Business auto insurance or the Business Auto Policy (BAP) is an insurance policy that provides auto liability and physical damage coverage for vehicles that are used for a business purpose. This insurance can cover autos that are owned, non-owned, hired or borrowed as long as they are used in the named insured’s business operations.
Important things that you need to know about Commercial Auto Insurance:
Commercial vehicles must be owned by the company. The owner of the vehicle needs to be an entity, not a person. It is important that the vehicle is insured under a policy that has the same named insured as the vehicle is registered in. The commercial auto policy is not designed to cover personal vehicles used for personal use.
Increasing your commercial auto deductible is rarely a good idea. In years past, increasing a deductible from $500 to $1,000 or from $2,500 to $5,000 made a calculable impact in reducing premium. In today’s insurance market, this is simply not the case.
Typically, commercial vehicles do not have towing and rental coverage included in the policy. There are many classes of commercial vehicles that can be chosen for rating purposes on a commercial auto policy. Personal passenger vehicles, such as a four door sedan, are the only class of vehicle that is automatically offered towing and rental coverage without endorsement.
Make sure you understand what do to when you rent a car on a business trip. The details of rental contracts vary widely. It is a best practice to always purchase the rental car company’s insurance even if your commercial auto policy includes coverage for Hired/Non-Owned autos.
Hired/Non-Owned Auto coverage is not follow-form auto coverage for any vehicle used in business. In the event of an accident, the driver’s insurance will be primary and, when exhausted, the commercial auto policy may step in.