Business Auto Insurance Picture

The Ultimate Business Auto Insurance Guide

Everything You Need To Know To Better Understand Business Auto Insurance

  • What does business auto insurance cover?
  • What Optional Coverages Are Available For Businesses?
  • How Much Does Commercial Auto Insurance Cost?
  • What Discounts Can Lower My Insurance Premium?
  • Do I need business auto insurance?

Whether you need answers to these questions or just want an business auto insurance quote, you’ve come to the right place

What Does Business Auto Insurance Cover?

Combined Single Limit Liability (CSL)

Most poeple understand how personal auto insurance works! While there are many similarities, one big difference comes with how MOST Business Auto Liability Carriers assign liability insurance.

In Personal Car Insurance, liability is split between Bodily Injury & Property Damage.  Commercial Auto Insurance combines both Property Damage & Bodily Injury into one single limit.

While it is one single limit, it is important to understand what both types of liability cover.

Bodily Injury Liablity

Bodily Injury Liability coverage will pay for damages to other people’s property as a result of an accident caused by you or another covered driver.

Here are some examples of damages covered under the Bodily Injury Liability of your policy:

  • Medical Expenses
  • Disability
  • Rehabilitation
  • Law suit settlements & Legal Fees

So What Limits Do I Need?  That is the question that only you can answer with the help of you Agent.  When speaking with customers, this is a story that is often used at ALLCHOICE.

You are involved in an accident (which is your fault).  You ran a stop light and struck another car that contained three (3) people.

All three people were injured and taken to the hospital.  The driver suffered numerous injuries, including a broken arm.

The other passengers all sustained minor injuries.  It is possible that North Carolina’s minimum Bodily Injury Limits would pay for the hospital bills (lets assume they did).

However, the driver (who suffered a broken arm) just happens to be Brain Surgeon!!!  How much would a simple month away from his occupation cost in terms of lost wages?  Are those minimum liability limits still sufficient?

Property Damage Liability

Property Damage Liability will pay for damages to other people’s property as a result of an accident that is caused by you or another covered driver.  Here are some examples of damages covered under the Property Damage Liability of your policy.

  • Vehicle Repair
  • Vehicle Actual Cash Value
  • Damage to other Real Property

So What Limits Do I Need?  That is the question that can only be answered by you with the help of your agent.

Let’s continue with our same hypothetical accident from “Bodily Injury”.  The Brain Surgeon that you hit was driving a NEW Mercedes CLS550 (Sticker Price $70,000 +).  North Carolina requires you carry a minimum of $25,000 Property Damage Liability.  That leaves a very large shortfall ($70,000 – $25,000 = $45,000) between what your insurance will pay for and what you will have to pay “out of pocket”!

Are those minimum liability limits still sufficient?

What Optional Coverages Are Available For Businesses?

Collision Coverage

Collision means physical damage to YOUR covered vehicle caused by an impact with another vehicle or object.  Collision Coverage will pay the lesser of the cost of repair or the ACV (Actual Cash Value) of your automobile.

Collision Coverage is an optional coverage, however, you may be required to carry Collision Coverage if you have financed your vehicle.

Comprehensive Coverage (Other Than Collision)

Comprehensive Coverage pays the cost of repair of ACV of your automobile when damage is caused to your covered vehicle by something “other than collision”.  Here are some examples:

  • Fire
  • Theft or Larceny
  • Contact with an animal

Comprehensive Coverage is an optional coverage, however, you may be required to carry Comprehensive Coverage if you have financed your vehicle

Towing And Labor

Towing & Labor Coverage pays for towing and labor costs each time your covered automobile or any non-owned automobile is disabled or the keys are lost, broken or accidentally locked in the car.

Extended Transportation (Rental Reimbursement)

This coverage will pay transportation expenses incurred by you or loss of use expenses for a non-owned vehicle for which you become legally responsible.

 

Medical Payments

Medical Payments Coverage pays for reasonable expenses (medical or funeral) due to an automobile accident.  Who is covered?

  • You or any family member while occupying any automobile, or as a pedestrian when struck by a motor vehicle
  • Any other person while occupying your covered automobile or any vehicle driven by you or a family member

Medical Payments Coverage is an optional coverage.

Hired Auto Coverage

Hired Auto Coverage extends liability protection from the business’ auto policy to vehicles that the business may need to rent or “hire” from time to time.

Non-Owned Auto  Coverage

Businesses often have employees that must use their personal vehicles as part of their daily business activities. Unless the company’s business auto insurance is endorsed to include Non-Owned Auto Coverage, the business would not have coverage should that employee get in accident and injure someone during the course of his/her business activity.

How Much Does Commercial Auto Insurance Cost?

Car Insurance Premiums vary from state to state, city to city, and business to business!

Here is a look at some of the factors that influence your insurance premium.

  • What Type Of Business

    • It stands to reason that if your business relies heavily on its vehicles for the operation of the business (example would be Sand & Gravel Haulers who use Dump Trucks) would have a greater risk than a business, and thus a higher premium, than a retail store
  • Driving Experience

    • Insurance Carriers can not adversely rate drivers based upon your AGE. However, they can charge different premiums based upon the years of driving experience a person has
  • Driving Record

    • Someone who has no tickets or accidents on their driving record will receive a better rating than someone who has tickets or accidents.
    • In some states, the Department Of Insurance allows insurance carriers to issue Surcharges to a policy (called Insurance Points) for tickets and accidents.
  • Type Of Vehicle

    • Liability Rate Factors: The type of vehicle you drive helps determine your liability rates. The safer the vehicles, the better rate.
    • Comprehensive & Collision Rate Factors
      • Average Repair Cost (some vehicles cost more to repair than others)
      • Value Of Vehicle
      • Vehicle Size
  • Location

    • Rural vs. City: More accidents occur (statistically) in cities vs more rural areas, therefore the rates ina more urban area will be higher than that of their more rural neighbors

 

  • Radius Of Operation

    • With Comemrcial Auto Insurance, Radius Of Operation plays a huge role in the rating, here are the normal Radius Options
      • Local Radius: 0-50 Miles
      • Intermediate Radius: 51 to 100 Miles
      • Long Distance: 100 Miles And Longer

What Discounts Can Lower Insurance Premiums For My Business?

NOTE Discounts are often just talking points for Insurance Carriers.  Different Carriers offer different discounts.

Discounts are reductions off of the carriers Base Insurance Rates for a particular risk. Therefore, a carrier could offer NO DISCOUNTS and still have lower a premium than another carrier that offers 100 Discounts if the BASE RATE is lower to start with.

However, in order to make sure you qualify for the very best insurance rate, here are a few discounts to consider:

  • Multi-Policy Discount

    • Insurance Carriers know that, statistically, they keep clients longer if they have more than one policy for a client.  Therefore, the carrier can charge a lesser rate.
    • When Possible, look to combine your Business Insurance, Workers Compensation Insurance & Business Auto Insurance with the same carrier.
  • Loss History Discount

    • The better a Business’s loss history, the better the rate business will receive

Do I Need Commercial Auto Insurance?

 

 

While every state has different requirements, if you are a North Carolina business, and it owns an automobile is required to carry Business Auto Insurance.

The problem that many NC Residents face is a lack of understanding of what coverages, and what coverages are needed.  The North Carolina Financial Responsibility Laws require that Automobile Liability coverage be maintained.  The minimum coverage requirements are as follows:

  • $30,000 Bodily Injury Per Person / $60,000 Bodily Injury Per Accident
  • $25,000 for Property Damage

Additionally, North Carolina now requires that all licensed drivers carry Uninsured/Underinsured Motorist Coverage at least equal to the highest liability limit on any one vehicle insured under the policy. Now that you know what the law requires…let’s take a better look at the actual coverages that are available.