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Understanding Commercial Auto Insurance | Pie Insurance

It’s not always obvious to small business owners when they need to have a commercial auto policy. As an agent, you can help your clients understand the benefits.
Understanding Commercial Auto Insurance | Pie Insurance

What agents need to know to serve their clients better

Owning and operating company vehicles isn’t just for the largest businesses, or those specializing in transport-related service. In reality, commercial vehicle use is much more common for companies of all sizes, with over half of small to medium-sized business owners reporting the use of cars, trucks, or vans in their day-to-day operations. 

As an independent insurance agent, it’s your job to help your small business clients understand and choose the best policies for their business. You’ve likely already discussed the importance of certain coverages such as workers’ compensation and general liability insurance, but how can you help your clients protect themselves and their employees from the risks associated with owning and operating commercial vehicles? The answer is simple—by seeing if a commercial auto policy is the right fit for their business.

What is commercial auto insurance?

Commercial auto insurance is a type of business insurance that applies to any vehicles owned or operated by a business. A commercial auto policy includes various coverages intended to protect policyholders from the risks associated with owning and operating company vehicles. If an accident happens, a commercial auto insurance policy protects small businesses from liability and financial losses associated with vehicles covered under the commercial auto policy. 

Without a commercial auto policy in place the business and its owners could be responsible for paying the costs associated with an accident out of their own pockets. These costs can include damage to vehicles and other property, medical bills for people injured in an accident, legal fees to defend the business, and ultimately any amount the business is found liable for. While larger companies may be able to pay up without too much financial loss, small businesses can take a real hit. Purchasing a commercial auto policy can help your small business clients avoid devastating financial loss.

Do your clients need commercial auto insurance?

If you serve clients in the transportation industry, or businesses with an obvious need for company vehicles (like pizza chains or HVAC technicians), then you’re probably already speaking to these clients about their commercial auto policy needs. But what about the clients where vehicle use isn’t a given? 

Any business, regardless of industry, type, or size, can be a candidate for commercial auto insurance if the company uses vehicles in any aspect of operating the business or serving customers. This can include driving to and from client sites for meetings, hauling products or equipment from one location to another, or even transporting employees. Even if your clients don’t work in a field where auto use comes quickly to mind, it’s worth having a deeper conversation to learn if they’re using a car or truck in any business capacity that could warrant a commercial auto policy. 

Some of the more obvious times when your clients may need a commercial auto insurance policy include: 

  • If they own or lease vehicles for their business
  • If they operate vehicles with commercial license plates, registrations, or tags
  • If they use vehicles as an essential part of their business operations (think taxi driver or delivery truck)

These are definitely not the only scenarios, and it’s always a good idea to speak with your clients about their vehicle use. Specifically, small business owners who use their personal vehicle for business may not even be aware that they should consider a commercial auto policy. As their independent insurance agent, you can help them evaluate their risks and whether adding commercial auto to their business insurance products makes sense.

What does a commercial auto insurance policy cover?

Similar to a personal auto insurance policy, commercial auto insurance includes a variety of coverages for your clients to choose from. Some common coverages include collision coverage, comprehensive coverage, liability coverage, personal injury, and medical payments. 

The exact coverage your clients’ commercial auto policies include will depend on what level of coverage they elect, which insurance carrier they choose and even state-based minimum limits.

How much does a commercial auto policy cost?

The exact price of a commercial auto insurance policy will vary based on things like:

  • The number of vehicles owned or leased
  • Whether the vehicles are owned or leased
  • How often the vehicles are driven
  • The vehicle type
  • Risk factors specific to each clients’ industry

When discussing a commercial auto policy with your clients, make sure you go over the number of vehicles being used, vehicle size and the average travel radius. There are also industry-specific and geographically specific risk factors to consider. All of these, along with the insurance carrier and your clients’ past claims history can influence the cost of a commercial auto policy. 

It’s important that your clients understand a personal auto policy will likely not cover them in the case of an accident involving a company vehicle. While the exact price will vary, having a commercial auto policy in place will be much less expensive than paying out of pocket for damages if an accident occurs.

Why is commercial auto insurance important?

Owning and operating company vehicles can provide great benefits to your clients and their businesses, but along with benefits, commercial auto use also comes with an additional layer of risk to business owners. If your client or their employees are involved in a car accident with a company vehicle and there’s no commercial auto policy in place, they could end up paying large amounts out-of-pocket to cover the cost of damages. 

On top of that, there’s the simple fact that roads are getting busier and the likelihood of being involved in a car crash is increasing. Whether your clients use their company vehicles to transport materials, equipment, people, or products, they rely on those vehicles to serve their customers and make a profit. You could help protect your small business clients and their employees by talking to them about commercial auto insurance.

Protect your clients when they’re on the road

Owning a business comes with its own risks, including those associated with driving for business purposes. Your clients rely on you for trusted advice to help protect against financial losses. As an independent agent, you can help your clients consider their risks and find the right commercial auto coverage to fit their needs.

Thanks for reading our educational resource! Any above reference to a specific company, method, or product is meant for educational purposes only and is not specifically endorsed by Pie.