Decision Guide
Learn About Business Insurance
Commercial Auto Policy 101: Terms to Know
If you’re considering new business auto coverage, it’s important to understand the basic elements of a business auto policy. In many ways, it’s similar to your personal auto policy. But there are differences you should understand as you consider your business auto policy options. After all, the more you know, the easier it is to compare coverage — and make an informed choice.
Basics of a business auto policy
There are three basic parts of every commercial auto insurance policy:
- Physical damage insurance - includes collision insurance, and either comprehensive coverage or coverage that specifies the loss you might incur
- Liability insurance - includes bodily injury, property damage, uninsured motorist and underinsured motorist
- Other coverages - can be added to your commercial car insurance policy. These include medical payments, towing and labor, rental reimbursement, and auto loan or lease gap coverage. These are not mandatory and can be added to your business car insurance policy based on the company’s budget and ability to self-insure some losses.
Understand the details of a commercial auto policy
Collision Insurance
A commercial car policy helps pay for damage to your vehicle if you
hit a vehicle, another vehicle hits you, or your vehicle rolls over,
regardless of who is at fault.
Collision coverage can be required if your vehicle is financed or leased.
Comprehensive Insurance
This type of insurance on your business auto policy pays for damage
to your vehicle from causes other than an accident. These instances may
include theft, flood, vandalism, earthquakes, fire or damage from a bird
or animal.
Liability Insurance
Liability insurance in your commercial auto policy
covers bodily injury to others and any property damage to another
vehicle if you are at fault in an accident. Bodily injury pays others’
medical costs and lost wages, and your legal expenses if a lawsuit is
brought against you due to an accident.
Uninsured Motorist Coverage
If you, or an employee, are involved in an accident with an
uninsured motorist, it can cost you plenty. This coverage on your
business auto insurance policy pays for your injuries or property damage
caused by an uninsured motorist, a driver that does not carry insurance,
or, in some states, an unidentified driver.
Underinsured Motorist Coverage
Unless you live in a “no-fault”
state, where each driver’s business auto insurance policy responds to
their own losses, this coverage protects you if the “at
fault” driver fails to carry enough liability insurance to cover your
bills.
Business auto policy options
Beyond these fundamental components, you can customize your business car insurance policy with the following coverages (also know as endorsements):
Emergency Road Service Coverage
Provides protection for problems that are not typically handled by
your commercial auto insurance policy, such as being locked out of your
car, needing a battery re-charged or inflating a flat tire.
New Vehicle Replacement Cost Coverage
This coverage can insure your new vehicle if it’s in an accident
resulting in a total loss,
without a deduction for depreciation.
Hired Auto Physical Damage with Loss of Use Coverage
Covers comprehensive and collision damage to a leased or rented
vehicle, as well as additional contractual obligations to the leasing or
rental company.
Auto Loan or Lease Coverage
If your vehicle is in an accident and is a total loss, this
commercial auto insurance policy covers the difference between the unpaid
amount on the loan or lease, and the actual
cash value of the vehicle.
Expanded Towing
Provides towing coverage for pick-up trucks that’s not part of your
standard business auto policy. This insurance also covers towing, jump
starts, and minor roadside repairs.
Rental Reimbursement
If you have a vehicle under repair because of an accident, a
standard business auto policy won’t pay for a rental car. This additional
coverage will make sure you have a replacement vehicle.
Medical Payments or Personal Injury Protection Coverage
Pays for medical expenses if you or your passengers’ health care
insurance does not cover the costs.
The bottom line of a commercial auto policy
A business auto policy can protect your business and its employees from financial losses resulting from an accident or other unforeseen incident. These basic terms and ideas will help you compare and contrast options before making a decision on auto insurance for your business.
Contact a Nationwide business insurance agent today for a free business car insurance policy quote that’s customized to your needs.
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*Products may be provided by Allied Insurance, a Nationwide company.
Business insurance terms you need to know
1. Liability
2. At Fault
3. Certificate of Financial Responsibility
4. Depreciation
5. Endorsement
9. Premium
10. Total Loss
