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Commercial Auto Insurance

What does commercial auto insurance cover?

Businesses purchase commercial or business auto insurance to provide liability and physical damage coverage to businesses for autos they own, maintain or use. This may include cars, trucks, vans, trailers and buses. The commercial auto coverage policy includes a common policy declarations page, common policy conditions page and coverage forms. The commercial auto coverage includes three coverage forms--business auto coverage, garage coverage and truckers' coverage.

Business Auto Coverage

The business auto coverage form provides insurance for private passenger and commercial autos for any business. Business-owned autos can be divided into three categories: private passenger auto, commercial autos and public autos:

  • Private passenger autos:  Includes ordinary autos, trucks and less than three-quarter ton vehicles owned by the company but not used commercially. The president of a company would be able to list his vehicle on the company's business auto coverage.

  • Commercial autos:  Includes trucks over three-quarters of a ton, truck tractors, semi-trailers, commercial and utility trailers.

  • Public autos:  Includes vehicles used for public transportation such as taxis and rental cars.

Garage Coverage

Garages, trucking firms, auto dealerships and implement dealers are not covered under the business auto coverage form, but can be covered under a garage policy.

Garage coverage includes garage liability, garage keepers' liability and dealer's physical damage. Businesses that would purchase a garage coverage policy are car dealerships, garages, implements dealerships, gas stations and mobile-home dealerships, among others.

Truckers’ Coverage

The truckers' coverage form covers those that hire themselves out to haul the goods of others. This policy also includes liability and physical damage. A unique coverage for truckers is trailer interchange insurance. This covers damage to a trailer that is borrowed or hired by an insured trucker from another trucking firm. Damage must be from one of the covered perils in the physical damage coverage section of the policy.

Liability Coverage
Liability coverage includes business operations, ownership, maintenance of used or covered vehicles and product liability. The garage operations coverage includes coverage for the named insured and her employees. Garage customers are not covered if they have their own liability coverage. Damage to property of others under the care and custody of the insured is excluded.

The legal liability coverage protects the garage owner from liability while the customer's property is under his care. Additional coverage can be purchased to protect customer's property even if the owner herself is not liable. Exclusions from coverage include property owned by the insured, operation of certain mobile equipment, pollution, employee injury (covered under worker's compensation insurance) and contractual liability except when qualifying under "insured contracts."

Physical Damage

The physical damage part of the policy includes collision coverage covering vehicles under the owners' care from collisions with another object or other vehicles. Dealerships may purchase this coverage on a blanket basis including options for medical payments and uninsured motorist coverage.

Comprehensive Coverage

Comprehensive coverage is also known as "coverage other than collision." Just about everything other than collision is covered. Standard exclusions include fire, hail, water, flood, vandalism, falling objects, glass breakage, riot or civil commotion, windstorm, bird or animal contact, theft, explosion or earthquake. Additional endorsements can be added to coverage items such as glass breakage.

Do You Need Commercial Auto Coverage?

If you answer yes to any of the following questions, you need a commercial auto policy:
Do you or your employees use titled vehicles in your work?
Do you use your car for delivery such as pizzas or newspaper?
Do you transport people for a fee?
If you are in doubt whether you are required to carry a commercial insurance policy, check with your agent or contact your state department of insurance.

What is Hired Automobile Coverage?

Hired Auto and Non-Owned Auto coverages are usually added as endorsements on a General Liability policy. These types of coverage meet contract requirements for Commercial Auto coverage when the company has no vehicles titled in its name.
Hired Auto coverage can either supplement or replace a car rental agency's liability coverage. But because Hired Auto insurance doesn't cover physical damage to a rented vehicle, it still makes sense to purchase the rental agency's physical damage coverage. The Hired Auto policy's liability coverage protects only your company, not the employee driving the rented vehicle. As such, it supplements the driver's own auto liability coverage. Just as if he or she were driving a personal vehicle, in the event of an accident, the employee would still be personally liable for injuries or property damage to third parties.

What is Non-Owned Automobile Coverage

Non-Owned Auto coverage protects your company should it be sued due to an auto accident while one of your employees is on company business in a personal vehicle. Unlike a personal auto policy, this coverage will not protect you or your employee. As with Hired Auto coverage, this coverage protects the company only and supplements the driver's personal auto liability coverage.

Why You Need Hired and Non-Owned Automobile Coverage

If an employee of your company has a serious auto accident in their own vehicle or in a rented vehicle while on company business and their personal insurance is not enough to cover the claim, your company can be held responsible. These claims can be catastrophic.  Every business owner should seriously consider this coverage.


For more information please call us at (415) 876-5440.  You can request a free quote here.


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