When a vehicle is used for business purposes, commercial auto insurance is usually required. This may include a work truck used for a plumbing business, a sedan solely used for deliveries or a vehicle for many other types of business functions. Commercial car insurance may meet the legal requirement for coverage in your state, and it may be specifically designed to protect you against losses related to business use of the vehicle. If your business-use vehicle is financed by an auto lender, this coverage may also meet the lender’s insurance requirements. Because there are multiple types of coverage available under a commercial auto policy, it is important to understand the requirements that you must meet as well as how the different types of required and optional coverages may protect you against losses.
When you or your employees operate a work vehicle, you are legally responsible for any expenses that you create for others through the use of the vehicle. This includes paying for medical expenses, lost wages related to injuries, property damage repairs and more. Liability insurance is commonly included in a commercial auto insurance policy to pay for these types of expenses, and this is the most common type of legal requirement that you may need to comply with. If your vehicle is involved in an accident, collision coverage will pay for repair work or even for a full vehicle replacement up to the limits of your policy. Comprehensive auto coverage is also available. While it offers the same collision benefits, it also goes a step further to protect you against losses related to theft, vandalism, fire, weather events and more. Many commercial vehicles carry products, supplies, equipment or other valuable items. Because of this, adding personal property coverage to a business auto policy is a smart idea in many cases.
While you may need to meet legal and lender auto insurance requirements for your business-use vehicle, you also may benefit by purchasing optional coverage and by increasing coverage limits. You should understand all potential risks that you and your employees face related to your commercial vehicles, and you also should understand how commercial car insurance works before you set up your policy.