The lowdown on commercial auto insurance

Commercial auto insurance is a lot like personal auto insurance, except with higher limits and added allowances to accommodate typical work usage of vehicles. Here’s a breakdown of who exactly needs it and what it covers.

When do you need commercial auto insurance?

The vehicle is owned by a business

Any vehicle owned by a business is a commercial vehicle by definition and must be covered by commercial auto insurance.

The vehicle is used for business purposes

If you use your personal vehicle for business purposes, like delivering goods or transporting passengers, you need commercial auto insurance. (An exception to this is vehicles used for ridesharing with Uber and Lyft. Most insurance carriers now offer ridesharing policies that differ from commercial policies.)

The vehicle is driven by employees, even occasionally

Any vehicle driven by an employee for business purposes must have commercial auto insurance.

The vehicle weighs more than 10,000 pounds or is rated for loads greater than 2,000 pounds

Bigger vehicles and those meant to transport heavy loads need coverage with higher limits than regular vehicles.

The vehicle is equipped with toolboxes, racks or other equipment used for business purposes

Vans and pickup trucks often have racks and toolboxes installed. If that equipment is used for business purposes, the vehicle must have commercial auto insurance.

The vehicle is equipped with cooking equipment, a snowplow or other specialized equipment

A vehicle with any other equipment installed for business use must be covered by commercial auto insurance.

What’s covered by commercial auto insurance?

Property damage and personal injury liability

Commercial auto liability insurance has a single combined limit higher than the minimum limits for personal auto liability insurance.

Whereas you can operate a car legally in New Jersey with as little as $5,000 per incident in property damage liability coverage, the state requires a minimum of $35,000 per incident for commercial vehicles. Depending on your needs, you can pay for limits of up to $1 million per incident.

Hired and non-owned vehicles

Since many businesses require temporary use of specialized vehicles, commercial auto insurance covers rented, leased or borrowed vehicles, as well as your employees’ personal vehicles when they’re being used for business purposes.

What happens if you don’t have commercial auto insurance?

If one of the above situations applies and your vehicle is involved in an accident when you don’t have commercial auto insurance, your claim is likely to be denied. Personal auto insurance policies simply aren’t meant to cover the risks of commercial vehicle use.

How much does commercial auto insurance cost?

The cost of commercial auto insurance depends on the size and type of your business and the types of vehicles covered. Construction and farming vehicles are generally the cheapest to insure, while vehicles transporting heavy loads are the most expensive. Vehicles used to transport passengers or small loads are in the middle range.

Contact us today for a free consultation and quote.