Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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UPDATED: Oct 18, 2021

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Everyone needs car insurance to protect you in the event an accident occurs while driving your vehicle for personal reasons. Additionally, there is a need for some people to obtain commercial vehicle insurance that protects business owners if an employee drive is involved in an accident with a company vehicle.

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Business owners operating any type of transportation or delivery service employing employee drivers are usual required by their resident state to carry commercial liability insurance. However, even if the state does not make coverage mandatory, it is a wise business decision to purchase commercial vehicle insurance so your business never faces financial disaster if a company owned and operated vehicle is involved in a serious accident.

Commercial Drivers Need Insurance

Commercial drivers also may need to purchase insurance. It is highly recommended that you confer with an employer about company insurance learning the types and extent of the coverage. Typically, commercial insurance does include liability coverage.

The coverage also may extend to collision and comprehensive as well as underinsured and uninsured motorist coverage.

Once you have learned about an employer’s commercial insurance coverage, you will be armed with enough knowledge to make an informed decision about buying additional coverage. There are several reasons buying additional liability coverage will benefit a CDL (Commercial Driver’s License) operator. Often, depending on the company, businesses opt for the bare state-mandated minimums.

So, obtaining additional liability coverage may be a good idea since minimum coverage may not be enough to cover the medical and repair costs after being involved in an accident. The exact amount of liability insurance needed depends on several factors including the type of business operated and the amount of driving involved. Most professional insurance agents suggest a minimum of $500,000 for liability coverage.

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 Where to Look For Commercial Insurance

A good place to start is consulting with your personal vehicle insurance agent. Often companies offer deep discounts when purchasing additional policies, especially if all drivers insured have clean records. Also, use the Internet to compare rates or consult with your state insurance department.

Determining what is a Commercial Vehicle

Simply put, a commercial vehicle is any vehicle used for business purposes. Business owners using one or more vehicles for commerce must insure these vehicles with a commercial insurance policy. This is not strictly directed at businesses operating vans, trucks or other delivery-type vehicles.

Companies supplying employees with traditional automobiles must also obtain commercial insurance policies.

Keep in mind insuring vehicles, even automobiles, under a commercial insurance policy can be more costly than simply buying personal car protection. Each state has different commercial vehicle requirements for insurance purchase. Check with your particular state to make sure you meet at least the minimum requirements. You need to protect your employees and yourself and prevent your business from suffering financial disaster.

There are common types of commercial vehicles that need to be covered by a commercial insurance policy including passenger cars and buses, mini-vans, cargo vans, delivery vans and pick-up trucks used in daily business operations. Specialty vehicles such as funeral home hearses, luxury limousines, and even ice cream trucks need coverage.

Also, every type of specialty vehicle used for commercial agricultural purposes needs to be covered by commercial insurance. Make sure to check with an insurance professional because often these vehicles are only covered for physical damage.

Get your information gathered before making a buying decision.

Rates Depend Upon Several Factors

Several factors have a direct influence upon rates charged for buying a commercial insurance policy including:

  • Driver Age
  • Driving Record
  • Driver License Type (There are several different CDL categories)
  • Vehicle Manufacturer and Model
  • Cargo content
  • Passenger number
  • Mileage driven annually

This is an information list all prospective commercial insurance buyers must provide to obtain a quote. The agent uses the information when assessing risk. It is important the information is accurate to obtain a realistic quote. Incorrect or missing information may result in future claim denial.

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The Need for Commercial Insurance

Commercial insurance is designed to meet specific business needs as financial protection against any losses resulting from a business-related accident. A good example would be a business using several trucks or vans making product delivery, such as flowers. If while on a delivery run, one of your vehicles hits another vehicle, the commercial insurance protection covers repairs for physical damage and any medical expenses for injuries sustained.

Although many commercial insurance policies are costly to buy and keep active, there are several methods you can use to lower your policy premiums such as:

  • Select a higher deductible – All insurance buyers must choose a deductible, which is the amount of money you choose to pay out of your pocket if an accident occurs. If you choose as high an affordable deductible possible, your premium will be lower. However, do not choose a high deductible resulting in out-of-pocket expenses you cannot afford when making vehicle repairs.
  • Choose Money-Saving Payment Option – The least expensive payment option is an annual paid-in-full method. This saves the typical administrative and interest fees applied to any periodic payment plan, such as monthly. In fact, many companies offer a 10% discount when making annual commercial insurance policy payments.
  • Employ Drivers with Clean records Only – Making sure your pool of company vehicle drivers maintains clean driving records may also result in a 25% savings on commercial insurance policy premiums. In addition, discounts may be available to companies offering defensive driving course for employees.
  • Check Out an Umbrella Policy – If you, as a business owner, have personal assets exceeding $100,000 that may be at risk in a lawsuit filed, consider the option buying an umbrella policy. The purpose for this type of commercial insurance is protection covering all expenses your standard liability does not cover.

If the standard liability covers only $500,000 for medical and vehicle repairs, but an accident causes $1,000,000 in expenses, an umbrella policy covers the additional $500,000. This type of insurance protection is typically inexpensive to purchase. Plus, this coverage may result in thousands in savings while saving your business from financial ruin.

Provide Personal Insurance Information – Grab a hold of your personal insurance declarations page, if never buying commercial insurance before – or your current policy information. This will help you to determine just what your commercial insurance needs will be.

Commercial Insurance Requirements

Check with your state concerning Commercial Insurance requirements. Some states may require a 50/100/25 split for liability coverage. This represents state-mandated requirements of $50,000 for bodily injury coverage for each person along with $100,000 bodily injury coverage for each accident and including $25,000 for property damage coverage for each accident. Other states may only require a 25/50/10 coverage split.

Do not let a state’s minimum coverage requirements sway you from buying more insurance than is state-mandated. You need to take into consideration not only your business assets, but your personal net worth as well. Consider obtaining nothing less than a 100/300/100 split.

Buying collision coverage is for covering the costs for repairs sustained in a collision accident. If your company vehicle hits another vehicle or even a stationery object like a road sign, fire hydrant or other, this type of coverage will pay for the repairs to your vehicle.

Buying comprehensive coverage will cover damage costs resulting from weather conditions, natural disasters, theft, and vandalism. Businesses operating in high-risk metropolitan areas or in parts of the country experiencing harsh weather conditions, for example, winter, should consider comprehensive coverage.

Buying uninsured and underinsured motorist coverage protects business owners financially in case an accident happens involving a motorist who has little or no coverage. If involved in an accident with a motorist where that person has only $25,000 of damage coverage but your repairs cost $40,000, having underinsured coverage will take care of the additional $15,000 repair bill.

Check Out Fleet Owner Options

Examine providers offering fleet owner insurance options when operating more than 25 commercial vehicles. One option may be posting a surety bond or becoming self-insured. This would require setting aside enough money to cover meeting the state-mandated insurance amounts for liability. A bond may also be posted to cover this amount.

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Get Prepared Before Shopping for a Quote

Always prepare a list of all your commercial vehicles and collect information about all your employee drivers. This information should include the vehicle make and model, along with the vehicle mileage. Make sure to include all safety features the vehicles have installed.

Record all drivers’ licenses and check driving records. You do not want any surprises. Vehicle descriptions along with license numbers provided allows your insurance company to better assess your risk producing an accurate quote.

Business owners need to make an informed decision when it comes to buying commercial insurance. So, collecting quotes from different sources along with quotes for different coverage packages will give you the needed information. You may be surprised finding additional liability or comprehensive coverage is not as expensive as you once thought. The more information collected will result in buying a policy better suited for your needs.

Consult with Others

If you own a business employing commercial drivers while belonging to a trade association or other industry-based organization, check with this source for insurance providers. You may find insurance you look at appears good at first glance. However, gaining another’s first-hand knowledge is extremely valuable.

Talk with business owners operating companies similar to yours. Seek out a business owner who has experienced an accident asking several questions about this experience with their insurance provider. Questions asked should include:

  • Did your rates go up after filing a claim?
  • Did your insurance cover all medical and repair expenses?
  • Did all insurance company representatives conduct themselves in a friendly, helpful manner?
  • Did the insurance company drop specific policy coverage after the accident?

Preparation is always the best method when looking for commercial insurance. So arm yourself with information before deciding on a provider for your insurance needs.

Use the FREE online tool found here, by putting your ZIP code into the FREE box to find affordable commercial insurance.