Commercial auto insurance is a type of insurance policy that covers losses related to the damage or theft of an automobile used for business purposes. It can also cover the cost of damages and injuries caused to others by the driver of the covered vehicle.
This type of insurance coverage is intended for business owners who have automobiles used for commercials purposes such as deliveries, the transportation of work-related equipment, or even the transportation of clients. Most states require that all automobiles be covered by some type of liability insurance. Commercial insurance satisfies this requirement.
When applying for a commercial auto policy, the insurance company will review information about the vehicle and the people who will be using it. Once the coverage is in force, the business owner will begin paying periodic premiums to continue coverage. In the event that the covered vehicle incurs a damage that is covered by the policy, the insurance company will pay for the loss up to a certain level. If damage to the vehicle is severe enough, the insurance company will pay to replace the vehicle rather than repair it.
There are two basic types of commercial auto insurance: liability and full coverage.
Under a liability policy, the policy only covers losses to other parties for which the owner of the vehicle is liable. For example, this could be the cost of repairing another person’s vehicle that was in a collision which was the fault of the covered person. No benefits would be paid to repair the insured car – only for damages to others.
Full coverage pays for not only liabilities but for damage to the insured’s vehicle as well. In the same scenario as above – a collision which was the fault of the covered driver – full coverage would pay for the damage to both vehicles, and likely the cost of any injuries as well.
In addition to satisfying laws that require such insurance, commercial auto coverage provides benefits in the form of peace of mind in knowing that the cost of any losses associated with a company vehicle will be covered by another party.