All About Commercial Auto Insurance

February 6, 2020

If you’re a small business and you don’t own a fleet of vehicles with your company’s logo emblazoned on the side and you don’t have a crew of drivers working for you, it may not be easy to determine if commercial auto insurance is necessary for you or not.

As a sole proprietor or small business owner, you or your employees may be using your personal vehicles to conduct business but your personal auto insurance may not cover you or any of your employees in the event of an accident, so it’s essential to find out immediately if a commercial policy is necessary.

What is Commercial Auto Insurance?

Commercial auto insurance provides protection for any vehicle designated for business use against both property damage and liability. Whether you drive a vehicle that is for dedicated business use or drive a personal vehicle for business, it is important to have commercial auto insurance, as your vehicle will not be covered under a personal auto policy.

What does commercial auto insurance cover?

The reality is that every company faces somewhat unique risks in their company. We can work with you to create a customized policy to meet those needs.

Several types of coverage may be included in your commercial auto policy; others are options that you can purchase separately. You will also need to choose the coverage amounts (“limits”) and deductibles.

Typical coverage available includes:

  • Property damage liability
  • Liability for bodily injury to others
  • Optional bodily injury coverage for injuries that occur outside of the state in which you reside
  • Personal injury to you, your employed drivers or passengers including medical expenses and lost wages
  • Collision coverage for costs associated with an accident, regardless of who is at fault
  • Comprehensive coverage for damage other than collision
  • Medical payments coverage for the cost of hospitalization, treatment and funeral expenses
  • Uninsured and underinsured motorist coverage
  • Non-owned auto coverage for when you or your employees drive a rented or borrowed vehicle
  • Loading and unloading liability
  • Substitution transportation when your commercial vehicle is being repaired and you use a loaner from the repair shop
  • Towing and labor costs

How Much Coverage Do I Need?

It can be tricky to figure out how much commercial auto insurance you need for your business. We can help you determine an appropriate amount for your specific needs. It’s important to be aware that at the bare minimum, you have to make sure that you have enough coverage to comply with any insurance requirements that are set forth by New Jersey.

The following factors can be used to help you figure out how much coverage your business will need:

  • The size of the business
  • How much the business assets are worth
  • Number of vehicles to be included in the policy
  • Number of people who will drive for the business
  • How much the business can afford to pay out of pocket in the event that an accident does occur

How Much Does New Jersey Commercial Auto Insurance Cost?

The average price of a commercial auto insurance policy depends on a number of certain factors. The premiums vary depending on the company and their underwriting rules, and it depends on the coverages and deductible selected. Following are some of the main factors that go into the price of a policy based on the business:

  • Geographical location – The more dangerous your location is the higher premiums you will pay as there is a higher probability for claims. If you live in a highly populated urban area accidents and insurance claims happen more often and rates are higher.
  • Vehicle types – Purchase price, theft rate, cost of repairs, accident rate and safety tests weigh heavily in car insurance cost.
  • Vehicle use – A vehicle used to haul hazardous waste more of a risk than the van used to drive to a worksite.
  • Miles driven annually – The less you drive, the less risk you have of being in an accident.
  • Business credit history – The better credit you have, the lower your rates. Most insurers look at credit and weigh it heavily.
  • Coverages – The more coverage you choose with higher limits, the more it will cost you since the insurer is taking on additional risk.
  • Deductibles – The deductible is your out-of-pocket-cost before your policy kicks in. A lower deductible equals a higher premium, and higher deductible equals a lower premium.

The following factors affect the price based on the actual drivers:

  • Age and years of driving experience – Typically drivers under 25 pay more because statistically shown to be inexperienced behind the wheel, easily distracted and to crash more often. They are one of the riskiest categories of drivers to insure.
  • Gender – Data shows males are more likely to crash, hence men’s premiums are higher.
  • Marital status – Married people have been found to be less of a risk to insurers than singles, including divorced or widowed drivers.
  • Driving record – Drivers with a clean driving record qualify for better rates and can be eligible for a safe driver discount.
  • Claims history – The higher the number of claims, the higher the premiums. Insurers more heavily consider your claim frequency, the number of claims in a given time frame, over the severity or size of the claim.

Tips To Save Money On Commercial Auto Insurance

Consider combining with a business owner’s policy – This type of policy can bundle various forms of protection insurance together such as property insurance, business interruption, and some liability into a single plan and save some money. Do your research, however, because many bundles don’t include auto.

Review your coverage and risks annually – Carefully review your policy on an annual or regularly scheduled basis and especially during major transitions in your business. As your business continues over the years, make sure the coverage is adequate to protect you and can expand to accommodate any growth that occurs.

Increase Your Commercial Auto Insurance Deductibles – If you choose higher commercial auto insurance deductibles, you’ll pay less for your commercial insurance. Be sure you choose a commercial auto insurance deductible that you can afford to pay out of pocket at any time, in case you get into an accident.

Ask for safe-driving discounts – As you continue to evaluate your policy on a regular basis, don’t forget to ask for any discounts that might be available for remaining claim-free.

Change your payment method – There may be discounts available if you pay your full premium upfront instead of monthly.

Maintain continuous coverage – Canceling your insurance, or worse, allowing it to lapse, can cost you money in the long run. Not only will your vehicles not be covered, but many insurance companies offer significant savings to customers that have maintained coverage on a continuous basis.

Do I Always Need Commercial Auto Insurance?

A good rule of thumb is to consider if the vehicle is being operated in relation to the job. If it is, you’ll likely need business auto insurance coverage. If you’re still unsure about commercial car coverages, call us today at (732) 566-0003 to request a quote.

Photo by @5m3photos

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