As a contractor, you and your employees are constantly on the move. Your work truck sometimes feels like a tool shed and a second office as you cart equipment from one job site to the next.
Could you operate your contractor business if your work truck was out of commission?
If you were to get in an accident while using your vehicle for work purposes your personal auto policy won’t cover the damages. Only commercial auto coverage can protect your assets in the event of an auto accident involving your work truck.
From covering your vehicle repairs to paying for repairs/ damages to third parties the benefits to contractors who carry a commercial insurance policy are far reaching. Here is a breakdown of the different types of coverage that are available with a commercial auto policy.
COVERED WHEN YOU’RE AT FAULT
Commercial Auto Coverage: Liability
You’re driving down a busy road and don’t notice that traffic in front of you has suddenly come to a dead stop. Slamming into the car in front of you, your coffee flies everywhere, your airbag deploys, and the driver in the car in front of you is rendered unconscious.
Both cars are totaled and the driver you hit suffers from an extreme case of whiplash.
Does your business have cash reserves to pay the tens of thousands of dollars to replace the vehicles as well as pay medical bills and cover lost wages for the other driver? Even if you have the money, is that how you want to spend it?
Commercial liability coverage – required in most states – is designed to help pay for bodily injury and property damage expenses that you have caused to third parties in an accident in which you are at fault.
Also helping to cover legal fees and judgments, should the third party decide to sue for ‘pain and suffering,’ commercial liability auto insurance helps keep your assets where they can help business move forward, in your bank account.
COVERED WHEN YOU DAMAGE YOUR VEHICLE
Commercial Auto Coverage: Collision
Imagine the same scenario as above. You’re at fault in an accident and your liability coverage has taken care of the costs of repairs and injuries for the other driver.
What about your work truck?
Without collision coverage, you could be responsible for paying to replace your vehicle.
While you most likely won’t receive the entire replacement cost for a vehicle, collision auto insurance will pay to repair your car up to its cash value. However, if the cost for repairs exceed the value of your vehicle, most insurance companies will ‘total’ it and give you the money towards the purchase of a new vehicle.
Usually the most expensive form of auto coverage, you can opt to have a higher deductible on your collision insurance in order to lower your premium payments. Keep in mind, though, that should an accident occur you will be responsible for paying the full amount of the deductible before your insurance payment will kick-in.
COVERED IF YOU GET HURT
Commercial Auto Coverage: Uninsured/ Underinsured Motorist
Imagine the same scenario yet again, only this time your work truck is the one getting hit. You didn’t see it coming and don’t even remember it happening, but when you come to in the back of the ambulance you’re told that you’ve been in accident and that your truck is totaled.
You’re grateful that your injuries aren’t worse, though you do have a killer headache radiating all the way down your neck.
A couple days later you find out that the other driver is uninsured and you’re going to have to cover all of your medical bills – including that ambulance ride – while at the same time losing wages as you take time off work to recover from your injuries.
With uninsured/ underinsured motorists coverage, you won’t have to foot the bill.
Uninsured/ underinsured motorist coverage is there to help you with the costs of injuries from a hit-and-run accident. This coverage may also help pay for your property damages if the driver who hits you is un/underinsured.
Unfortunately, the prevalence of uninsured drivers nationwide makes this an essential coverage.
COVERED IF YOUR PASSENGER IS HURT
Commercial Auto Coverage: Medical Payment
Choose either of the above scenarios: you are driving and cause an accident or the other driver hits you. Either way, medical payment coverage is designed to pay for medical expenses of both you and your passenger(s). However, if someone else is liable for the accident your insurance company will likely seek to recoup expenses from them.
This coverage also covers you or family members if you are injured as pedestrians.
COVERED IF YOUR VEHICLE IS DAMAGED
Commercial Auto Coverage: Comprehensive
Your work truck is parked in front of a job site. The heavy wind that has been blowing all week brings down a tree branch. A big one. Right on top of the cab of your truck. Comprehensive auto coverage is meant to cover non-collision damage to your work truck or other commercial vehicles.
Damages to your work vehicle that are not caused in an auto accident are insured under comprehensive coverage. Comprehensive also typically covers damage from things that are outside of everyone’s control – such as fire, theft, vandalism, flooding, earthquake, natural disaster, or even hitting a deer.
WHO NEEDS COMMERCIAL AUTO INSURANCE?
It is uncommon for personal auto insurance to cover accidents that occur when a vehicle is being used for work purposes.
You need commercial auto coverage for your vehicle if:
- You use your personal vehicle for work purposes
- Your employees use your vehicle for work purposes
- Your employees use their own vehicle for work purposes
- Your business leases, rents, or owns vehicles.
Whether you or one of your employees are in an accident while driving for work, a personal auto insurance policy will not cover damages or injury. Protect your business assets, your vehicles, and the drivers and passengers inside them with coverage designed to insure autos that are being used for work purposes.