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Commercial Auto provided by Builders Choice Insurance Services

If your business owns vehicles, transports goods or people for a fee, uses vehicles to conduct a service, or if employees operate vehicles, commercial auto insurance is required by law. Written and rated differently than a personal auto policy, some commercial auto such as box trucks, service utility trucks, vans, and semi trucks require higher liability limits. Ex: Commercial autos that travel from state to state must comply with federal in addition to state regulation and are subject to higher minimum limits of liability coverage.

Who Needs Commercial Auto Insurance?

You need this protection if:

Your business owns, leases or rents any vehicles
You are using your vehicle to transport goods or people for a fee
Employees drive company-owned, leased or rented vehicles
Employees drive their own vehicles while conducting business
You or your employees drive company cars for both business and personal use
You need higher limits of liability because of the nature of your work
You are hauling a considerable weight in tools or equipment or towing a trailer used to conduct your business

What Does Commercial Vehicle Insurance Cover?

Bodily injury liability coverage – (pays for bodily injury or death resulting from an accident for which you are at fault and in most cases provides you with a legal defense)
Property damage liability coverage – (provides you with protection if your vehicle accidently damages another person’s property and in most cases provides you with a legal defense)
Combined single limit (CSL) – Liability policies typically offer separate limits that apply to bodily injury claims for property damage.
Medical payments, personal injury coverage, regardless of fault
Uninsured motorist coverage – pays for your injuries and, in some circumstances, certain property damage caused by an uninsured or a hit-and-run driver. (In some cases, underinsured motorist coverage is also included)
Comprehensive physical damage coverage – (pays for damage to your vehicle from theft, vandalism, flood, fire, and other covered perils)
Collision coverage – (pays for damage to your vehicle when it hits or is hit by another object)

Who Is Insured?

The persons or entities that qualify as insureds are classified into three categories:

“You”: “You” means the named insured, the person or company listed in the declarations page.
Permissive Users: Anyone else who is driving a covered auto you own, hire or borrow with your permission.
Omnibus Insureds: Anyone who is liable for your conduct or for the conduct of a permissive user. Often referred to as the omnibus clause, this wording covers anyone who may be held legally responsible for an accident caused by a named insured or a permissive user. EX: An employer may be held vicariously liable for an auto accident caused by a negligent employee.

Does Commercial Auto Cover Mobile Equipment like Trailors and Forklifts?

The commercial auto policy defines “auto” as a land motor vehicle, trailer or semitrailer designed for travel on public roads. Mobile equipment like trailors and forklifts would be covered in transit, however, if not used in transit, you would need an additional endorsement depending on the nature of your business.

Vehicles automatically covered:

Small Trailers designed for travel on public roads if they have a load capacity of 2000 pounds or less (whether you own the trailers or not)
Mobile Equipment in Transit while being towed or carried by a covered commercial auto. (Ex: a forklift being transported to a job site on a truck you own that is insured for liability under your commercial auto policy)
Temporary Substitutes – A vehicle you borrow as a substitute for a covered auto that is temporarily unusable because it has been damaged, has broken down or is undergoing service or repair.

In contrast, mobile equipment used to perform operations like digging, scraping, or lifting large items (think crane or forklift) are used primarily off public roads. Mobile equipment may be driven or conveyed on a public road from one job site to another. Yet, transportation is not its primary purpose. Therefore, depending on your needs additional coverage options under Inland Marine Insurance such as Contractor’s Equipment Insurance or Floating Property Insurance may be required.

The definition of mobile equipment includes six categories of vehicles. These include vehicles:

Designed for use off public roads, like forklifts or farm machinery
Maintained for use on or adjacent to your premises. An example is a maintenance truck that never leaves your premises
Used to carry shovels, loaders, diggers, road construction and similar equipment
That travel on crawler treads (such as an excavator)
That are not self-propelled and are used to carry compressors, pumps, generators, cherry pickers are other equipment that is permanently attached. (If self-propelled, such vehicles are considered autos)
That don’t fall into categories 1-5 and are used for purposes other than the transportation of persons or cargo.

Still have questions about a Commercial auto policy? Find out if you also need a Motor Carrier endorsement, Cargo Insurance or an Inland Marine policy by talking to a Builders’ Choice agent today!

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