Owning a business is fraught with high-stake uncertainties ranging from product and market risks to financial risk. One of the most essential ways to mitigate financial risk is through commercial auto insurance.
According to the U.S. Census Bureau, approximately one-fourth of the 240 million motor vehicles registered in the United States are used for business purposes. But business use of personal autos to visit clients or replenish supplies is risky if you don’t have the proper insurance in place. Contrary to popular belief, personal auto insurance policy does not offer protection when vehicles are used for business purposes.
CHECK OUT: When Do You Need Commercial Insurance?
Whether you are using vehicles primarily to transact business needs or your business owns and operates its vehicles, the best way you can protect your business from unforeseen circumstances is to purchase commercial auto insurance. If you or an employee is sued following a serious accident in an auto or truck that you own, liability insurance can protect your business’s assets.
Here are five key ways that commercial auto insurance will protect your business assets and protect employees and clients while your team is conducting business activities on the road:
1. Protects against injury or damage caused by you or an employee
Significant financial loss due to an accident can wipe out an entire business, especially if you are at fault. Liability auto insurance provides coverage for businesses by paying third parties involved when you cause an accident. Liability insurance consists of two types of coverage: bodily injury and property damage.
Bodily injury provides payment to third party people who are injured personally in auto accidents; property damage provides payment to people when you cause damage to their property, such as their vehicle. Keep in mind that your own injuries or property damage are not covered by liability insurance.
2. Protects against physical damage to your vehicle
Damage to your vehicle can be more than an inconvenience, especially if you use your vehicle regularly for business purposes. Unlike liability insurance, physical damage insurance provides financial protection against damages to your vehicle regardless of whether the source of damage is another vehicle or an external object. Physical damage insurance consists of two type of coverage: collision and comprehensive.
Collision insurance covers the cost of repairs to your vehicle if sustained from a collision accident; comprehensive insurance covers the costs of repairing your vehicle when damages are caused by external forces such as theft, vandalism, or falling objects.
3. Offsets medical bills incurred after an auto crash
Though often not a concern until it’s too late, the health implications of an accident can be much more devastating than the financial burden of a car accident. Medical payment insurance covers the medical and injury expenses that you and your passengers receive as a result of an accident regardless of fault.
In addition, medical payments can cover funeral expenses, injuries you sustain as a pedestrian or bicyclist after a car hits you, and necessary dental care as a result of an accident.
4. Offsets expenses incurred from crashes with an uninsured motorist
According to the Insurance Research Council (IRC), nearly 13 percent of motorists, or about one in eight drivers, were uninsured in 2014. Uninsured motorist insurance pays for damages to your vehicle when the other party does not carry insurance or does not carry enough when an accident is the other party’s fault.
Coverage can include a variety of options that provides payment for medical or hospital bills, lost wages, and pain and suffering for you and others in the vehicle who are injured in an accident. Depending on where you live it can also protect you, an your personal property, from damages caused by hit-and-run incidents.
5. Protects against damage to vehicles not listed on your policy
Every so often, you may need to use a vehicle not listed on your commercial auto policy. Perhaps you need to send an employee to pick up a catered lunch. Or you are on a business trip and need to rent a car. Or maybe you send a car service to pick up a client. For those infrequent instances, having liability coverage can be beneficial should an accident occur.
Non-owned vehicle insurance provides coverage for vehicles used for your business that aren’t listed on your policy. If there is an auto accident and you are sued, coverage applies.