Commercial Auto Insurance is an indispensable coverage for cleaning services businesses that make use of company vehicles. Auto insurance is legally required in most states, and it can protect your company from the significant costs and liabilities associated with vehicle collisions.

What is Commercial Auto Insurance?

Commercial Auto Insurance protects your business from financial losses if vehicles owned or leased by your company are involved in accidents. Like personal auto insurance, Commercial Auto Insurance is a critical coverage as car accidents are common and personal injury lawsuits can be incredibly costly. If anyone at your company is at fault for a collision while driving a company car and causes bodily injury or property damage to a third party, your insurer will provide funds to cover damages. Commercial Auto Insurance also protects the value of your company vehicles against hazards such as theft, vandalism, collisions, and more.

Example:

• You own a commercial cleaning business, and one of your cleaning crews is on route to a client’s offices with one of the company vans. The driver of the van is distracted by a cell phone call and fails to see a “no left turn” sign. He crashes the van into another oncoming vehicle, and the driver of the other vehicle is badly injured. Commercial Auto Insurance would cover medical costs for the injured driver as well as any physical damages to the cars involved in the crash.

Who needs Commercial Auto Insurance?

Any company that owns or leases vehicles will likely need Commercial Auto Insurance since most states require a minimum level of liability coverage for all vehicles. Since cleaning companies commonly use company vehicles to provide their services, this is a particularly important coverage to obtain. Owning and operating vehicles opens you up to substantial liability, and if you are involved in an auto collision, you could be required to pay for costly lawsuits, settlements, and medical expenses. A large auto claim or multiple smaller accidents could rapidly prove financially unsustainable for your company without sufficient coverage.

Insurance companies are able to provide coverage for a range of situations, from companies with only one vehicle to large fleets. Cars, vans, trucks, and other specialized vehicles can all be covered.

What does Commercial Auto Insurance cover?

Commercial Auto Insurance includes two main types of coverage: auto liability coverage, which protects your company if it’s at fault in an accident that causes bodily injury or property damage, and auto property coverage or physical damage coverage, which protects the value of the vehicle itself.

Commercial Auto Liability Coverage

Commercial auto liability coverage protects against three areas of damage: bodily injury, property damage, and pollution cleanup. If an employee of yours is involved in an accident with a company vehicle and causes third-party damage of this nature, liability coverage will provide funds to cover legal expenses, medical bills, and other damages.

Bodily Injury Liability. If you or your employee is at fault in an accident while driving a company vehicle, bodily injury liability would cover any third parties who are injured. Coverage could include passengers in the covered vehicle, occupants of other vehicles, and pedestrians. Your insurer would cover expenses including medical bills, legal fees, lost income, pain and suffering, and funeral costs.

Example:

• While reversing a company vehicle out of a parking spot, an employee of your cleaning company knocks down a passing pedestrian. The pedestrian suffers a fractured arm. Your insurer would pay for the pedestrian’s medical expenses and lost income.

Property Damage Liability. If you damage others’ property while driving a covered vehicle, property damage liability would provide coverage. This could include other vehicles and property such as a building or wall.

Example:

• Your window cleaning company is hired to clean all of the large office windows at a small commercial building. An employee of yours accidentally drives the company truck into a support pillar in the underground parking garage of the building, damaging it. Your insurer would pay for repairs.

Pollution Cleanup. If a covered vehicle is at fault in an accident that causes bodily injury or property damage, and the accident also causes pollutants to leak, your insurer would pay for cleanup. It’s important to note that this coverage only applies in situations where the covered vehicle leaks pollutants that are part of the vehicle’s normal operation, such as gasoline or motor oil.

Example:

• An employee at your carpet cleaning business accidentally backs the company van into a client’s fence, knocking it down. The collision causes the van to leak coolant and oil into the client’s yard. The insurer would pay for the pollutants to be cleaned up as well as pay for the fence to be repaired.

Commercial Auto Property Coverage

Commercial auto physical damage coverage protects the value of your vehicle if it is damaged or stolen. This portion of Commercial Auto Insurance includes collision coverage as well as either comprehensive or specified causes of loss coverage.

Collision. Collision coverage will pay for damages if your company’s vehicle is damaged in a collision with another vehicle or object, or if it is overturned. Collisions with stationary objects such as fences, walls, or trees are covered as well as collisions with other vehicles.

Comprehensive Coverage. Comprehensive coverage will pay for any losses to your vehicle that are not covered by collision coverage, such as theft, vandalism, falling objects, fire, or flood.

Specified Causes of Loss Coverage. Specified causes of loss coverage is a more restrictive option compared to comprehensive coverage. Rather than covering a broad range of possible risks, it only covers specific risks named in the contract. Covered causes of loss typically include:

• Theft
• Fire, lightning, or explosion
• Windstorm, hail, or earthquake
• Flood
• Mischief or vandalism
• The sinking, burning, collision, or derailment of any vehicle transporting the covered vehicle

Uninsured and Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage protects your business if one of your employees is involved in an accident with an underinsured or uninsured driver. Although most states require drivers to have liability insurance, not everyone complies or purchases enough coverage.

Uninsured motorist coverage protects you if your vehicle is involved in an accident caused by an uninsured driver who is unable to pay for damages. Underinsured motorist coverage protects you if another driver is at fault in a collision and the resulting medical expenses are greater than the liability limit of the at-fault driver’s insurance policy.

What are the key exclusions to Commercial Auto Insurance?

Commercial Auto Insurance covers most instances of bodily injury or property damage, but there are a number of key exclusions.

Common exclusions to liability coverage include:

• Expected or intended injury
• Pollution
• Racing
• War, insurrection, or rebellion

Excluded causes of loss for physical damage coverage include:

• War or military action
• Nuclear hazard
• Racing, demolition contest, or stunting activity
• Wear and tear, freezing, mechanical or electrical breakdown
• Blowouts, punctures, or other road damage to tires
• Diminution in value

What is hired and non-owned auto insurance?

Hired and non-owned auto insurance covers incidents that occur when your employees drive their personal vehicles or rented vehicles for work purposes. This is an essential type of coverage to consider if employees of your cleaning services company drive their own vehicles to travel to locations where they will be working, as well as if any of your staff run business errands using personal vehicles. If your employee is at fault in an accident while driving for business reasons and their personal insurance is not enough to cover the claim, your company could be held liable.

It’s important to understand that this coverage is limited to third-party property damage and bodily injury. Injuries to employees themselves would be covered by workers’ compensation insurance, the medical payments portion of personal auto insurance, or personal health insurance. Damage to the employee’s car would be covered by the employee’s personal auto policy.

If your company has Commercial Auto Insurance, hired and non-owned auto insurance can commonly be added as an endorsement to your policy. If your employees drive for work purposes but your company does not own vehicles and does not need Commercial Auto Insurance, it’s possible to purchase hired and non-owned auto coverage separately or add it as an endorsement on your general liability or business owner’s policy.

Final Word

As a cleaning services company, Commercial Auto Insurance is a particularly critical coverage, since it’s common for companies in this industry to own or lease work vehicles. As well as being legally required in most states, Commercial Auto Insurance can protect your company from the considerable financial losses that could result if your vehicle is involved in an accident or damaged by other hazards. Even if your employees drive their own vehicles to work locations, it’s important to make sure that you have the correct insurance coverage. Hired and non-owned auto coverage can protect you from lawsuits that may result if your employees are at fault in an accident while driving their own car as part of their job. Commercial Auto Insurance can provide financial protection from costly lawsuits and settlements, allowing your company to continue functioning if an incident occurs.