If your company uses automobiles in any capacity, you’ll need to acquire business vehicle insurance. Even if you already have business property insurance or any other type of professional coverage, you’ll need a separate policy to cover your employees when they’re on the road.
What Does Business Vehicle Insurance Cover?
The type of vehicle coverage your company requires will be largely determined by the nature of your business and its use of automobiles. In general, though, a business vehicle insurance policy should include the following:
- Liability protection for yourself and your employees
- Liability coverage for other individuals
- Physical property damage coverage (for vehicles your business owns/leases)
Some states also require underinsured/uninsured motorist coverage and/or personal injury protection, features that are not otherwise included in standard business vehicle insurance policies.
What Does My State Require For Business Vehicle Insurance?
Below we’ll outline the states that have additional coverage requirements for business vehicle insurance:
- States that require both uninsured and underinsured motorist coverage: Connecticut, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oregon, South Dakota, Vermont, Virginia, Wisconsin.
- States that require uninsured motorist coverage: Illinois, Kansas, Missouri, New Hampshire, New York, South Carolina, West Virginia, Washington D.C.
- States that require personal injury protection (PIP) coverage: Delaware, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania, Texas, Utah.
Why Can’t I Just Use My Personal Auto Insurance Policy?
While personal auto insurance policies provide some coverage for use in business settings, relying on a personal policy alone is not advisable if your vehicle is primarily used for business. Many personal policies will decline coverage altogether if you make a claim during a “business endeavor.”
Furthermore, the coverage limits on your personal policy probably aren’t high enough to offer viable protection for your business. In other words, if you got in an accident, your company could be vulnerable to lawsuits from parties seeking damages that exceed the limits of your personal policy.
Which Vehicles Should I Cover?
After determining whether or not you need business vehicle insurance, the next step is to decide how many vehicles to get covered. You can customize your policy to be as robust as necessary, covering anywhere from one vehicle to an unlimited amount.
It’s important to acquire a broad enough policy to effectively protect your business from liability -- otherwise, what’s the point in investing in vehicle insurance at all? For instance, if an employee gets in an accident while running errands for the business in their own car, you need to make certain your policy will cover it.
Which Type(s) of Physical Damage Coverage Do I Need?
A major variant from policy to policy is the type of physical damage coverage provided. There are three major types of physical damage coverage, each with a different price tag:
- Collision Coverage: Covers any losses resulting from a collision in a covered vehicle.
- Comprehensive Coverage: Covers losses due to collision and other causes, including natural disasters and theft.
- Specified Perils Coverage: Covers losses caused by perils specifically outlined in the policy. (Typically, businesses opt for fire and theft coverage.)
How Much Coverage Do I Need?
Finally, and perhaps most importantly, you’ll have to determine the level of vehicle coverage your company actually needs. Most businesses choose a minimum of $500,000 in liability coverage, and many insurers recommend upwards of $1 million.
When deciding on a coverage limit, keep in mind that business vehicle insurance policies typically use a Combined Single Limit (CSL) system that covers both property damage and bodily injury (as opposed to personal policies that separate these types of liability).