Commercial Vehicle Insurance FAQ

Commercial Vehicle Insurance 101

Everything you need to know about commercial vehicle insurance, and more.

Commercial vehicle insurance is an essential coverage for most types of businesses that rely on cars, trucks, and other vehicles for work purposes. But it can also be a complex and confusing coverage. That's why it's important to know the details about this insurance before you ever get a policy.

No matter your industry, these common commercial vehicle insurance questions can provide helpful guidance. An independent insurance agent can answer any further questions and help you find coverage for your business. But for starters, here's a big list of all the questions you might have about commercial vehicle insurance.

Do You Need Commercial Auto Insurance?

Commercial vehicle insurance provides protection against both property damage and liability for any vehicle designated for business use. 

Whether you drive a vehicle that's for dedicated business use or drive a personal vehicle for business, it's important to have commercial auto insurance because your vehicle won't be covered under a personal auto insurance policy.

Several types of coverage may be included in your commercial vehicle policy. Typical commercial vehicle coverage includes:

  • Property damage liability and bodily injury liability to third parties
  • Personal injury to you, your employed drivers or passengers, including medical expenses and lost wages
  • Collision coverage for accidents, regardless of who's at fault
  • Comprehensive coverage for damage other than collision
  • Medical payments coverage for the cost of hospitalization, treatment, and funeral expenses
  • Uninsured and underinsured motorist coverage

Additional coverages can include:

  • Non-owned auto coverage for when you or your employees drive a rented or borrowed vehicle
  • Loading and unloading liability
  • Substitution transportation when your commercial vehicle is being repaired and you use a rental from the repair shop
  • Towing and labor costs

Commercial vehicle insurance provides coverage for any vehicle you use for business purposes and for your commercial drivers. As a business owner, you can get commercial vehicle coverage for a single vehicle or a fleet of vehicles. 

Coverage protects your commercial vehicles from weather damage, accidents, and many other types of incidents. If you or one of your drivers is at fault in an accident that injures another person or damages their property, the liability coverage in your commercial vehicle policy will cover the costs of the claim, up to the limit of your policy.

Many business owners choose to buy a commercial umbrella policy to cover the costs of large liability claims that exceed the limits of the commercial vehicle liability policy. Commercial umbrella insurance often comes in $1 million dollar increments which can greatly help cover the costs of liability claims and lawsuits, protecting the business financially.

You need commercial auto insurance for any vehicle your company uses for business purposes, any vehicle that has a commercial license plate or tag, and any vehicle that's registered as a commercial automobile.

You must also get commercial auto coverage if your employees drive or use vehicles for business purposes, whether making deliveries, driving people to the airport, or running errands on behalf of the business.

If you use your vehicle for any of the following functions, you may also be required to get commercial coverage.

  • Using a vehicle to carry equipment, or to transport freight
  • Transporting flammable or hazardous materials
  • Transporting housekeeping equipment for business use
  • Hiring your vehicle out to tow other vehicles
  • Delivering any goods, such as pizza, newspapers, or any types of wholesale or retail products
  • Transporting people as a chauffeur, limousine service, or taxi service

Some situations and certain occupations may be covered under standard auto policies, but you should always ask your independent insurance agent if your vehicle use warrants a commercial policy.

You need commercial vehicle insurance for any automobile, taxi, van, limo, bus, or small truck that you use for business purposes, because a personal auto policy won't cover this type of use. Coverage protects you and your business from the costs of property damage, injury, and liability claims you may incur while using your commercial vehicles.

For larger commercial vehicles such as tow trucks, cement trucks, construction vehicles, tractor trailers, or semi-trucks, you will need a commercial truck insurance policy. Not only is your commercial vehicle policy critical for protecting your business financially, but it's also required by law.

There are several ways to get commercial vehicle insurance like by shopping for quotes online, although you won't necessarily find the best coverage at the lowest rates that way. You also won't have reassurance that your coverage really matches your needs.

One of the best ways to get commercial vehicle insurance is through an independent insurance agent. Here are some advantages of working with these agents:

  1. Independent insurance agents work with multiple insurance companies and can shop for the best rates for you.
  2. Your agent is local, available to meet in person, and can answer all of your questions so that you can make an informed decision about your coverage.
  3. Your agent will get to know you, your business, and your vehicle use, and will be able to help ensure that your coverage is the right type and amount to protect you and your company in the event of an accident.
  4. Your independent insurance agent can meet all of your commercial insurance needs, and can package up the different policies you may need so that you get all of your coverage from one office.

The cost of auto insurance depends on a number of things, including the size of your business, the types of vehicles used, the number of vehicles you need to insure, your business's risks, and the amount of coverage you need.

Generally, a passenger auto vehicle will cost much less to insure than a heavy duty vehicle such as a dump truck. However, insurance carriers also offer fleet insurance at a bulk discount. The driving records of the drivers who will be using your commercial vehicles and their ages also factor into your policy's cost. 

Commercial vehicle insurance rates are generally least expensive for vehicles used in construction and farming. Vehicles used as passenger vehicles and for small deliveries are slightly more expensive. Heavy duty cargo vehicles that transport loads of more than 10,000 pounds are often the most expensive to insure.

Yes, your commercial auto coverage is often tax-deductible. There are many situations that allow you to deduct the cost of commercial auto insurance for tax purposes when you use your vehicle for commercial or business use. 

If you're self-employed, you may be able to deduct your commercial auto insurance premium under Schedule C. If you're an employee and don't receive mileage or expense reimbursement, you can use Form 2106 (Employee Business Expenses). Contact the IRS or a tax adviser for clarification.

Personal use will be covered for a company-owned vehicle providing the company has commercial auto coverage. If you're driving your own vehicle to work without using it for commercial purposes, it should be covered under your personal auto policy.

Using your personal vehicle on occasion for commercial purposes might be sufficiently covered under your personal policy as well. But if you use your own vehicle for any kind of business purpose, be sure to talk with your independent insurance agent. 

If your personal vehicle is insured as a commercial vehicle and other members of your family use the vehicle for personal purposes, you might have to get a non-owned vehicle endorsement. Ask your independent insurance agent about what's required for these situations.

If you use your own vehicle to deliver pizza, there are a few options you can consider in terms of coverage.

  1. Buy a commercial lines policy.
  2. Get non-owner coverage from the pizza business owner. This will give you liability coverage for injuries and property damage to others, but will not cover property damage to your own vehicle.
  3. Obtain coverage from insurance companies that offer policies specifically tailored for personal vehicles used for delivery situations. The insurance company may even discount the rates if you use the vehicle for seasonal use, such as a summer job.

One of the best ways to find a commercial vehicle policy to suit your individual insurance requirements is to speak with an independent insurance agent. These agents can compare policies and rates so you can find a policy you can afford. If you use your vehicle for commercial purposes or plan to do so in the near future, contact an independent insurance agent today to find the coverage you really need.

How Do Independent Insurance Agents Help Me Find Commercial Auto Insurance?

It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print, so you know exactly what you’re getting.

Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best commercial auto coverage, accessibility, and competitive pricing while working for you.

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