If a company owns, leases, or rents vehicles for work purposes, commercial auto insurance is a must. It covers a company’s financial liability if an owner or employee causes an accident involving personal injury or property damage. Here, business owners, managers, and employees can learn more about this essential coverage.
What If the Business Owner Already Has a Personal Auto Policy?
Most personal car insurance policies don’t cover commercial vehicle accidents, which means the company has no duty to indemnify damages or defend a claim in court. In simpler terms, without the right coverage, a business owner would have to pay out of pocket for their own damages and attorney’s fees. As explained in the sections below, commercial auto insurance policies address a variety of risk management areas. Many policies are stronger in some areas than in others, and clients should work with an experienced company like Yeager Insurance that understands business owners’ unique needs and can guide them in the right direction.
Why Is Commercial Auto Coverage Necessary?
Assault, premises liability, and auto accident claims are under the theory of respondeat superior, which means that the employer is liable for a worker’s actions that take place within the scope and course of employment. The theory has three parts, as shown here.
- The employee is defined as an unpaid or paid worker, including contractors, volunteers, and regular workers.
- The scope and course of employment is anything that benefits the employer in any way. This may mean that driving a vehicle with a company logo can trigger the respondeat superior doctrine, because the employer may benefit from the advertising.
- Foreseeability determines whether the at-fault party could or should have reasonably predicted the consequences of his or her actions.
The US Department of labor defines employment as a permit to work, which incorporates almost all independent contractors, owner-operators, and regular employees. In most cases, the term also includes volunteers and unpaid interns.
The scope of employment is rather broadly defined as well, including anything that furthers an employer’s interests in any form. Many of the country’s courts agree that driving a company car is covered under respondeat superior.
It’s not surprising, then, that foreseeability is also broadly defined. In the past, when the “detour” exception applied, the doctrine of respondeat superior was inapplicable to almost everything other than delivery drivers on predetermined routes. These days, however, the only unforeseeable events occur when workers steal vehicles, and most judges would side with the plaintiff in such a situation. Even if the theory doesn’t apply, an employer may be liable for a plaintiff’s damages under the negligent hiring doctrine.
What’s Covered Under a Commercial Auto Insurance Policy?
If an employee causes an accident and it can’t be proven that there was no relationship to the business, it’s likely that the company will be held responsible for the damage. Fortunately, most commercial vehicle insurance policies provide an array of coverage, including those listed here.
- Collision insurance, which pays for damage to the company vehicle in a collision with a non-living or stationary object
- Comprehensive insurance, which covers the cost of other collision types
- Personal injury and liability insurance, which covers victims’ damages
Along with monetary coverage, commercial auto insurers have a duty to defend policyholders against wrongdoing and other claim types. Here, a lawyer would represent the client throughout the claims process, from the demand letter to the final trial. Because the insurer’s duty is fiduciary in nature, they must do what is necessary to protect the client’s interests and not simply provide the least costly defense possible.
Commercial auto insurance companies offer a variety of specialty coverage types, and some may come at no additional cost. They include:
- Physical damage to borrowed or rented vehicles, if the damage occurs during the course of business
- Loan or lease gaps, which occur when a work vehicle is totaled and the actual cash value is less than the amount owed to the bank, lender, or rental company
- Damage or theft to a vehicle’s electronics, such as permanently installed DVD players and GPS units
Consult the coverage experts at Yeager Insurance to find coverage that meets any business’ needs and budget.
The Cost of Commercial Auto Insurance
A customer’s rates will depend on the vehicle type, driver, and level of coverage, but risk is ultimately determined by the insurance company. A good way for clients to manage their risk is to choose drivers with clean motor vehicle reports. A driver with a good record, aged 30-65, is typically seen as a low risk to an insurance company. During hiring, it is typically legal to check applicants’ driving histories.
Private passenger cars are often the least expensive to insure, while tractor trailers and other heavy-duty vehicles are costlier. Customers are in control of the coverage and maximum payout amounts, but they should not cut corners; a catastrophic injury or wrongful death claim could easily add up to hundreds of thousands of dollars. Talk to the team at Yeager Insurance about a commercial umbrella policy that provides million-dollar incremental coverage.
Talk to the Insurer About Policy Modifications
Choosing between commercial and personal auto policies involves many questions and mitigating factors, and customers should discuss these issues with their insurer. A commercial policy is likely necessary for those who use their vehicles primarily for business. However, if a car or truck is only occasionally used for business, an insurer may be able to modify a personal policy to cover work-related driving. Most well-known insurance agencies, including Yeager Insurance, offer commercial auto policies. Because commercial coverage is usually costlier than personal auto insurance, getting multiple quotes is the best way to find an affordable rate. The team at Yeager can work with customers to find the most affordable coverage options.
Commercial auto insurance is a solid risk management move for business owners, because it protects the company’s interests from vicarious liability and respondeat superior claims. Yeager Insurance makes it easy for any business owner to get the coverage they need. Call today or request a quote online.