Commercial Contractor Auto Insurance: Do Your Policies Cover Children?

Commercial auto insurance is a type of insurance that covers vehicles used for business purposes beyond the coverage offered by a personal auto insurance policy. It is designed to protect business vehicles and their owners from financial losses due to accidents, theft, damage, and liability claims. This type of insurance is particularly relevant for contractors who rely on their vehicles to travel to customers and transport equipment. While commercial auto insurance covers employees driving company-owned vehicles, it does not typically extend to their children. However, personal auto insurance policies may cover children under their parents' policy, depending on their age, driving status, and residence.

Commercial auto insurance for contractors: what's covered?

Commercial auto insurance is a necessity for contractors who own or lease vehicles under their business name. This type of insurance provides financial coverage for accidents, theft, and property damage, much like personal auto insurance. However, it is tailored to meet the unique needs of contractors, who often rely heavily on their vehicles for travelling to job sites and transporting equipment.

Commercial auto insurance has both liability and property components. The liability component protects your business if it is found to be at fault for causing a crash and covers bodily injury or damage to someone else's property. The property component protects the value of your vehicle against crashes, theft, and other perils.

Commercial auto insurance can be customised to fit the specific needs of a contracting business. For example, a plumber's van that is rarely used may require less coverage than a painter's car that is driven daily.

Bodily Injury Liability

This covers injuries caused by the insured driver to someone else. Most states require all registered vehicles to have a minimum level of bodily injury liability coverage. This includes medical expenses, legal fees, loss of income, pain and suffering, and funeral costs.

Personal Injury Protection (PIP)

PIP covers medical care for the driver and passengers of the insured vehicle. It may also cover lost wages and funeral costs.

Comprehensive Coverage

This covers damage to or theft of the car itself that occurs due to something other than a vehicular accident, such as natural disasters or falling objects.

Collision Coverage

This pays for damage to your vehicle if it is damaged by another vehicle or a rollover, regardless of who is at fault.

Guaranteed Asset Protection (GAP) Coverage

In the event of an accident that totals your car, GAP coverage pays you the difference between the amount you owe and the cash value of the vehicle.

Uninsured and Underinsured Motorist Coverage

This coverage pays for your injuries and damages if you are hit by an uninsured, underinsured, or unknown driver. Some states require this coverage, and it may cost more in states with a higher number of uninsured drivers.

Medical Payments Coverage

This is a no-fault coverage that provides payments for medical and funeral expenses for the driver and passengers in the insured vehicle, regardless of who is at fault for the accident.

Who Needs Commercial Auto Insurance?

Any independent contractor or self-employed professional who owns a vehicle registered to their business needs commercial auto insurance. This is particularly important for professions where driving is integral, such as healthcare facilities, human and social services, and professional services.

If you use your personal vehicle for work-related purposes, such as visiting job sites, transporting clients, or carrying work tools, you may need to consider hired and non-owned auto insurance (HNOA) in addition to your personal auto insurance. HNOA offers liability protection for self-employed individuals and small business owners when they use their own vehicles for work.

Commercial vs. personal auto insurance

Commercial and personal auto insurance policies differ in several key ways. Firstly, commercial auto insurance is necessary when a business owns the vehicle. This type of insurance covers the business, its employees, and even personal errands. In contrast, personal auto insurance is designed for individuals and covers their morning commute but not accidents that occur while working.

Another distinction is the scope of coverage. Commercial auto insurance usually covers higher claims, different types of vehicles, and more complex legal issues. It often includes all employees of the business as additional insureds, meaning any employee with a valid license can drive the company vehicle. The cost of commercial auto insurance is influenced by factors such as employee driving records, policy coverage limits, and deductibles.

Personal auto insurance, on the other hand, typically covers the owner of the vehicle and one or two immediate family members. It is important to note that personal auto insurance policies almost always exclude business use, meaning accidents that occur while driving for work (except during a commute) may not be covered.

The type of vehicle is also a factor in determining the need for commercial or personal auto insurance. If the vehicle is heavier than a standard pickup or SUV, such as a dump truck or semi-truck, commercial auto insurance is often required. These vehicles can cause more damage in an accident and may need specialised coverage.

Additionally, if your business requires higher liability limits, commercial auto insurance is generally the way to go. Commercial policies typically offer higher liability limits than personal policies, which is important if your business has specific insurance requirements.

For sole proprietors or small businesses, the line between a personal and commercial vehicle can be blurry. If you occasionally use your personal vehicle for work, such as travelling to job sites or transporting equipment, you may want to consider hired and non-owned auto insurance (HNOA). This type of policy provides liability coverage if you get into an accident while using your personal vehicle for work purposes.

In summary, the main factors to consider when choosing between commercial and personal auto insurance include vehicle ownership, the purpose of the vehicle, the type and weight of the vehicle, and the required liability limits. It's important to review your specific needs and choose the policy that best suits your situation.

When to add/remove children from a policy

When to add/remove children from a car insurance policy:

Adding Children to a Policy

It is recommended to add children to a car insurance policy when they are old enough to drive. Anyone with a learner's permit has automatic coverage under a family policy. Once they gain a full driver's license, they will need to be added to the policy.

Removing Children from a Policy

There are several reasons why you may want to remove a child from your car insurance policy. These include:

• They no longer live at your home address.
• They are covered under another insurance policy.
• They have their own vehicle.

However, it is important to note that some insurance companies require all household members of driving age to be listed on the policy, especially if they operate the vehicle occasionally. In this case, you may need to list them as an "excluded driver".

Timing

The timing of removing a child from a car insurance policy depends on various factors, including the child's driving record, maturity, and financial situation. It is generally recommended to wait until the child has moved out and/or purchased their own vehicle and insurance policy.

Additionally, insurance companies do not put a cap on the age of a child that can be listed on a policy. As long as the child lives in the same household, they can remain on the policy.

Process

The process of removing a child from a car insurance policy typically involves contacting the insurance company and providing any required documentation, such as proof of the child's new address or insurance policy.

How to get covered as a young driver

While commercial contractor auto insurance is not specifically mentioned, it is likely that children are covered under their parents' auto insurance policies. However, it is important to list children as drivers on insurance policies to ensure coverage in case of an accident. Failure to do so may result in denied claims.

• Add them to an existing policy: It is usually cheaper to add a young driver to an existing insurance policy than to purchase a separate policy. By adding a young driver to a parent's policy, they can benefit from any savings and lower rates that the parent may have earned as a longtime driver. Additionally, the young driver will be insured to drive all the vehicles listed under the parent's policy.
• Shop around for the best rates: Compare quotes from multiple insurance providers to find the most affordable option. Request quotes from a mix of national and regional insurers to ensure you are getting the best price and policy for your needs.
• Ask about discounts: Many insurance companies offer discounts for young drivers who are students and/or have good grades. For example, maintaining a "B" average or better in high school can often lead to a discounted policy. Additionally, completing a driver's education course or a defensive driving course can also result in discounts.
• Assign the right car: Insurance premiums are based, in part, on the car that is being covered. Giving a young driver an older, more affordable car with good safety features can help reduce premiums. Ideally, the vehicle should have airbags, anti-lock brakes, power steering, and a seatbelt alarm.
• Use technology: Adopting specific technology, such as a telematics app or device, can generate valuable data about a young driver's driving habits and lead to discounts on insurance premiums.
• Review your coverage and deductible: Consider raising the deductibles on full-coverage vehicles or dropping full coverage altogether for older vehicles to help reduce premium costs. Just remember that the deductible is the amount you are responsible for paying before the insurer starts covering costs.

Auto insurance for contractors: state requirements

Commercial auto insurance is a requirement for contractors in every state. This type of insurance covers vehicles owned by a business, or those registered to a business, and is necessary for compensating someone in the event of an auto accident. Commercial auto insurance covers legal bills, medical expenses, and property damage.

Commercial auto insurance is necessary for contractors because their work often requires travel to customers to offer services such as plumbing, electrical work, and construction. This means that contractors rely heavily on their vehicles to carry equipment to and from job sites.

While personal auto insurance may cover a work vehicle, it often isn't enough to provide full protection. Commercial auto insurance offers more extensive coverage, including protection against theft, damage, and liability (particularly third-party liability). It also covers vehicles during all business activities, such as transporting commercial goods and equipment, which personal insurance typically doesn't cover.

Some common coverages included in commercial auto insurance are:

• Bodily injury liability
• Personal injury protection (PIP)
• Comprehensive coverage
• Collision coverage
• Guaranteed asset protection (GAP) coverage
• Uninsured and underinsured motorist coverage

In addition to commercial auto insurance, contractors may also need other types of insurance, such as property insurance to protect their equipment and general liability insurance to cover medical or property damage costs resulting from their work.

Frequently asked questions