Business Auto Insurance: What Does It Cover?

Business auto insurance is a type of insurance that covers vehicles used by a business, whether they are owned by the business, leased, or owned by employees. It is also known as a Business Automobile Policy (BAP) or Business Auto Coverage Form (BACF). This type of insurance is designed to cover vehicles used for commercial purposes and is more extensive than standard commercial auto coverage. It provides coverage for property damage, bodily injury claims, and liability claims. It is important to note that personal auto insurance policies typically do not cover business-related incidents, so it is crucial for businesses to have separate business auto insurance to ensure they are protected in the event of an accident or incident.

Collision coverage

When purchasing collision insurance, you must select a deductible, which is the amount you agree to pay out of pocket when filing a claim. It's important to choose a deductible that you can comfortably afford at any time. Additionally, you will need to provide a stated amount, which is your best estimate of the current value of your vehicle, taking into account factors such as age, condition, and any permanently attached equipment.

Commercial auto insurance policies often include collision coverage, providing protection for business vehicles owned by the company or used for business purposes. This ensures that repair costs are covered in the event of a collision, helping to keep the business operational and reducing potential financial losses.

Comprehensive coverage

It's important to note that comprehensive coverage does not cover damage to other vehicles or people. It also does not cover damage caused by potholes or acts of war. Additionally, it does not cover any personal items stolen from your vehicle.

Medical payments

When setting up a commercial auto insurance policy, you must choose the maximum coverage limits for medical payments. The maximum coverage amount selected is on a per-person basis. For example, if you select $30,000 as your medical payments limit, the insurance policy will pay up to $30,000 in accident-related injury bills for each person travelling in your vehicle.

MedPay covers numerous healthcare expenses and medical treatments that your car insurance company might not cover after an accident. This includes emergency room visits, X-rays, surgery, ambulance costs, chiropractic bills, rehabilitation, and some medical devices, such as prostheses.

MedPay is an optional form of auto insurance that typically covers the policyholder, family members driving the car, and any passengers. It is available in some states and not others. It is usually unnecessary to purchase MedPay if you are carrying personal injury protection (PIP) insurance, as it offers broader coverage. However, if your state does not offer PIP insurance, then you should strongly consider buying MedPay.

Liability insurance

Bodily Injury Liability Coverage

This aspect of liability insurance covers the medical expenses of individuals injured in an accident caused by you or your employees while driving a company vehicle. It includes payments for medical treatments, rehabilitation, dental care, and, in the unfortunate event of a fatality, funeral costs. This coverage is essential in mitigating the financial impact on your business in the event of a serious accident involving injuries.

Property Damage Liability Coverage

Property damage liability insurance covers the costs of repairing or replacing another person's property damaged by your company vehicle. This includes damage to other vehicles, buildings, or any other type of property. For example, if your employee crashes into a fence or telephone pole, this coverage will pay for the repairs. It is important to note that this coverage only applies if your business or employee is found to be at fault for the accident.

Uninsured/Underinsured Motorist Coverage

This aspect of liability insurance comes into play when the other driver involved in the accident doesn't have enough insurance coverage or is uninsured. It helps cover the medical expenses or vehicle repair costs for you or your employees in such situations. This type of coverage is particularly important because, according to the Insurance Information Institute (III), about one in eight drivers in the United States is uninsured.

Hired and Non-Owned Auto Insurance

Hired and non-owned auto insurance provide liability coverage for accidents that occur while your employees are driving their own or leased vehicles for business purposes. For example, if an employee is involved in an accident while driving their car to a client meeting or running business errands, this coverage will protect your business from legal and financial consequences. It is worth noting that this type of coverage does not pay for damages to the employee's personal or leased vehicle.

Drive Other Car Coverage

This type of liability insurance covers your business executives and their spouses when they drive vehicles that are not listed on your commercial auto insurance policy. It ensures that your business is protected even when your executives are driving rental cars or personal vehicles for business-related activities.

Uninsured motorist coverage

• A driver with no liability insurance.
• A hit-and-run driver.
• A driver whose insurance company denies coverage or goes out of business.

• Medical expenses for you and your passengers.
• Lost wages if you are unable to work due to injuries from the accident.
• Pain and suffering compensation.
• Funeral expenses, in the unfortunate event of a fatality.

In some states, you can also purchase Uninsured Motorist Property Damage (UMPD) coverage, which pays for repairs to your vehicle if it is damaged by an uninsured driver. It is important to note that UMPD may not be available in all states, and even in states where it is offered, it may not cover hit-and-run accidents.

Underinsured Motorist Coverage

Underinsured motorist (UIM) coverage is similar to UM coverage but applies when the at-fault driver has insufficient insurance to cover all the costs of the accident. UIM coverage pays for medical bills and other related expenses when the other driver's insurance is insufficient. In some cases, UIM coverage may be packaged with UM coverage, providing a more comprehensive safety net.

According to the Insurance Research Council, about one in eight drivers is uninsured. This means that there is a significant chance of being involved in an accident with an uninsured or underinsured driver. Without uninsured motorist coverage, you could be left with substantial out-of-pocket expenses, including medical bills, lost wages, and vehicle repairs. By including this coverage in your business auto insurance, you can have peace of mind knowing that you and your passengers are protected in the event of an accident, regardless of the other driver's insurance status.

Frequently asked questions