Commercial Auto Policy

What is a Business Auto Policy?

As a business owner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel -- liability, collision and comprehensive, medical payments (known as personal injury protection in some states), and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the "principal insured" rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you. Whether you need to buy a business auto insurance policy will depend on the kind of driving you do.

A good insurance agent will ask you many details about how you use vehicles in your business, who will be driving them, and whether employees -- if you have them -- are likely to be driving their own cars for your business.
While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your insurance agent to explain all the differences and options.

Almost every business may face a loss due to its owning, renting, using, or loading/unloading of a vehicle.  Most coverage needs can be handled by a business auto policy (BAP) or similar form.  BAPs may cover a variety of operations, including trucking, garaging, public and private transport, and businesses with auto exposures that fall outside the other classes. Coverage is flexible. It may be purchased as a separate policy or as part of a package of coverage that may also protect buildings and business property (equipment, furniture, etc.).

A BAP generally offers:

  • Liability coverage
    protection for physical injury to other persons or their property because of an accident related to your covered vehicle including legal defense cost or expense
  • Comprehensive coverage
    handles loss from any cause except collision. A limited, less expensive option is available. It only protects against a set of specific causes such as fire, lightning, explosion, vandalism, and several others)
  • Collision
    takes care of damage from crashes with another object or overturn of the vehicle
  • Towing and labor
    costs for disabled vehicles
  • Loss of use / Rental vehicle coverage
    if you damage a rental car, this option helps to reimburse the rental company for income it loses because the vehicle is out of use. Also, there may be limited coverage for injury or damage that you cause to others while using a rented vehicle anywhere in the world

BAP Exclusions

Typically a business auto (or similar form) will not provide coverage for the following:

  • Any injury/damage that you expected or intended
  • Responsibility for damage you assume under a contract
  • Losses that should be handled by a workers' compensation, disability benefits, or unemployment compensation law
  • Bodily injury to an employee caused by a fellow employee
  • Damage to property that is in your care, custody, and control
  • Any bodily injury or property damage that occurs because of pollution
  • Any loss that is related to racing, demolition, or stunts

Other items that are not covered are the same as those found with most types of policies, such as nuclear hazard or any type of war or military action. Racing, wear and tear, freezing, mechanical or electrical breakdown, blowouts, punctures, or other road damage to tires are also excluded.