Commercial Auto Insurance protects your business from the financial consequences of auto accidents involving company vehicles.
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If your IT company owns or leases vehicles, or if your employees regularly use their own vehicles for work purposes, it’s crucial to consider Commercial Auto Insurance. Auto insurance is legally required in most states, and it can protect your company from the significant costs associated with vehicle collisions. If you or one of your employees is at fault in an accident that causes bodily injury or property damage, settlement costs could be high. Injuries can be severe and require costly, ongoing care, and vehicles are increasingly difficult to repair because of their growing mechanical complexity. It’s important to financially protect your company by purchasing sufficient Commercial Auto Insurance coverage.
What is Commercial Auto Insurance for IT Professionals?
Commercial Auto Insurance protects your business against the financial consequences of auto accidents involving company vehicles. If you or your employees are at fault in an accident while driving a company car, Commercial Auto Insurance will pay for any resulting third-party bodily injury or property damage. Commercial Auto Insurance also covers your vehicles if they are physically damaged or lost due to theft, vandalism, collisions, or other perils.
- While driving a company van, one of your computer repair service employees becomes distracted and rear-ends another vehicle. Your insurer would pay for the damages to both vehicles.
Who needs Commercial Auto Insurance?
If your company owns or leases vehicles that are titled under the name of the business, you will likely need Commercial Auto Insurance, as most states require a minimum level of liability coverage for all vehicles. Owning and operating a motor vehicle opens your business up to significant liability, and the cost of dealing with lawsuits can be financially draining. For small businesses, in particular, the legal expenses and settlement costs involved in auto claims have the potential to put you out of business.
There are a variety of auto policies available that can cover a range of situations, from small businesses with only one vehicle to companies with large fleets. Commercial Auto Insurance covers many types of vehicles, including those that aren’t typically covered under personal policies, such as large trucks, but most IT companies are likely to only need coverage for cars, SUVs, or vans.
What does Commercial Auto Insurance for IT Professionals cover?
Commercial Auto Insurance includes liability and property components. The liability component covers your company if it’s at fault in an accident that causes bodily injury or property damage, while the property component covers the value of the vehicle itself.
Commercial Auto Liability Coverage
The liability portion of Commercial Auto Insurance generally covers three types of damages caused by an accident in a covered vehicle: bodily injury, property damage, and pollution cleanup. Some insurance policies will have separate limits for bodily injury and property damage, while others have combined single limit (CSL) liability, which combines coverage with a single limit.
Bodily Injury Liability. If you or your employee is at fault in an accident while driving a covered vehicle, your bodily injury liability will cover injuries to your passengers, the occupants of other vehicles, or pedestrians. Covered expenses include medical bills, legal fees, lost income, pain and suffering, and funeral costs.
- Example: While driving to a work site, an employee of your telecom cabling installation company runs a stop sign and hits a pedestrian who was crossing the street. The pedestrian is knocked down and suffers a concussion. Your insurer would pay for the pedestrian’s medical expenses and lost income.
Property Damage Liability. Property damage liability covers you if you cause damage to others’ property while driving a covered vehicle. Covered property includes vehicles and other property, such as walls or fences.
- Example: While running an errand in a company car, an employee of your IT consulting company accidentally reverses into a fence, damaging it. Your insurer pays for repairs to the fence.
Pollution Cleanup. If you or your employee is at fault in an accident that causes the covered vehicle to leak pollutants, your insurer will pay for cleanup costs. This coverage only applies in situations where property damage or bodily injury covered by the policy has occurred. It covers pollutants that are part of the vehicle’s normal operation, such as gasoline, motor oil, or coolant. Pollution cleanup coverage also applies in situations where pollutants are released due to a covered vehicle damaging, upsetting, or overturning a container holding the pollutants.
- Example: One of your IT consulting company’s employees skids on an icy road and drives into a wall on another company’s property, damaging it. The accident causes the car’s gas tank to leak into the yard. Your insurer would pay for the gasoline to be cleaned up.
Commercial Auto Physical Damage Coverage
Commercial auto physical damage coverage protects the value of your vehicle if it is damaged or stolen. There are three forms of physical damage coverage: collision, comprehensive, and specified causes of loss.
Collision. Collision coverage will pay for damage to your vehicle if it is involved in a collision with another vehicle or object, or if your vehicle is overturned. Collisions can happen with other vehicles or stationary objects like trees, buildings, and more.
- Example: While driving a company car to a conference at which he will be working, one of your web developers loses control of his car and crashes into a tree. Your insurer will pay for repairs.
Comprehensive Coverage. Comprehensive coverage will pay for damage to your vehicle that is not caused by a collision, such as theft, vandalism, falling objects, fire, or flood.
- Example: Your company car is damaged by a severe hailstorm while parked in the company parking lot. Your insurance would pay for repairs.
Specified Causes of Loss Coverage. Specified causes of loss coverage is a more limited alternative to comprehensive coverage. Instead of covering a broad range of risks, it covers only specific risks named in the contract. Because it provides a smaller range of coverage, it is usually less expensive than comprehensive coverage. Covered causes of loss typically include:
- Fire, lightning, or explosion
- Windstorm, hail, or earthquake
- Mischief or vandalism
- The sinking, burning, collision, or derailment of any vehicle transporting the covered vehicle
Uninsured and Underinsured Motorist Coverage
Many states require you to have uninsured and underinsured motorist coverage. This coverage can be added as an endorsement to your Commercial Auto policy and protects your company if one of your employees is involved in an accident with an uninsured or underinsured motorist.
Uninsured motorist coverage protects you if your vehicle is involved in an accident caused by an uninsured driver. Because the other driver does not have insurance, they may not be able to pay for any injuries to the occupants of your vehicle resulting from the crash. In this situation, uninsured motorist coverage would step in to provide coverage.
Underinsured motorist coverage protects you if your employee is not at fault in a collision, but the resulting costs for medical expenses exceed the liability limit of the at-fault driver’s insurance. Many drivers purchase the minimum amount of insurance required by law in their state. If your employee suffers serious injuries, this may not be enough to cover their medical costs. Underinsured motorist coverage would step in to cover the difference.
- One of your network security company’s employees is driving to a client’s offices in a company car. Another car runs a red light and crashes into your employee’s car. The other driver’s insurance has a limit of $15,000 per person for bodily injury, but your employee’s medical costs are $30,000. Underinsured motorist coverage will pay for the remaining $15,000.
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
- 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 protects your company if you or your employees are at fault in an accident while driving a vehicle that is used for business purposes but isn’t owned by your business. If your employees drive their personal vehicles for work purposes, such as visiting clients or running business errands, or rent cars while traveling for business, you may need this type of insurance. If your employee causes an accident while driving for business purposes and their personal insurance is not enough to cover the claim, your company could be held liable.
This type of insurance only covers third-party property damage and bodily injury. It does not cover the employee involved in the accident; workers’ compensation, medical payments coverage in personal auto insurance, or personal health insurance should cover injuries to the employee. Damage to the employee’s car would be covered by the employee’s personal auto policy.
Hired and non-owned auto insurance can be added as an endorsement to your Commercial Auto Insurance policy. If your company does not need Commercial Auto Insurance, you can purchase hired and non-owned coverage separately or add it as an endorsement on your general liability or business owner’s policy.
- A salesperson for your software development company runs a red light and collides with another car while driving to a meeting with a client. The driver sues the employee and employer for damages. The salesperson’s personal auto insurance would be the primary coverage and cover damages and claims against the employee. Hired and non-owned auto insurance would serve as excess insurance and cover any legal fees and damages not met by the employee’s personal insurance, as well as any claims against the company itself.
If your IT company owns or leases vehicles, Commercial Auto Insurance is an important consideration. Not only is it legally required in most states, but it can also protect your company from significant financial losses if your vehicle is involved in an accident or damaged by other perils. It’s also necessary to make sure you have the correct coverage for personal or rental vehicles that are used for work purposes. Hired and non-owned auto coverage can protect you in those cases. Commercial Auto Insurance can provide financial protection from costly lawsuits and settlements, and for any company that relies on vehicles for business purposes, it is a critical coverage to obtain.