Define Business Auto Policy
Do you know what a business auto policy is? It’s pretty self explanatory. It’s auto coverage for any driver or vehicle that is owned and used for the company. It’s important to understand that business auto policies are always a separate policy. We will also discuss when you need a business auto policy, what is and isn’t covered, and why you need to keep your vehicle and driver list fully updated any time there is a change.
Why do I need a business auto policy?
Vehicles that are primarily used for a business must have a business auto policy. A standard auto policy will only cover some of the vehicle in the case of an accident. Business auto policies typically cover a minimum of $500,000 in liability protection. Personal auto policies allow coverage for some business use of your personal vehicle. This also applies to your employee’s personal auto policies. But, they won’t cover anything is the vehicle is a primary business vehicle and you might not have enough coverage.
What is covered?
There are 3 types of vehicles you can choose to cover:
- Autos your business owns
- All autos your business own, hires or leases
- All autos used for the business, including those that your business does not own, hire or lease
There are 3 types of damage coverage you can choose:
- Collision Coverage – losses that result from the collision of a covered vehicle with any object or from the vehicle overturning
- Comprehensive Coverage – losses from any cause (flood, fire, theft, glass breakage, falling objects, explosion, earthquake, or colliding with an animal), except collision and overturn and a few policy exclusions (wear and tear, mechanical breakdown, and acts of war).
- Specified Perils Coverage – losses that are only specifically named. This coverage provides a lower premium.
Other Information You Need to Know
- Keep Your Driver List Updated: It is very important for insureds that have employees driving or potentially driving for the business to update their drivers list every time they want a new person to drive. The reason for this is for protection in the case of an auto claim. If the agency does not have a record of the employee on file as a covered driver, in the event of a claim there would be no coverage and the claim would be denied.
- You Are Liable if You Allow a Bad Driver on the Road: Be aware that if you allow a worker with a history of bad driving on the road, you and your company could be held liable. It would be considered negligent entrustment. This happens when someone allows another person to use a vehicle known or having reason to know that the use of the vehicle by that person creates a risk of harm to others. Call your agent today to find out how to become aware of bad driving records.
Sources: Insurance Information Institute