Why You Need Commercial Vehicle Insurance

If you run a small business, you may find that you need to use a car or commercial vehicle to run errands that will keep your company ticking over – whether that’s transporting goods to a customer, visiting a site or even driving your customers yourself. Have you got the correct insurance cover for your work, though?

It’s vital that you make sure you have the right coverage for you and your business’ transportation requirements. If you don’t think you need to have it, then here are some of the reasons you should.

Your personal insurance may not cover you

A personal auto insurance policy is designed to cover individuals, and not any business entities. The insurance typically covers those who are named in the policy declarations.

If you have a look at your personal auto insurance, you may also find there are business-related risks that are excluded from the policy. These may include:

  • Commercial auto exclusion: many policies exclude someone from using a vehicle if they are employed or engaged in a business that isn’t ranching or farming. However, this doesn’t apply to private passenger vehicles or pick-ups/vans not used for transporting/delivering materials and goods. If you have a vehicle that’s larger than 10,000lbs or you use any-sized vehicle for delivery or transport, then you need commercial auto coverage
  • Auto business exclusion: this applies to vehicles used in businesses that sell, repair, service, park or store autos – such as a repair shop or dealership
  • Livery exclusion: pretty much all personal policies exclude using trucks or private passenger vehicles to transport people (eg taxi service) or property (eg packages) for a charge. This also includes ride-share businesses

Limits may be inadequate

Most personal auto policies won’t have the liability limit that you may need for a business. The typical maximum limit for a personal policy will be $500,000 – whereas your commercial vehicle insurance could provide you with an auto liability limit of $1,000,000.

Such coverage could be money well spent. If you’re unfortunate enough to be involved in an accident where there’s a serious injury, then that could result in you receiving a large liability claim. So, if you don’t have adequate coverage, then that one claim could put you out of business.

You may be required to have it by law

Federal law says there are strict commercial auto insurance requirements for certain businesses that use vehicles to transport passengers or goods between states. However, these requirements will be different depending on what you are transporting. Your commercial insurance provider must submit filings to verify that you meet the insurance requirements that you need.

If you don’t cross state lines for work, then you may still need to submit these filings with state officials to confirm you meet your state’s insurance requirements. This will also include commercial auto insurance conditions that may apply.

So, if you’re transporting parcels, people or equipment, then it may be that you’ll need to get commercial vehicle insurance. It may save the future of your business if you are involved in an accident.