Insurance Frequently Asked Questions: Business Auto Insurance

If you own a business that relies on motor vehicles in order to operate the business, your vehicles should be titled in the business name and covered on a business auto policy. Every vehicle on the road must be covered for the minimum state-required coverage. Liability is compulsory for the majority of states. Federal law requires businesses that move goods or individuals across state lines have certain limits of liability insurance in place to operate.

You may need commercial auto insurance for vehicles:

⇒ Used for business.

⇒ Carry a commercial license plate or tag.

⇒ Over 10,000 pounds gross vehicle weight (GVW)

⇒ Box Trucks

⇒ Carrying passengers for a fee

⇒ Tow trucks

If your business and its personnel frequently use vehicles for business-related tasks, you should consider getting commercial auto coverage. These tasks could be:

⇒ Delivering goods

⇒ Going on sales calls

⇒ Taking packages to a shipper

⇒ Transporting equipment to job sites

Perform services like tree trimming using vehicle-mounted equipment

You may need specialized coverage if you utilize a vehicle for certain activities, such as:

⇒ Acting as a chauffeur, taxi or limo service

⇒ Transporting flammable or hazardous materials

⇒ Carrying equipment

⇒ Towing vehicles

⇒ Trucking and moving freight

⇒ Moving household or office goods

A business policy typically covers the personal use of a business vehicle, though it is frowned upon by most underwriters. If a business owner has all of the family’s vehicles on a business auto policy, there is coverage that you get with a personal auto policy that needs to be endorsed onto a commercial auto policy, it is not automatically included.  This coverage is not usually needed when there is at least one personal auto policy in the household. Check with your agent to determine if you need extended coverage on a business auto policy.

Commercial vehicle insurance is required to protect the vehicles, trucks, and vans you routinely use during business operations. Insurance for large fleets and small fleets must be insured with commercial auto insurance. A commercial auto policy pays for expenses not necessarily covered by a personal car insurance policy when using it for business. Commercial auto insurance covers company-owned motor vehicles, including but not limited to automobiles, pickup trucks and larger commercial vehicles.

For example, commercial car insurance can cover:

⇒ Delivery trucks or vans

⇒ Work vans

⇒ Dump trucks

⇒ Vehicles with lifts

⇒ Food trucks

⇒ Pickup trucks

⇒ Box trucks

⇒ Company cars

Business auto insurance includes coverage for liability, physical damage for company vehicles, personal injury protection or no-fault, rental reimbursement, and towing. You can also include liability for hired and non-owned vehicles used for business.

An advantage of having commercial car insurance is that the premiums are usually tax deductible. Personal automobile insurance premiums are generally not tax deductible unless you separately track the miles for business vs personal use.