How to Determine If You Need Commercial Auto Insurance

Commercial auto insurance is often associated with the need to purchase insurance for the coverage of vehicles that are used for business purposes. Although this is a rightful definition of commercial auto insurance, commercial auto insurance policies are not used strictly for business. Typically, commercial auto insurance offers the same coverage with personal auto insurance, including liability for bodily injuries and property damage, medical costs, uninsured motorist coverage, under-insured motorist coverage, collision, comprehensive coverage, towing & labor coverage and rental reimbursement.

If your business requires the use of vehicles for commercial use, including the transportation and delivery of goods, then you are required to have commercial auto insurance policy. But, even if you are not a business owner, you may have certain types of vehicles or use them in a certain way that requires commercial auto insurance based on certain criteria.

The following are factors to consider for determining if you need commercial auto insurance.

1. What types of vehicles are you driving?

In majority, insurance companies provide commercial auto insurance for most commercial truck and tractor trailers. If you are driving any type of box trucks, dump trucks, semi-trucks, tow trucks, vocational trucks, garbage trucks, front loaders, cement and pump trucks, roll-on vehicles, tank trucks or auto hauler trailers, bulk commodity trailers, dry freight trailers, refrigerated trailers, tank trailers, livestock trailers, transfer boxes or utility trailers, you definitely need commercial auto insurance.

2. Are you regularly using your vehicles for business use?

If your vehicles are getting regular business use, meaning you're using them on average more than three times per month for commercial purposes, then you definitely need commercial auto insurance. On the other hand, if you are simply using your truck to commute from your house to your business, then you need personal auto insurance coverage.

In particular, the following activities are considered business use and require commercial auto insurance policy:

- Transporting equipment, including tools and supplies

- Transporting housekeeping equipment for a business site

- Transporting hazardous material

- Delivering goods

- Delivering newspapers

- Towing

- Driving a truck equipped with cranes, lifters etc. for public use

- Trucking (local and long haul)

- Messenger, chauffeur

- Taxi driver

3. Who is driving your vehicles?

If you are renting or leasing your vehicles to someone else for a fee, then you need commercial auto insurance to cover for potential bodily injuries or property damages associated to your vehicles since your vehicles are used for commercial purposes.

If you are using your vehicles for delivering pizzas and you get involved in a car accident for which you are fully responsible, your personal auto insurance will not cover for potential bodily injuries, medical costs and/or property damages. Since the vehicle is used for business use (delivering pizzas) you are required to have commercial auto policy. You should also consider who is riding with you in the vehicle in the time of accident. If it is a coworker, the commercial auto insurance will cover the accident and related injuries and damages for both of you.

To determine if you need commercial auto insurance, primarily you have to determine if your vehicles are regularly getting business use. Then, you have to check if your personal auto insurance excludes particular activities from your policy, which means that in case of an accident with a commercial vehicle you will not be covered. Even worse, if you transfer clients or coworkers to a business site, you will need to have commercial auto insurance to cover the event of an accident and related medical costs and bodily injuries that will not be covered by personal auto insurance.

Sources:

http://www.progressive.com/understanding-insurance/entries/2009/8/31/when_do_you_need_a_.aspx

http://www.business.com/guides/knowing-when-you-need-commercial-vehicle-insurance-29078/