What Is Commercial Auto Insurance - ALLCHOICE Insurance - North Carolina

What Is Commercial Auto Insurance?

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Return To: Commercial Auto Insurance – The Ultimate Guide

Commercial auto insurance for businesses is the financial protection you need for the vehicles you primarily use to run your business. Just as you have protection for your personal car, your company’s trucks or vans need the same insurance coverage.

Commercial auto insurance covers all state-registered vehicles that your business owns. There are options to include all vehicles that your business hires or leases to use for business reasons. Most companies select the option that covers all vehicles the business uses, including those that it does not own, since employees may use their personal vehicles for business activities.

In North Carolina, the minimum coverage of commercial auto insurance policies ranges between $25,000 to $30,000 for bodily injuries (per person) and property damages. These protections are mandatory per North Carolina law (G.S. 20-279.21).

To help you avoid breaking the law, we discuss all you need to know about business auto insurance in North Carolina. From more about its coverage to getting commercial auto insurance quotes online, we can answer your questions.



What Does Commercial Auto Insurance Cover?

Business auto insurance has standard, state-sanctioned coverage and optional coverage that you may apply for at your discretion.

Standard Coverage

  • Bodily Injury Liability: This coverage pays for the medical expenses, rehabilitation costs, and legal fees for a person whom you have injured, disabled, or killed after a vehicular accident while on duty. The NCDMV requires a minimum coverage amount of $30,000 per person for bodily injury liability insurance.
  • Property Damage Liability: This coverage financially protects you if your business vehicle accidentally damages another person’s property. Most cases may provide financial assistance for lawsuit settlements. The minimum coverage requirement for property damage per North Carolina law is $25,000.
  • Combined Single Limit (CSL) Liability: This business auto policy coverage combines the limits for bodily injury and property damage into one limit. CSLs offer higher limits because they cover two types of liabilities in one policy, unlike personal auto policies, which have split limits for bodily injury and property damage.

Optional Coverage

  • Towing and Labor: This optional coverage pays for the labor costs for towing your covered vehicle. Events that disable vehicles include leaving keys in a car, dead batteries, flat tires, or running out of gas in the middle of the road.
  • Medical Payments: This coverage pays for the reasonable medical or funeral expenses due to a vehicular accident, regardless of fault. Medical payment coverage usually covers drivers and passengers occupying covered vehicles.
  • Collision Coverage: This pays for the losses that result from damages upon impact with buildings, objects, or other vehicles. Collision coverage can pay the repair costs (in part) for any covered vehicle in your business. Although this coverage is optional, you may need to apply for collision coverage if your business vehicle is financed.
  • Comprehensive Coverage: Your business automobile needs further financial protection from factors other than collision. Comprehensive coverage pays the repair costs or the actual cash value (ACV) of your vehicle in the event of covered perils such as fire, flood, theft, vandalism, or contact with an animal. Like collision coverage, financed vehicles may require comprehensive coverage.
  • Hired Auto Coverage: This optional coverage provides liability insurance for the vehicles your company leases, hires, rents, or borrows for business purposes. Hired auto coverage may cover legal fees should your hired vehicle cause accidents that lead to lawsuits.
  • Non-Owned Auto Coverage: This coverage protects your employees who use their personal vehicles to conduct your company’s business. Non-owned auto coverage would apply to sales employees who use their car instead of a company vehicle or administrative staff members who run company errands.
  • Extended Transportation Expense Coverage (Rental Reimbursement): This optional coverage can pay for your company’s lost revenue while a vehicle is under repair or temporarily disabled.


Do I Need Commercial Auto Insurance?

The above are necessary protections for your business. You can learn more about why you need commercial auto insurance to help convince you to keep your company vehicles safe. Here are 5 reasons to get commercial auto insurance to get you started:

  1. Commercial auto insurance is not personal auto insurance: Your personal auto insurance does not count as insurance for your business vehicle. This means that you have to cover all fees when you get into vehicular accidents while on duty.
  2. Commercial auto insurance has higher limits than your personal auto insurance: Work vehicles tend to be larger, requiring more protection for potential damages. This explains why commercial auto insurance liability limits are two times higher than personal auto insurance.
  3. Commercial auto insurance covers your vehicular business activities: Whether you are transferring supplies, traveling to a meeting, or delivering goods, commercial auto insurance can cover any accidents that may occur along the way.
  4. Commercial auto insurance is a tax deduction: You get to save money from tax deductions when you have the appropriate protections for your business vehicles.
  5. Commercial auto insurance is required by law: North Carolina strictly enforces state law (G.S. 20-309), which requires all licensed businesses to have continuous liability insurance for all valid state-registered vehicles. The North Carolina Division of Motor Vehicles (NCDMV) may issue penalties in the event of any insurance lapses:
Name of FeeFee AmountDescription
1st Insurance Lapse$50Penalty/Fee*
2nd Insurance Lapse$100Penalty/Fee*
Restoration fee$50Penalty/Fee*
Subsequent insurance lapses$150Penalty/Fee*
North Carolina Lapse In Auto Insurance Penalty Chart

*Civil penalties assessed for liability insurance lapses depend on a registered owner’s prior lapses on their vehicle within three years of their current lapse.



Conclusion

Commercial auto insurance is the necessary protection you need for the vehicles you use to run company errands. There are standard and optional coverages that may depend on the size or activities of your business.

North Carolina state law requires businesses to at least have coverage for bodily injury liability and property damage liability. Failure to meet these insurance standards may result in appropriate penalties.Learn more about auto commercial insurance and get a commercial auto insurance quote today to protect the vehicles you use to run your business.

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