Whether your employee is delivering food from your restaurant or driving a food truck to an event, your business faces the risk of vehicle collisions and the high costs associated with these collisions. Commercial Auto Insurance is essential for any business that owns or leases vehicles or has employees regularly use their personal vehicles for work. In most states, this coverage is legally required, and it is key to protecting your business from the rising costs related to auto accidents. 

What is Commercial Auto Insurance? 

Commercial Auto Insurance provides financial protection for your business if any of the vehicles owned or leased by your company are involved in an accident. Just like personal auto insurance, Commercial Auto Insurance is critical to protect your food and hospitality business from the costly expenses related to auto accidents and personal injury lawsuits. 

If your business is at fault for third-party bodily injury or property damage as a result of a car crash, Commercial Auto Insurance will provide funds to cover the damages. Regardless of fault, your coverage can cover medical expenses if the passengers in your vehicle are injured. Additionally, Commercial Auto Insurance covers physical damage to your vehicles from several perils including collisions, theft, vandalism, and fire. 

Example:

• While driving a company van to a wedding, one of your caterers collides with a vehicle in his blind spot. The driver of the other vehicle requires medical attention. Commercial Auto Insurance would cover damages to the vehicles, as well as the medical expenses of the injured driver and any legal fees. 

Why do food and hospitality professionals need Commercial Auto Insurance?

Commercial Auto Insurance is particularly important for food and hospitality businesses since they commonly use vehicles to provide services or travel to client locations. Food truck businesses often travel from location to location. Restaurants may have employees deliver orders to clients. Bakeries rely on vehicles to transport baked goods to stores and markets. Catering companies drive food and equipment to events. 

In every instance, a vehicle is utilized for work and as such, the business is at risk. The costs associated with lawsuits, settlements, and medical expenses from auto accidents can be extremely high. This is where Commercial Auto Insurance comes in. This coverage also protects the value of your vehicles if they are physically damaged or lost due to theft, vandalism, collisions, or other perils.

Example:

• Your employee uses the company car to deliver your bakery’s goods to a new client. While looking for directions on her phone, your employee runs a stop sign and hits a pedestrian. The pedestrian sues your business. Your insurer would cover any damages related to the lawsuit.

What does Commercial Auto Insurance cover?

Commercial Auto Insurance provides auto liability coverage and auto property coverage. Auto liability coverage protects your business if you or one of your employees is at fault for an auto accident and the incident causes injury or damage to another party. Auto property coverage, also known as physical damage insurance, protects the value of the covered vehicle itself. Both forms of coverage are important for food and hospitality businesses, especially since the rise in food delivery services has placed more employees on the road.

Commercial Auto Liability 

The liability component of Commercial Auto Insurance protects your business from liability in the case of third-party bodily injury or property damage. Your insurance policy may have separate limits for bodily injury and property damage or it may have a combined single limit (CSL) for all coverage.

Bodily injury liability financially protects your business if you or your employee is at fault for an auto accident that causes physical injury to a pedestrian, to the driver or passengers of the other vehicle, or to passengers of your own vehicle. Your insurer will provide funds for legal fees and other damages, including medical expenses, loss of income, pain and suffering, and funeral costs. Similar to personal auto insurance, there are typically “per person” and “per accident” limits of coverage.

Example:

• Your restaurant has a Commercial Auto Policy with a per person limit of $50,000 and a per accident limit of $100,000. During a food delivery, your employee rear-ends the car in front of him, causing injury to the driver and the passenger of the other car. Your coverage would pay for up to $50,000 in medical expenses and damages for each injured individual, with a maximum $100,000 total payout. 

Property damage liability protects your business if you damage the property of others while driving a covered vehicle. This includes damage to the other vehicle, as well as other types of property, such as a building, wall, or fence. 

Example: 

• While your food truck is leaving a location, the employee driving your vehicle accidentally backs the truck into a neighboring company’s fence. Your insurer would provide funds to repair the fence. 

Pollution cleanup coverage protects your business if you or your employee is at fault for an auto accident that causes the vehicle to leak pollutants. Take note that this coverage is restricted to incidents where property damage or bodily injury covered by the policy has occurred. The covered pollutant must be part of the vehicle’s normal operation (such as gasoline or motor oil). 

Example:

• After making purchases at a farmer’s market for your smoothie shop, you accidentally reverse the company car into a fruit stall. The crash causes your vehicle to leak gasoline onto the market lot. Your insurer would pay for the pollutant to be cleaned from the lot and would also provide funds to repair the damaged fruit stall. 

Commercial Auto Property

The property component of Commercial Auto Insurance protects the value of your vehicle if it is damaged or stolen. This coverage is essential in the food and hospitality industry as your vehicle may be the driving force behind your sales and day-to-day operations.

Collision coverage provides funding for physical and mechanical damage to your vehicle caused by a collision with another vehicle or object, or when the vehicle is overturned. Note that the other object or vehicle may be moving or stationary.

Example: 

• Your employee is driving a company car to make a food delivery. A soccer ball bounces into the street from the nearby park, causing your employee to swerve into a tree to avoid the ball. Your collision coverage will pay for the costs to repair the company car. 

Comprehensive physical damage provides funding for any losses to your covered vehicles that are not covered by collision coverage. This commonly includes theft, vandalism, and damages from a fire, flood, or falling object. 

Example: 

• Your catering company’s van is damaged from an intense hailstorm. Your insurer would cover the costs to repair the van. 

Specified cause of loss coverage will only cover specific risks named in your contract. This is typically a smaller range than a comprehensive coverage plan, so it will likely be less expensive. Covered causes of loss typically include theft, fire, explosion, lightning, windstorm, hail, earthquake, flood, and vandalism.

Example:

• You discover that the bumper to your catering van was stolen overnight. Because theft is a risk specifically listed in your contact, your insurer would cover the loss. 

Uninsured and Underinsured Motorist Coverage 

Uninsured and underinsured motorist coverage is essential if you or one of your employees is involved in an auto accident and the other driver (who is responsible for causing the accident) is underinsured or uninsured. This coverage is required in many states and can be added as an endorsement on your Commercial Auto Insurance policy. 

• Uninsured motorist coverage financially protects your business when you or your employee gets into an auto accident with an uninsured motorist. Note that the accident must be the other driver’s fault. Without coverage, the other driver cannot pay for any damages or injuries resulting from the collision. This is where uninsured motorist coverage comes into play. 

• Underinsured motorist coverage also protects your business when another driver causes an auto accident with your covered vehicle. In this case, the resulting damages are greater than the liability limit of the other driver’s insurance policy. Your underinsured motorist coverage would cover the difference. 

Medical Payments Coverage 

Regardless of who is at fault for the auto accident, medical payments coverage provides funds for medical and funeral expenses for the driver and the passengers in your covered vehicle. Similar to uninsured and underinsured motorist coverage, medical payments coverage can be added as an endorsement on your Commercial Auto Insurance policy. 

Are food trucks covered under Commercial Auto Insurance?

Damages or losses to your food truck would be covered by Commercial Auto Insurance. However, it should be noted that equipment, supplies, and inventory would generally not be covered. Commercial Auto Insurance policies typically cover damage to permanently attached equipment (such as stoves and burners), but it does not cover any items that are not permanently attached to the vehicle. If your food truck consists of a trailer that is towed by a vehicle, you’ll need to purchase Commercial Auto Insurance for the vehicle as well as an endorsement to cover the trailer. 

What are key exclusions to Commercial Auto Insurance?

Commercial Auto Insurance covers most instances of bodily injury or property damage, but there are several key exclusions. Relevant exclusions to the food and hospitality industry include:

Expected or intended injury. Any third-party bodily injury or property damage that is caused intentionally is excluded from coverage.

Example:

• While delivering food with the company car, your employee gets into an argument with another driver on the road who cut him off. In a fit of rage, your employee intentionally rear-ends the other vehicle. When the other driver sues, your business will not be covered by Commercial Auto Insurance because the damage to the other vehicle was done intentionally.

Workers’ compensation. If your employee is injured in a company vehicle during work, medical expenses and lost wages are not covered by Commercial Auto Insurance. Instead, they are covered by workers’ compensation insurance. 

Example:

• Your employee is delivering a cake from your bakery. A deer suddenly jumps onto the road and your employee accidentally swerves into a light post while trying to avoid the deer. She suffers a number of injuries and ends up with a massive hospital bill. Workers’ compensation insurance will cover her medical expenses as well as a portion of her lost income while she is recovering and unable to work.

Pollution. Damages caused by pollutants that escape from or are released from your vehicle are excluded from coverage. It is important to note that this exclusion does not apply to fuels, lubricants, fluids, and other pollutants that are needed for or result from the mechanical functioning of the vehicle (such as gasoline).

Example: 

• During a vehicle collision, the paint supplies that you were going to use for your new restaurant are ejected out of your car. Pollution cleanup coverage covers damage from spilled pollutants that are part of the vehicle’s normal operation. Since the paint, paint thinner, and other solvents that spilled are not covered pollutants, any damage they cause will not be covered under Commercial Auto Insurance.

What is hired and non-owned auto insurance? 

If your employees drive their personal cars for business purposes and cause a car crash, hired and non-owned auto insurance can cover bodily injury, property damage, and legal costs that arise. You may have employees use their personal cars to make food deliveries, drive to client locations, or run errands for your business, and if they are found to be at-fault for a car accident, your business may be held liable. Hired and non-owned auto insurance can provide coverage on a secondary basis, after the limits of your employee’s personal auto insurance is exhausted. 

It’s important to note that hired and non-owned auto insurance provides coverage only for third-party injury or damage. Your employee would still be responsible for their own injuries and for damages to their vehicle. This may be covered by personal auto insurance or workers’ compensation insurance. 

Hired and non-owned auto insurance can be added as an endorsement to your Commercial Auto Insurance policy. If you do not have Commercial Auto Insurance, hired and non-owned auto insurance can be added as an endorsement to your general liability insurance. 

Pricing and Quotes

The premiums for a Commercial Auto Insurance policy vary widely and depend on a number of factors. While most small businesses will pay less than $2,500 per vehicle per year, there is a great deal of variance.

Factors that may influence your premium include:

• Number of vehicles
• Make, model, and age of vehicles,
• Cost of vehicles
• Primary use of vehicles
• Driving history
• Claims history
• Coverage limits and deductibles

For many businesses, a minimum of $500,000-$1 million in commercial auto liability is appropriate. To supplement this liability, a commercial umbrella policy may also be appropriate to provide strong protection for your business.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer Commercial Auto Insurance:

Provider	Commercial Auto	Hired & Non-Owned Auto	Uninsured & Underinsured Motorist
CoverageSmith	✔️	✔️	✔️
CoverWallet	✔️	✔️	✔️
Hiscox	✔️	✔️	✔️

Final Word 

The food and hospitality industry relies heavily on vehicles to operate and provide services. This is why Commercial Auto Insurance is particularly important for these businesses as it can protect your company from the costly expenses related to auto accidents and personal injury lawsuits. If your employees utilize their personal vehicles for work purposes, make sure your business is financially protected with hired and non-owned auto coverage. There is no telling if and when your business will be involved in an auto accident, so make sure you keep safety at the forefront with Commercial Auto Insurance in place.