Business Auto Coverage 101: The Basics

As a business owner, insurance coverages for the cars, trucks, vans or other vehicles you use in your business is critical. Most states require liability insurance for bodily injury and property damage to others that may result from a vehicle accident occurring while you or someone from your organization is driving on business. Many states also require uninsured/underinsured motorist coverage to protect you in case the other driver is uninsured, and/or medical payments coverage (known as Personal Injury Protection (PIP) in some states). You can also purchase physical damage coverage for vehicles your business owns, leases or hires. Whichever state or states your business operates in, having the right coverage is a must.

What does Auto Liability cover?

The liability portion of a business auto policy covers all damages that a business becomes legally obligated to pay as a result of bodily injury or property damage caused by a covered vehicle, up to the policy limits. When there is an auto liability lawsuit against the insured business, where the loss is covered by the policy, the insurer is obligated to defend the business or settle the lawsuit. The decision whether to contest or settle the case is entirely at the insurer’s discretion.

How much Auto Liability coverage is needed?

Many insurers recommend a business auto coverage limit of $1,000,000, with $500,000 as the minimum. Considering the amount of additional protection that the higher limit it provides you and your business, the higher limit is generally a wise investment.

Does Auto Liability cover employees who use company vehicles for personal business?

It is not uncommon for businesses to allow employees to utilize company vehicles for personal purposes. As long as these vehicles are scheduled on your business auto policy and the appropriate “coverage auto symbols” are shown on the policy page, you have coverage for business owned autos taken home by employees.

Employees’ own personal auto policies will usually not cover their use of a company car unless the car has been specifically borrowed as a temporary replacement for the employee’s own car while it is unavailable.

What vehicles are covered?

The scope of coverage in the business auto policy varies. In general, you have three options for which vehicles you choose to cover:

  1. Autos your business owns.
  2. All autos your business owns, hires or leases.
  3. All autos used for the business, including those that your business does not own, hire or lease.

Generally, businesses purchase the third type, since it is the only coverage that protects the business from liability in almost all circumstances, even when an employee or owner is driving a personal vehicle on business.

What names need to be on the Auto policy?

An insurance contract usually requires that the owner of a vehicle be named in the policy “Declarations” as the “named insured.” If you drive any of the same vehicles for business and pleasure, make sure you tell your agent who holds the vehicle’s title, you personally or your company. This will avoid problems if you need to file a claim or a claim is filed against you.

What happens when I have a claim? Athens can help:

It’s imperative to have the best possible partner to handle your claims when they occur. Fast, effective, and fair are just some of the important factors to consider when managing the exposure or liabilities to your organization.

Before a claim

  • Our experienced claim examiners can answer informational questions on what auto policy language means and what coverage will respond to special claims situations.
  • Athens can help by consulting with the employer and/or your broker on the best practices for employees that drive business vehicles.
  • Provide superior access to information for the policy holders.

During the claim

  • Continue to communicate to all affected parties.
  • Be reachable and responsible during the process so that there is no mystery.

After the claim

  • Be proactive to get the claim investigated, evaluated and resolved as soon as possible to end any exposure to your business.
  • We strive to educate our insureds throughout the claim process, so their businesses benefit from experience of a claim.

Related Links

Business Automobile Policy
Commercial Automobile
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