Commercial vehicle liability insurance is so important that it is mandatory in nearly all of the states.
Only Virginia and New Hampshire have not passed laws requiring companies to insure their business vehicles.
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Commercial vehicle insurance covers four main areas of risk:
- Loss from accidents resulting in damage to the vehicle, or another vehicle in case of a collision. At a minimum, liability cover for damage to a third-party vehicle is mandatory in 48 states.
- Comprehensive cover for loss or damage from weather and other causes not related to collisions, like theft, vandalism or spoilage of the vehicle itself, and of contents
- Medical expenses in case of a collision resulting in injury to a third party or employee. At a minimum, liability cover for injury to third-parties is required in 48 states
- Any related legal expenses in case of a lawsuit.
What kind of business requires vehicle insurance?
Apart from the two exceptions, all of the other states require commercial vehicle insurance coverage for any vehicles owned by or operated by any business.
Ownership is not the only criterion.
Instead, if you are using a private vehicle to carry people or pets, goods or equipment to and from work places, then you must be aware that regardless of the private insurance cover that the vehicle may already have, your business is directly responsible for whatever may happen to the vehicle.
Any accident or incident while the vehicle is engaged in some business-related activity will not be covered by the private policy.
What does Basic Commercial Vehicle insurance cover?
In the event of an accident, a basic commercial insurance policy helps cover claimed medical expenses and property damage caused by the accident to third parties.
As well, if you are sued, the cover includes any resulting legal expenses awarded to the plaintiff.
In most states, for example in California, this is the minimum cover required by law. In California, the minimum levels of insurance are set at $15,000 liability per person, $30,000 liability per accident for bodily injury and $5,000 liability for property damage.
A policy should also cover losses and damages arising from vehicle theft, vandalism, and other occurrences, but this is not a mandatory requirement.
You should at the very least take out the mandatory liability coverage.
Note that if your business moves goods or people interstate, you are required by federal law to have it, regardless of whether the state laws require it.
What does Comprehensive Commercial Vehicle insurance cover?
As well as the covers provided by basic policies, comprehensive commercial vehicle insurance can provide the following:
- Repairs of damage to your own vehicle in case of an accident or non-collision events like storm damage, vandalism or explosions
- Cost of vehicle replacement in case of a total write-off or theft
- Cost of rentals when your vehicle is being repaired
- Cover of medical costs and income loss in any case of injury suffered by people in your own vehicle, regardless of fault
- Uninsured driver coverage when a collision is caused by another driver who had no insurance.
What is an example of a commercial vehicle insurance claim?
In the case of a company that bought a vehicle in another state, and brought it back into the home state, commercial vehicle insurance cover in the state of origin of the vehicle was different from the home state.
The vehicle was involved in a collision soon after crossing the state border, and the company’s driver admitted it was his fault.
However, the original insurance policy had different conditions regarding fault than the company had on its other vehicles, and the insurance company rejected the claim.
The lesson to learn is you should check with your insurance agent or broker to make sure you have the right cover for every state where your insured autos will be used.
How much commercial vehicle cover do you need, and what will it cost?
In the first place, at the very minimum in almost all states, you must have the basic liability cover.
You should get professional help here from your insurance broker, agent or a reliable insurance office.
In most states, you can expect to pay around $1500 to $1800 per year.
Comprehensive cover levels depend very much on the value of the vehicle itself, the level of business activity it’s involved in, and the level of risk.
Usually, a car or light van may need a combined single limit (CSL) listed as a single number, such as $500,000 for Alaska, or defined minimum liability coverage for bodily injury and property damage such for California or Delaware – $50,000 for bodily injury per person, $100,000 for bodily injury per accident and $10,000 for property damage.
Another method used in some states is gross vehicle weight (GVR), such as for Illinois.
The expected price of this insurance depends very much on the type of business and value of the vehicle, but you should expect to pay, in addition to the basic cover, around $1800 -$2200 per year.
What are the requirements for commercial vehicle insurance?
You need commercial vehicle insurance for all vehicles that are used for business tasks like traveling around on sales calls, moving your own people to work sites, delivering packages, or transporting supplies.
If your vehicle carries a commercial license plate, you must have commercial vehicle liability insurance.
You may need to stipulate if your company uses its vehicles for specific functions, including delivering food products, acting as a taxi service, transporting hazardous materials or towing vehicles.
Can my business use private vehicles?
Personal vehicle insurance will only cover accidents that occur while the owner or a nominated driver is using the vehicle for personal reasons.
That includes travelling to and from work, but not for work-related travel.
It may be possible to get extended coverage for occasional business use, but this requires permission from the insurance company.