Do not attempt to drive a commercial vehicle that doesn't have liability insurance in place. If you do, you might face a variety of penalties and legal challenges. Contact your Auto Insurance Discounters agent and let them guide you through the process of getting the appropriate policy. If you ever need to file a liability claim, never wait to contact your agent either.