Do you use vehicles in your business? What kind of driving do you do? Who drives autos in your company? Are your employees likely to be driving their personal cars for your business? If you have answered "yes" to the first question, you will have to answer all the following and more questions before you purchase a Business Automobile Policy to be adequately covered.
Business Automobile Policy (BAP) is essential for businesses or corporations which own motor vehicles registered in the business name. It provides coverage for business automobiles when the use of the vehicle results in a liability judgment, or the automobile is damaged or destructed. Owned or leased vehicles, a hired car or non-owned autos can be involved in serious accidents and cause property damage or bodily injury and entail major liability exposure. Business Automobile Policy can cover any vehicle in use, whether business, personal, hired or your employees' vehicles used for business purposes. It will cover you in case of injury to others, damage to their property, or damage to other vehicles.
A commercial vehicle is a vehicle which primarily transports goods, materials, tools or equipment relating to your business. Basically, you need the same kind of coverage for the car you use in your business as you do for your personal car. It means you need to be covered for liability, collision and comprehensive, medical payments and have coverage for uninsured motorists.
Liability will protect you in case someone claims that you (or a person driving your insured vehicles) are responsible for bodily injury or property damage. Collision and comprehensive provide coverage for physical damage to your vehicles. Uninsured/Underinsured Motorist coverage will protect you in case you are injured in an accident caused by uninsured or underinsured vehicle, or by a hit-and-run driver. BAP also offers coverage for Towing and Labor Costs for disabled vehicles and Loss of Use, Rental Vehicle Coverage designed to reimburse the rental company for income it loses in case you damage a rental car.
As there is almost no business where no autos are used nowadays, Business Automobile Policy is very important to obtain. In fact, any business may face a loss associated with owning, renting, operating, or loading/unloading an automobile. The Business Auto Policy is rather flexible and may cover trucking, garaging, public and private transport and a variety of other operations and commercial risks. It is the most frequently used policy, which is not specific to a certain type of business. BAP also has numerous endorsements with the help of which one can adapt the policy to the specific business needs or situations.
BAP may be purchased as a separate policy or as part of a package which may include protection for business property, such as building, equipment, furniture, etc. Business Automobile Policy can also provide some extra types of coverage, such as transportation expenses if your business-owned car is stolen, expenses like returning an insured vehicle that has been stolen and recovered, glass repair, and coverage for permanently installed sound and reproducing equipment (cellular phones, radios, CD players etc). Additional types of coverage can be purchased as endorsements to enhance protection in other areas.
No matter how many cars, vans or trucks you use in your business, you need adequate insurance for all of them. In case you have 4 or more commercial vehicles, you'll need Commercial Automobile Insurance, also called Fleet Insurance. It is almost identical to Personal Auto Insurance, with liability and damage coverage for injury, damage, or theft. In case your company owns several vehicles and they are parked together overnight, it will be a good idea to add overnight premises exposure coverage to your existing Property Insurance.
It is important to review the auto loss exposures your company faces and add protection you lack. For example, in case a business drives or parks customer vehicles (theatres, restaurants, hotels, shopping centers) the damage to customers' vehicles will be covered by Garage keepers Insurance.
BAP has its exclusions and won't usually provide coverage for any injury or damage that you expected or intended; damage to property in your care, custody and control; any bodily injury or property damage that occurs because of pollution or any loss related to racing or demolition. It also won't cover bodily injury to an employee caused by a fellow employee, responsibility for damage you assume under a contract and losses that should be handled by a Workers Compensation, Disability Benefits or Unemployment Compensation Law.
Some business owners use the same vehicle for both business and pleasure. In this case make sure that it's the name of your business that appears on the insurance policy as the "principal insured", but not your name. It should be done to avoid possible confusion when you need to file a claim or a claim is filed against you and avoid problems with the Department of Motor Vehicles. Remember that insurance companies require the legal owner of the vehicle to be the principal insured and need the correct name of the vehicle as it appears on the registration.
Be ready that insurance companies will need to know every detail about the vehicles you want to get insured and the vehicle drivers. Providing proper automobile underwriting information is very important. The insurer will require all vehicle and driver information: year, make, model number and vehicle ID number for each vehicle, value for each vehicle, vehicle type, lien holder name and address, if any, garage location, operation radius, vehicle use whether it is personal and/or business use, gross vehicle weight and maximum cargo weight if it is truck or van; name and address of each driver, drivers license number, driving history etc. Inform your insurance company if your business has any contractual agreement for which you have to provide proof of Auto Insurance.
Vehicles that are covered by the Business Automobile Policy are indicated by symbols that range from 1 for any vehicle to 9 for non-owned vehicles only. Symbol 2 applies to owned vehicles only, symbol 3 - to owned private passenger vehicles. Symbol 4 is designed for owned vehicles other than private passenger vehicles, 5 - for owned vehicles subject to no-fault insurance, 6 - for owned vehicle subject to compulsory uninsured motorist's laws. Number 7 is for specifically listed vehicles and number 9 covers hired autos only. BAP term is often annual but it is possible to settle for other periods.
BAP may not cover your business for all auto mishaps. It is recommended to include Hired and Non-owned Auto Coverage in your Business Auto Policy, as an employer is usually liable for the negligent acts of employees when they get in an accident when driving a personal or rental car while on company business. Even if your company doesn't own any vehicles, you may need Non-owned and Hired Auto Liability coverage. Expect to pay about $100 for $1 million in coverage. In order to provide enough protection for the employees who use their own personal vehicles in their employer's business, Employees as Insureds endorsement is recommended.
As a general rule, higher coverage limits are recommended. Many providers suggest a minimum liability coverage of $500,000, but it may be worthwhile to consider raising your liability to $1,000,000 to have enough protection against multi-party claims.
Work with your insurance agent and ask him/her to explain all the differences between a Personal Automobile Policy and a Business Automobile Policy, as well as all the options of BAP available. Remember that a Personal Umbrella Liability policy usually excludes business-related liability. Therefore, make sure you have sufficient Auto Liability coverage.
Talk to your insurance agent and check to see if you can get a quote from the same insurance provider you have your General Business Insurance with. Multiple accounts may save you up to 20% in premiums.
Vehicles often make an essential part of the business' overall costs. According to statistics, traffic accidents result in more employee injuries and deaths than any other job risks. Thus, it pays to take certain risk management measures in order to prevent vehicle accidents. For instance, with various auto innovations introduced on a regular basis, driver refresher courses can be very helpful. Establishing rules for use of vehicle phones will prevent you from adding to this major contributor to road accidents.