Auto Liability Insurance: Coverage For Commercial Vehicles

Commercial auto insurance is a type of insurance that covers vehicles used for business purposes. It's a contract between the policyholder and their insurance company, outlining how the company will compensate for financial losses in the event of an accident or other problems covered by the policy. Commercial auto insurance covers a range of vehicles, from company cars to commercial trucks and vans, and even food trucks. It typically includes liability protection for people and property, as well as coverage for the policyholder, their passengers, and their vehicle.

Bodily injury liability insurance

In the unfortunate event of an accident, Bodily Injury Liability insurance will cover the medical bills of the injured party, including hospital and medical expenses, as well as long-term nursing care if necessary. This ensures that the injured individual receives the treatment they need without the policyholder having to worry about the financial burden.

Moreover, this type of insurance also provides legal protection for the policyholder. If a lawsuit arises from the accident, the insurance will cover the legal defence costs, shielding the business from potentially devastating financial consequences. This aspect of the insurance is particularly valuable, as legal fees can quickly escalate and become a significant drain on a company's resources.

When selecting a Bodily Injury Liability insurance policy, it is important to understand the concept of limits. Limits refer to the maximum amount that the insurance company will pay out if the policy is used. These limits can be set as split limits or a combined single limit (CSL). Split limits provide a maximum payment per person and a separate maximum payment for all injuries in an accident. On the other hand, a CSL offers a single maximum payment that covers all medical and injury-related bills, as well as property damage expenses, resulting from a single accident caused by the policyholder.

It is worth noting that the requirements for Bodily Injury Liability insurance may vary depending on the state and the nature of the business. For instance, truckers operating under their own authority need this type of insurance to obtain certain filings. Additionally, each state sets its own minimum limits for the amount of coverage required, so it is important for businesses to ensure they comply with the relevant regulations.

Property damage liability insurance

When choosing a property damage liability insurance policy, consider factors such as whether you own a home or other expensive items, whether you travel in high-traffic areas, and whether there are many expensive vehicles in your area. You may want to opt for a higher limit for this coverage to ensure you're adequately protected in the event of an accident.

In the event that the cost of damages exceeds the amount of your coverage, you will be responsible for the remaining cost. Therefore, it's crucial to ensure you have sufficient coverage to protect yourself in case of an accident.

Medical payments coverage

MedPay is not available in all states, and in some states, it is mandatory. It is important to check with your insurance provider to understand the specific requirements and coverage offered in your state. When purchasing MedPay, you must select a limit, which determines the maximum amount your insurance company will pay out for each person involved in an accident. This limit typically ranges from \$1,000 to \$5,000 per person.

For example, if you choose a \$2,000 MedPay limit and you and your passenger are injured in an accident, your insurance will cover medical expenses up to \$2,000 per person. If your expenses exceed this limit, you will be responsible for the remaining costs.

MedPay also covers you as a pedestrian if you are injured by a vehicle. It is a valuable addition to your commercial auto insurance policy, providing financial protection for you and your loved ones in the event of unforeseen circumstances.

Uninsured/underinsured motorist coverage

• Uninsured Motorist Bodily Injury (UMBI): This coverage ensures that medical bills for both you and your passengers are covered if you are hit by a driver without insurance. It also applies in hit-and-run situations. UMBI is crucial as it shields your business from the financial burden of medical expenses resulting from another driver's negligence or lack of insurance.
• Uninsured Motorist Property Damage (UMPD): UMPD comes into play when an uninsured driver damages your vehicle. It helps repair or replace your commercial vehicle, ensuring your business operations are not disrupted due to the actions of an uninsured driver.
• Underinsured Motorist Bodily Injury (UIMBI): This coverage is similar to UMBI but focuses on the scenario where the at-fault driver has insufficient insurance to cover the injuries sustained by you and your passengers. UIMBI fills the gap, ensuring that your business doesn't bear the financial burden of another driver's inadequate insurance coverage.
• Underinsured Motorist Property Damage (UIMPD): UIMPD addresses situations where a driver with insufficient insurance coverage damages your vehicle. It helps repair or replace your commercial vehicle, mitigating the financial impact on your business caused by an underinsured driver.

The availability and specific requirements of these uninsured/underinsured motorist coverages may vary depending on your state and insurance provider. It is important to review the details of your commercial auto insurance policy to understand the extent of your protection in these scenarios.

While not all states mandate uninsured/underinsured motorist coverage, it is highly recommended for all businesses operating vehicles. Without this coverage, your business could be vulnerable to significant financial losses in the event of an accident with an uninsured or underinsured driver.

Comprehensive insurance

It is important to note that comprehensive insurance does not cover every possible scenario. For example, it will not cover the cost of repairs if your vehicle breaks down due to a mechanical issue. In such cases, roadside assistance coverage would be more applicable. Additionally, comprehensive insurance does not typically cover the contents inside your vehicle, such as tools or equipment, in the event of damage or theft. To ensure these items are covered, you may need to add inland marine insurance to your general liability policy.

Frequently asked questions