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What Does Commercial Auto Insurance Cover?

What Does Commercial Auto Insurance Cover?

What Does Commercial Auto Insurance Cover?

If you own a business, you usually need to get business liability insurance and commercial car insurance to avert risk and possible financial hardship in California.

Given that businesses that use commercial vehicles are typically exposed to an increased risk of liability, regular car insurance will not cover your business.

What you pay for a commercial auto policy depends on the profession, the type of vehicle(s), the mileage that is driven regularly, and your driving history.

Don’t confuse commercial auto insurance with a business auto insurance policy.

Speak with a commercial car insurance professional today.

How Commercial Auto Insurance Works

Commercial auto insurance covers specialized vehicles used for specific jobs, while a business auto insurance policy (BAP) covers autos driven for regular travel needs. 

BAPs are designed to protect businesses that use cars, trucks, and vans during the course of business.

The insurance is used to cover owned or leased vehicles or employee-owned autos used for conducting business.

Commercial auto insurance covers a vast array of occupations associated with restaurant delivery, the trades, and business services.

Businesses may include:

  1. Catering
  2. Roofing
  3. Carpentry
  4. Landscaping
  5. Fast-food delivery
  6. Taxi services
  7. Painting
  8. HVAC 
  9. Plumbing
  10. Electrical services
  11. Funeral homes
  12. Cleaning and janitorial services
  13. Logistics and shipping

What you pay for the insurance depends on the degree of risk to which you’re exposed.

For example, if you own a business where drivers carry tools and equipment, your rates are naturally higher than if you work, for instance, as a personal trainer and use your vehicle for this purpose.

The size of the vehicles covered also impacts insurance rates.

Therefore, insuring a food truck is often more expensive than if you’re operating a small truck that you use for catering. 

As noted, commercial insurance providers factor in the driving history of the drivers as well.

To determine coverage, insurers run a motor vehicle report on each driver who’ll have access to a vehicle.

If some of the reports show accidents or violations, you’ll pay a higher premium.

Typically, insurers check the past three years of each driver’s history.

The location also plays a major role in what you’ll pay for commercial insurance.

Naturally, you’ll pay more for coverage in a larger city than if your travel is confined to a smaller and safer locale.

Earthquakes and weather-related events may also factor into the equation.

Where and how far your vehicles travel influences commercial vehicle rates.

Local routes present fewer risks than when drivers cover a broader area.

Minimum State Limits in California

You may need to buy at least the state limits for your policy, or a combined single limit of coverage. For example, California has a minimum liability limit of 15/30/5, also known as a split limit.

That’s because the liability coverage “splits” what insurers pay for bodily injury and property damage, as follows:

  • $15,000 for each individual injured in a car accident
  • $30,000 for all the individuals injured in a car crash
  • $5,000 in property damage for each accident

State limits jump significantly on large commercial vehicles. For instance, vehicles that have a USDOT serial number require different coverage.

The Federal Motor Carrier Safety Administration (FMCSA) requires large commercial trucks, such as semi-trucks, or similar interstate vehicles, to carry a single limit of at least $750,000 in coverage. 

This limit caps out at $5,000,000, depending on what products the vehicles are carrying.

The weight of the truck and what or who has been transported influence the premium as well.

For instance, large commercial passenger vehicles require at least $5,000,000 in liability protection whose seating capacities are limited to 15 passengers.

Add-ons to the Basic Coverage

Besides the required state minimum coverage, commercial auto plans also are designed to cover insurance customers for collision protection.

To cover vehicle damage, and for comprehensive plans that pay for incidents related to the weather, vandalism, or theft.

Uninsured motorist coverage and medical payments may also be added to plans.

Make Comparisons First With a Commercial Auto Insurance Agency

The above information can help you make a more informed decision about what to expect when you buy a commercial car insurance policy.

Contact Panorama Insurance to learn more about the rates and coverage now. Call: 818-781-6630.

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