Commercial auto insurance is a policy that is designed to cover the vehicles your business owns or uses for work purposes. Unlike a personal auto insurance policy, these policies are almost specifically geared to cover more than one driver, as you will generally have employees sharing vehicles. But not all commercial auto insurance policies are created equal, and it is important to understand your policy’s limitations and who will be covered in case of an accident.
Named Insureds
Named insureds are generally those who hold the policy and are the most covered under commercial auto insurance. As a business owner who purchases a commercial auto insurance policy, you are the named insured. This means that you will have the widest scope of coverage under this auto insurance policy. This coverage extends to you even if you are not operating the vehicle.
For example, say one of your drivers causes an accident while operating one of your business’ trucks. The victim of the accident attempts to sue your business for the damages. In this case, you should be covered under your commercial auto insurance policy.
It is generally recommended that you do not have too many named insureds on a single policy to avoid issues in the future. Also keep in mind that insureds can affect the cost of your commercial auto insurance due to their driving record and even credit score.
Permissible Drivers
Permissible drivers are any drivers who you give permission to operate the insured vehicles. In a business setting, permissible drivers are generally employees. As long as you have the proper type of insurance, your employees should be covered while operating your company’s vehicles.
The one exception is when your business is renting or borrowing vehicles, which are not owned by the business. In this case, you will need to carry Hired or Non-Owned Liability in order for your employees to be covered while operating a vehicle that is not owned by your business.
Make sure your commercial auto insurance policy comes with the correct type of insurance to protect your employees and other drivers on the road. Important coverages include:
- Comprehensive Coverage: Comprehensive coverage covers damages to your company vehicles caused by fire, wind, hail, lightning, smoke, falling objects, theft, vandalism and other incidents not involving collision.
- Collision Coverage: Collision coverage covers damages to your company vehicles caused by a collision with another vehicle or object.
- Liability: Liability insurance provides compensation for bodily injury and property damage your employees may cause others while operating the insured vehicle.
- Medical Payments Coverage: Medical payments coverage helps with medical bills for your employee and their passengers after an accident, no matter who caused the accident.
- Uninsured/Underinsured Motorist: This insurance covers damages that occur in an accident involving a driver not carrying insurance.
This can also apply to company vehicles, but this does not include vehicles owned by the employees. If employees operate personal vehicles for work, they will need to be covered under Hired or Non-Owned auto insurance.
Omnibus Insureds
Omnibus insureds refer to anyone who can be held liable for an accident in one of your company vehicles. For example, if another company hires your vehicles for delivery, they could be held liable for an accident that occurs while your employees are driving. This includes any damage the hiring company’s products may cause due to the accident.
Excluded Drivers
Excluded drivers aren’t as much of a worry for commercial auto insurance as they are with personal auto insurance. On your personal auto insurance policy, an insurer may place a limitation on certain people who can drive the vehicle. If you live with someone who is considered a high-risk driver, for example, they may be excluded from your car insurance coverage.
Under your business, you put your potential drivers through extensive background checks to avoid this. It is important to check each potential employee’s driving record and credit score. Not only can a poor driving record lead to more accidents on the clock, but it can also have an affect on your commercial auto insurance premiums. Having multiple drivers can generally raise your rates, anyway, and one bad driving record can drive them even higher.
Conduct thorough background checks and consider putting employees through defensive driving course before allowing them behind the wheel of a company car. Whether your company vehicles are small sedans or large delivery trucks, it is crucial to keep your employees and everyone else on the road safe in case of an accident.