Do I need commercial auto insurance? For companies that do not manage large fleets, there can be a disconnect when it comes to the importance of business automobile liability insurance. An employee may only use a company vehicle for a quick work-related errand once a month, but that small instance can put the business at risk. So, whether someone uses a company vehicle or a personal vehicle for work-related duties, you need to understand your liability and take the correct measures to protect your business. Discover the ins and outs of business automobile liability insurance below.
What is Business Automobile Liability Insurance?
Business automobile liability insurance is a facet of commercial insurance services. Also known as hired and non-owned commercial vehicle insurance, it covers businesses that use commercial and/or employee vehicles for work-related events or errands. Why is it important? Essentially, if an employee runs a small errand for their employer — even something as simple as a quick stop at the bank or post office down the street — you could be held liable if something goes wrong. Commercial liability insurance manages the risk associated with using vehicles for company matters and protects your business from large financial losses if something goes awry.
Do I Need Commercial Auto Insurance? Things to Consider
So, do I need commercial auto insurance? See these key considerations if your employees ever use a car for work-related duties. If your business falls into any of the following categories, you need to get insured.
- An Employee Occasionally Uses a Commercial Vehicle for Business
- An Employee Occasionally Uses a Personal Vehicle for Business
- An Employee Rents a Vehicle for Business
- An Employee Consistently Uses a Personal Vehicle for Business
- An Employee Uses a Personal Vehicle for Non-Work-Related Duties
- Multiple Employees Consistently Uses Fleet Vehicles for Business
If an Employee Occasionally Uses a Commercial Vehicle for Business
If an employee occasionally uses a commercial vehicle for business-related tasks, you need commercial vehicle insurance. A task as simple as grabbing lunch for the team, stopping at the office supply store, or meeting with a client across town qualifies for this insurance. Why is this the case? Say something rolls into the road as they drive, they swerve and get into a car crash. Because they were technically at work and using a company vehicle, your company can be held liable for the damages. With insurance, that risk is largely covered by your policy.
If an Employee Occasionally Uses a Personal Vehicle for Business
If an employee occasionally uses a personal vehicle for business-related tasks, you need commercial vehicle insurance. Essentially, you take on the risk for work-related driving of any kind – even if an employee uses their own car and has personal car insurance. So, if they stop at the bank for their manager on the way to work and get in an accident, you can be held accountable for damages. However, if you have a commercial insurance policy that covers hired and non-owned commercial vehicle liability, you can avoid taking on the bulk of that financial burden.
An Employee Rents a Vehicle for Business
If an employee rents a vehicle for business-related tasks, you need commercial vehicle insurance. Luckily, hired and non-owned vehicle liability insurance also protects rented vehicles used for work duties. So, even if your team member goes on a business trip and rents a vehicle when they arrive, both you and your employee are protected under a commercial auto insurance plan.
If an Employee Consistently Uses a Personal Vehicle for Business
If an employee consistently uses their personal vehicle for business-related tasks, register that vehicle under your commercial auto policy. The more an employee drives for work-related tasks, the greater the risk. That means if someone does this regularly, it’s a good idea to add that specific vehicle to the policy. It provides greater protection for your business if an incident occurs in their car on the clock. Plus, it can account for some of the wear and tear that comes with driving a personal vehicle frequently for work. An insurance agent can help you identify all the employee-owned vehicles that qualify for registration under these risk management insurance plans.
If an Employee Uses a Personal Vehicle for Non-Work-Related Duties
If an employee uses a personal vehicle for non-work-related tasks, register that vehicle under your business’ commercial auto policy — and ensure they also have personal car insurance. Hired and non-owned coverage does not replace an existing personal auto coverage for the employee. When they drive for any non-work-related duties, they should be insured under their own auto coverage.
This is a common question, because two car insurance coverages may seem excessive, but there is a big difference between commercial vehicle insurance and personal car insurance. Essentially, if they drive their personal vehicle for any personal errand and get in a car accident, they are not covered by the commercial auto policy they are registered under. As you add more employees to the policy, ensure they get onboarded with this information to avoid any misunderstanding or issues down the line.
If multiple Employees Consistently Uses Fleet Vehicles for Business
If multiple employees consistently use fleet vehicles for business, you need vehicle liability insurance. This one is a no-brainer. Businesses that rely on fleet vehicles, like construction companies, landscapers, and delivery services require comprehensive liability insurance for those fleet vehicles. Employees operate your cars, trucks, and towing equipment all day – and likely come across a wide range of conditions as they travel. That means all parties need coverage in case an accident occurs. Get a policy in place before letting any team member enter a company fleet vehicle.
So, Do I Need Commercial Auto Insurance?
Do I need commercial auto insurance? If your business aligns with any of the circumstances listed above, it’s time to get commercial auto insurance. You may read the above situations and think some are overkill, but it truly is better to take preventative action than to pay the price later. Plus, not all commercial auto insurance is the same. If you fall into one of the lower-touch circumstances (for example, an employee only using a personal vehicle occasionally) simply get a less comprehensive policy.
Ultimately, the role of a Colorado insurance specialist is to listen to your team, get an accurate understanding of your risk, and recommend the right-fit policy for your current state. Then, they help you establish and manage that policy, so it remains up-to-date and effective as your business grows and evolves.
Protect Your Business with Business Automobile Liability Insurance
Do you need commercial auto insurance in Colorado? Moody Insurance Agency can help. Our deep experience in commercial insurance means we can provide personalized recommendations based on your business’ needs. Our expertise has protected Colorado businesses for over 50 years. Contact Moody Insurance today to speak with our team and get started with business automobile liability insurance.
Want to learn even more about commercial insurance, small business insurance, employee benefits, personal lines, and risk management? Check out Moody’s insurance resources to get more insights from our experts.
