Business auto insurance is needed when a vehicle is owned by the business, used regularly for business operations, or driven by employees for work-related tasks. Even if your company does not own any vehicles, you may still need hired and non-owned auto coverage if employees use their personal cars or rented vehicles for errands, deliveries, client meetings, job-site visits, or other business purposes.
Many business owners assume their personal auto insurance, general liability policy, or business owners policy will automatically cover work-related driving. In many cases, that assumption can leave the business exposed. Personal auto insurance policies often exclude coverage for business activities, or its limits are too low for the actual cost of damage or injuries. When you or your employees use personal vehicles for work, an accident could result in you being responsible for major expenses.
For businesses in Pennsylvania and New Jersey, the type of commercial auto insurance your company needs depends on exactly how vehicles are used in your operations. There are distinctions in the appropriate policies for company-owned vehicles and rented or employee-owned vehicles that are driven for business purposes. Make sure your commercial insurance agency knows these details so that your business and employees are properly covered.
How Auto Insurance Fits into Commercial Insurance
Business auto insurance is one type of commercial insurance. Commercial insurance addresses the specific risks and liabilities that businesses face. Commercial auto coverage is designed to protect business assets, cover employee driving activities, and provide liability protection that aligns with the higher risks associated with business operations. In comparison with personal auto policies, commercial policies typically offer higher liability limits. They also provide coverage for scenarios that personal policies exclude, such as transporting goods, carrying passengers for a fee, or using vehicles with commercial signage.
Commercial vehicle insurance policies cover the business entity, vehicles owned by the company, and employees who drive for work purposes. There are separate policy types for employees who drive company vehicles and employees who drive their own or rented vehicles. In either case, the business may need liability protection to cover the cost of an accident that an employee causes.
Company-owned Vehicles Require Commercial Auto Insurance
Any vehicle titled in your business name needs a commercial auto insurance policy. This includes cars, trucks, vans, SUVs, and specialty vehicles used for business operations. Some examples of businesses with vehicles include:
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A landscaping company with pickup trucks and equipment trailers
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A catering business with delivery vans
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A consulting firm with company cars for sales representatives
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An auto parts store that delivers parts to local mechanics
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An airport ride service
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A handyman with a box truck that contains tools and parts
Commercial auto insurance provides liability coverage for bodily injury and property damage with coverage limits appropriate for business exposure. It also includes options for collision and comprehensive coverage to protect the vehicles themselves from damage or theft. Additional protections specific to business use include coverage for equipment or tools carried in the vehicle and for employees driving company vehicles.
The liability risks for business-owned vehicles can be substantial. If an employee causes an accident while driving a company vehicle, the business can be held liable for injuries and property damage. When the operator of a commercial vehicle is at fault in an accident, the lawsuits tend to get filed for higher amounts because there is an assumption that the company can pay out more than an individual could. As a result, commercial auto policies have high liability limits, often starting at $100,000 bodily injury per person, $300,000 bodily injury per accident, and $100,000 property damage.
Because of the risks involved with having employees use company-owned vehicles, it is good practice to keep a copy of employee driver’s licenses and driving records on file.
Hired and Non-owned Auto Coverage for Businesses
Many businesses do not own vehicles that are titled under the company. But they do need employees to drive for work reasons. When employees are driving for work in their own car or a rented vehicle, the business has exposure in the event of an accident. Hired and non-owned auto coverage addresses this exposure and provides protection.
Employees drive their own cars for many work purposes:
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Making deliveries on behalf of the business
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Going from the office to a job site
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Transporting clients to a meeting or to and from the airport
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Running daily errands to the bank, post office, or office supply store
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Visiting clients or vendors
Companies also rent vehicles for various reasons:
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Renting a car to go to an out of town trade show
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Renting a truck or motorized equipment for a job
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Renting a car after flying out of town for a business meeting
Employees who drive always need personal auto insurance, which would be the first coverage applied if they cause an accident. But personal insurance may not be enough. Not only can personal insurance have lower limits, but some carriers exclude work use. The injured party may seek damages beyond the personal policy limits, which would typically result in a lawsuit against the business. Non-owned auto insurance provides excess liability protection for your business in this type of claim.
It’s important to note that worker’s compensation comes into play as well. If the employee is injured in an accident while driving for work, worker’s compensation will cover their medical expenses and lost wages. Your worker’s compensation policy should account for employee driving activities.
Hired and non-owned auto policies are usually inexpensive, and they can even be added as an endorsement to a commercial liability policy, or hired and non-owned auto liability only coverage can be added to a business owners policy. This simple addition provides essential protection for businesses that have employees routinely driving for work. If you don’t know whether or not your current policy has this coverage, and you have employees who drive during their work day, contact your agent to review your circumstances.
Protecting Your Business and Employees with the Right Auto Insurance in Pennsylvania and New Jersey
Determining what kind of commercial auto insurance your company needs depends on how vehicles are used and who drives them. Many business owners assume that they don’t need any type of auto coverage as long as they do not have any company-titled cars. That assumption could be financially devastating if your business is found liable for an accident caused by one of your employees. When you work with an experienced commercial insurance agent who has decades of experience working with small businesses, you will be asked the right questions to ensure that you have adequate coverage.
Our commercial agents at Freedom Insurance Group work with businesses of various sizes throughout Bucks, Montgomery, and Philadelphia Counties in Pennsylvania and in New Jersey. Our agents understand the commercial insurance needs of businesses in this region, and we are familiar with the many common reasons auto coverage would be needed. We always take the time to get to know our clients and how they operate their business so that we can get a realistic picture of their exposure and recommend the best coverage options.
Whether you need a commercial auto policy for a fleet of vehicles or a simple endorsement for hired and non-owned auto coverage, Freedom Insurance Group is here to help you through the process. We’ll explain your options across multiple carriers so that you can choose the right policy for your liability and budget. Contact us to get started on your commercial auto, general liability, or commercial property quote. Give us a call at 215-673-0300 or complete our online form to request a call.
