Commercial Auto Insurance Houston: Learn the Basics
If you drive, chances are you are familiar with personal auto insurance. But, would you know the difference between a personal auto insurance policy and a commercial auto insurance policy? If not, you have come to the right place.
At Frank Medina Insurance, we’re dedicated to giving you the tools and know-how you need to help you make informed insurance decisions. There are several things to know and consider when deciding on a commercial versus personal auto insurance policy, so let’s get started.
Do You Own it and Drive It?
The first question your auto insurance agent is likely to ask is who owns and drives the vehicle. If you are the owner of the vehicle, chances are you just need a personal auto insurance policy. That said, your agent may also ask you how you use your vehicle on a regular basis.
How Do You Use Your Vehicle?
If your auto insurance agent asks you how you use your vehicle, please don’t look at them like they’re crazy. And, no, they are probably not asking for a driving lesson. What they most likely mean is whether or not the vehicle you use is owned by a business or used for business-related travel.
Nowadays, there are many individuals who use their vehicles to provide rideshare services. Examples of these services include UberX, Sidecar, Lyft, etc. If you use your vehicle to drive for a rideshare service, it is likely you will need a commercial auto insurance policy. Why? Well, as it turns out, driving for this type of service is considered “commercial driving”.
Therefore, being a driver-for-hire, may not be covered under your current personal auto insurance policy. Providing rideshare services may mean you will need to consider buying a supplemental commercial auto policy. Keep in mind, this may not be feasible if you only provide rideshare services on a part-time basis.
Commercial driving isn’t just limited to rideshare services like those mentioned above. It can encompass a variety of vehicles and driving situations to include:
- Any vehicle that has been customized/outfitted with work gear or equipment
- Dump trucks
- Rental/leased vehicles
- Limousines, cabs and other “for-hire” vehicles
- Catering and/or refrigeration trucks, etc.
In short, if a vehicle is leased and/or owned by a business and is involved in any type of commercial work, it will likely need commercial auto coverage.
What Kind of Vehicle Do You Drive?
Okay, so the person asking you what kind of car you drive may be thinking how awesome it would be if you owned a Porsche, Ferrari or some other high-end vehicle. Who would mind being on the passenger side of one of those? In all seriousness though, when your auto insurance agent asks you that, it’s highly likely they want to know the type and weight of your vehicle.
If what you are currently driving looks like the real-life version of a Tonka truck or is heavier than your typical sport utility vehicle (SUV), you may need a commercial auto insurance policy. These “larger than life” vehicles can cause major damage in the event of an accident. As such, they may require special coverage.
In short, commercial auto coverage may be required if any of the following applies:
- The vehicle is leased and/or owned by a business,
- is larger than a typical on-road vehicle
- and/or the vehicle is involved in any type of commercial work
Business as Usual
Running a business is hard work and finding the right commercial auto insurance policy can be too. But, we’re here to help make things easier. Although personal auto insurance policies may provide adequate coverage for certain businesses, this isn’t always the case.
Businesses have to deal with different auto insurance concerns than your typical personal car drivers. Usually, businesses, partnerships and corporations have higher liability issues and have to deal with business-specific driving issues.
For example, if you haul specialized equipment, transport people or commercial goods or have other unique business operating circumstances, you will need to give serious thought to buying a commercial auto policy. Commercial insurance policies typically offer higher liability limits and greater protections in case of an accident.
That said, you may be asking yourself, “what types of commercial auto insurance coverage is available?”. We’ve got your answers in terms of the types of commercial vehicle insurance coverage that may meet your needs.
Types of Commercial Auto Insurance Coverage
Although we have stated that commercial auto insurance is different than personal auto insurance, it does offer some of the same coverage.
Coverage can include: personal injury protection (PIP), bodily injury liability, medical payments, uninsured motorist, property damage, etc.
If you are not sure what the purpose of these coverages are, don’t worry. We’ve got you covered (pun intended).
Let’s talk about personal insurance protection (PIP), also known as personal injury protection, first. This type of coverage can be considered an extension of your vehicle insurance. It covers medical expenses and, in some cases, lost wages.
Next, there’s bodily injury liability. Assume you are found legally responsible for an auto accident, involving a commercial or personal vehicle. Should you be sued for damages or injure others, this part of your insurance policy would cover the associated costs. Bodily injury liability coverage does not pay the costs associated to your own injuries.
It can, however, help cover the funeral and/or medical expenses of third parties you injured as a result of an auto accident. Additionally, it may help cover the third party’s lost income, pain and suffering (as determined by court) and nursing care. Remember, if you are deemed the at-fault driver, you are responsible for paying the costs related to the car accident.
Then, there’s medical payments coverage. Medical payments coverage provides for those medical expenses incurred by you or your passengers in the event of an auto accident.
Add it to your Commercial Auto Quote
Most types of vehicle insurance policies include a provision that allows a driver to receive damages for an injury caused by an uninsured driver. This is known as uninsured motorist coverage. Let’s discuss two main types of uninsured motorist (UM) coverage: bodily injury (BI) coverage and motorist property damage coverage.
Where motorist bodily injury coverage protects against damage caused by hit-and-run accidents, motorist property damage coverage does not. It is important to understand there is a difference between uninsured motorist coverage and underinsured motorist coverage.
Underinsured motorist (UIM) coverage is intended for those cases in which the liability limits of an at-fault driver’s insurance policy are too low to cover the costs of damage or other expenses. The at-fault driver’s insurance should provide coverage up to the stated limits. Underinsured motorist coverage would “cover the gap” between the at-fault driver’s policy limits and damages above stated policy limits.
The premium paid for this protection may vary from insurance provider to insurance provider and state to state.
Property damage liability insurance coverage covers the cost of damages to third party property if you are found at fault for an auto accident.
Two other types of commercial auto insurance coverage are collision insurance and comprehensive coverage. Here is what you need to know about both of these types of commercial auto insurance policy coverage. When your vehicle hits another vehicle or is hit by another vehicle, collision insurance may provide coverage for damages not covered by a property damage policy.
For its part, comprehensive coverage provides coverage for YOUR vehicle for damages not resulting from a traffic accident. For instance, such coverage would pay for damages to your vehicle due to vandalism.
Still unsure of what type of coverage is best for you or your business? A qualified insurance agent can help talk you through your commercial auto policy coverage options. The internet can also help you compare commercial auto policy options from multiple companies. Websites such as DMV.org, are dedicated to helping auto insurance consumers understand the pros and cons of different policies and coverage.
The Cost of a Car Crash
Traffic accidents in the U.S. come with a cost both in terms of money and lives lost. According to the Association for Safe International Road Travel, traffic accidents are the cause of death for 1.3 million people each year. That figure does not include the additional 20 to 50 million people who are left injured or disabled due to traffic collisions.
It is important to know that each state has different auto insurance coverage requirements. Some states may mandate additional coverages. On average, traffic accidents cost the U.S. almost $231 billion per year! In tort states, such as Texas, if you are found to be the at-fault driver in a traffic accident, you will be held responsible for any damages. These damages can include victim(s) medical expenses, vehicle damage etc. For this reason, it is extremely important to make sure you have the right type of commercial auto insurance policy.
Whether you are the CEO of a multi-national trucking company or your neighborhood’s best known rideshare driver, having the right insurance coverage could save you thousands of dollars. In the event of an accident, your commercial auto insurance policy is key to protecting yourself from financial hardship.
Did You Know?
In addition to various types commercial auto coverage, there are certain types of “extras” you may be able to add to your policy. A number of auto insurance companies can provide broadened coverage such as the following:
Personal effects coverage. Certain policies will pay for your personal effects, in a covered work vehicle, up to $500.
Substitute and leased vehicle coverage. Other policies may extend physical damage coverage to vehicles being temporarily used to substitute work vehicles. Certain restrictions may apply to this type of coverage, so it is a good idea to check with your agent to make sure the coverage meets your requirements and those of the policy.
Broadened additional insured protection. Considered “blanket coverage,” the provision provides a company the ability to add any person doing work for them to their policy. The person would receive temporary liability protection until work is completed.
Broadened “who is insured” clause. This is similar to the broadened additional insured protection, except it provides liability coverage for subsidiaries owned or acquired.
Deductible waiver. This type of provision most frequently applies to collision coverage. It can eliminate the deductible in cases where your work vehicle and that of the third party involved in the accident have the same insurance company.
Truck Topics To Understand
Loan and lease gap coverage. This type of coverage comes into play when your work vehicle is wrecked and the settlement isn’t enough to cover repairs or replacement.
Fellow employee coverage. Should an employee injure another, this type of commercial auto policy enhancement helps protect your business from claims.
Unintentional omissions or errors provision. This type of clause provides assurance you won’t receive a lower settlement due to accidental mistakes when reporting claims.
Glass repair deductible waiver. If you choose to repair instead of replace the vehicle’s glass, this policy feature can save you some money.
Broadened supplementary payment provision. This insurance coverage enhancement increases the supplementary payment amounts offered under a policy’s liability coverage.
These types of enhancement coverages may not be offered by all companies or even in all U.S. states. That said, some insurance companies offer these enhancement coverages at no added cost to you.
The Power of Business Auto Protection
As you can see, there are numerous types of commercial insurance offerings. Your auto insurance agent is a great resource to help you find the policy that best meets your business needs and budget.
We said it before, but it is worth repeating. The right type of commercial policy coverage has the potential to save you thousands, even millions, of dollars in commercial auto claims. Although a standard commercial auto insurance policy may be sufficient to meet your business needs, added coverages may provide that layer of protection you didn’t know your business needed.
Taking the time to understand the different insurance coverages available is not only smart. It’s an investment in your business and your future.
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