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What Businesses Need Commercial Auto Insurance
Small Business Insurance
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What businesses need commercial auto insurance? - Pie Insurance

What businesses need commercial auto insurance? - Pie Insurance

What to know about commercial auto insurance coverage

In assessing threats to your small business, you might not consider a car accident to be near the top of the list. However, an unexpected accident can hit your company with as much force as it hits your vehicle.

Imagine Fiona, who runs a florist business. She bought a used, midsize van with a special cooling unit to transport her floral arrangements to venues like weddings.

One evening, Fiona was returning home from a wedding, and she ran a stop sign that was partially hidden by overgrown vegetation. Unfortunately, she crashed into a small sedan, and the passenger of the other vehicle filed a lawsuit against her business for sustained injuries and compensatory damages. Not only did Fiona lose transportation for her business, but she was also left with the real worry that financial liability for the accident would cripple her business for years to come.

Fiona’s troubles could have been minimized had she realized the necessity for small business insurance—particularly commercial auto insurance.

What is commercial auto coverage?

Most of us are aware that if you drive a personal vehicle, you’re required to have auto insurance. It manages the risk of a car accident, whether the accident is your fault or someone else’s.

If protection is necessary for your personal vehicle, it only makes sense that company vehicles require the same risk management.

As with personal auto policies, commercial auto insurance provides coverage when an accident involving a company vehicle results in injury, damage to property or liability claims.

How is commercial coverage different from personal auto insurance?

Unlike personal auto insurance, commercial policies often provide different amounts of coverage. They also encompass situations and vehicle use beyond the scope of a personal policy. Commercial auto policies are designed to consider conditions unique to your business and the kinds of vehicles you own or operate.

Another difference is commercial auto policies can also cover specialized equipment—often both expensive and essential to your business—that may be damaged during an accident. Even merchandise being transported (like Fiona’s floral arrangements) can be compensated if destroyed or damaged, including when the loss occurs during the process of loading or unloading.

Finally, commercial auto insurance covers multiple drivers, including employees who drive vehicles that belong to your business.

Types of businesses that require commercial auto insurance

Do you use a car in any way for your business? If so, then you are required to have commercial auto insurance.

Here are several types of businesses that may need to evaluate their need for this coverage.

Independent contractors

Even if you use your own car to conduct business, you’re involved in commercial ventures beyond your own personal pursuits, which exposes you to potential litigation against your business.

Any independent contractor who travels to various locations to provide services falls under this umbrella. This kind of business includes, but isn’t limited to, the following:

  • Private cleaning companies, even if a sole proprietorship
  • Freelance accountants
  • Real estate agents
  • Independent owner/operator truck drivers

Tradespeople and special service providers

Businesses in this category often use expensive equipment that requires additional protection or materials that could incur additional risk.

Imagine, for example, that you own a painting company. Your truck is involved in an accident that spills paint all over the place. The cleanup services alone could cost a small fortune.

The following are examples of small businesses that will want this extra protection:

  • Plumbers
  • Electricians
  • Heating and air specialists
  • Carpet and upholstery cleaners
  • Painters
  • Pest control technicians

Car dealerships and trucking and delivery companies

These businesses require vehicle protection, be it to cover potential mishaps due to constantly moving automobiles on and off a car lot or to mitigate the risk of deliveries involving larger vehicles (vans, pick-ups, semis).

The larger the vehicle involved in an accident, the more costly and even deadly the damage can be.

Construction companies

Construction businesses may need commercial auto coverage the most. Driving heavy machinery like bulldozers or cranes takes special training and experience. Since construction vehicles often transport large quantities of heavy materials, the potential for damage and danger is high.

Don’t let an auto accident cripple your small business

Operating a vehicle for your business comes with risks. Even the safest driver can find themselves in circumstances out of their control, and no one wants to be stuck paying the cost of repairs out of their own pocket.

Luckily, commercial auto insurance can help you avoid expensive repairs and keep the business running smoothly. Think you may need a policy? Pie can help with that!

Thanks for reading! Please note that this content is intended for educational purposes only. As best practices change regularly, you should refer to your trusted advisor for specific counsel.