Do I Need A Commercial Auto Insurance Policy For My Work Vehicle?
I was asked a question last week about commercial auto insurance for a home based business. “Do I need a commercial auto insurance policy for a delivery van which will be used to deliver my product?” This particular business is a new venture. It’s a baked goods catering business which prepares all product at a third-party commercial kitchen.
It can be confusing trying to determine when a commercial auto insurance policy is necessary, especially for home based businesses. If you’re trying to figure out if you need commercial auto insurance, or if you can just get by with your personal auto insurance policy, here are some scenarios that will hopefully help you decide.
When Might I Need Commercial Auto Insurance?
- If a vehicle is used in tasks related to the operator’s job, profession or business (other than commuting).
- If you are using your vehicle to transport goods or people for a fee or if you use your vehicle to conduct a service
- If you need higher limits of liability because of the nature of your work.
- If you are hauling a considerable weight in tools or equipment or towing a trailer used to conduct your business.
- If employees operate the vehicle or if ownership is in the name of a corporation or partnership.
If you as an individual are the titled owner of your vehicle, and use it for business purposes, contact your insurance agent to discuss your policy. Be certain you’re covered adequately for business use and appropriate estimated annual mileage. Many business uses and vehicle types may be excluded from personal auto insurance policies, so you want to be sure you have the right coverage.
–JK
All Businesses Are Vulnerable to Catastrophic Auto Liability Claims
Last month, on August 9th, a tour bus carrying Japanese sightseers from Las Vegas, NV to a national park in Utah, crashed on Interstate 15 north of Cedar City, Utah. Three were killed in the crash and 11 injured.
This photo released by the Utah Highway Patrol shows the bus at the scene of a crash north of Cedar City, Utah
The 26 year-old driver of the bus was reported to have smoked marijuana heavily for several days before falling asleep at the wheel of the tour bus when it crashed. He was charged yesterday with 10 felony counts of negligent driving under the influence, and one misdemeanor charge of having marijuana residue in his system.
To date, no charges have been filed against the bus company he was driving for. That company supplied the shuttle bus and driver to other tour operators who organized the trip.
What if this happened to your business?
You might not be in the tour bus industry, but this doesn’t mean an accident of this magnitude can’t happen to your business. Do you own commercial autos titled under your business? Have a commercial auto insurance policy in force? Or, do you simply have employees run errands to the post office, store, or to pick up your lunch? What if your employee was distracted at the wheel and veered off the road killing or injuring others? Are you certain your business is covered for these circumstances? You may want to inquire with your insurance agent NOW to confirm.
Aside from having the proper insurance coverage in force to protect your business from auto liability claims, here are some basic risk management measures you can take as a business owner to help mitigate the situation. Although, following these measures is no guarantee accidents will NOT happen.
If you have additional stories, advice, or recommendations to share, please comment!
–JK
Why Your Business Should Consider A Cell Phone Usage Policy
Did you know that more than 1.5 million collisions a year, or 4,300 crashes daily are caused by driver distractions or inattentive driving? This comes from the National Highway Traffic Safety Administration. Probably the most obvious reason for driver distraction comes from cell phones and PDA’s. Whether it be text messaging, emailing, or straight talking, people on the road seem to make it their priority, putting driving secondary. Even here in California where it’s against the law to use hand-held devices while operating a vehicle, most don’t seem to care from what we see first-hand on the road every day. If it isn’t the cell phone, then it might be laptops, GPS systems, food, drinks, reading, writing, grooming and other crazy things.
A 2009 study from the Virginia Tech Transportation Institute reflects the severity of cell phone distraction while driving. From dialing and talking to reaching and texting, cell phone usage while driving can be over 23 times riskier than non-distracted driving. Text messaging is by far the riskiest as the study results show.
The important message here is if you’re an employer, you may be held liable if one of your employees causes an accident, catastrophic or not, from distracted driving. As long as that employee is driving in the course of employment, then beware. It’s highly recommended to establish a cell phone usage policy for your business and to educate your employees on the potential severity of their actions. If employees must use their phone to conduct business, they should at least pull over to the side of the road or into a parking lot. Or, get out of the car completely.
1.5 million accidents a year is substantial number. However, it might only take one employee accident to affect your business substantially. Know your risks!
-JK
Photo Courtesy of TPS Report; Additional Resource: Insurance Information Institute
Auto Liability Insurance You Must Have
For all you business owners out there, do you ever send your employees on errands to the store or to the post office? To pick up food for the office? Do you have sales reps driving their own autos to meet clients or potential clients? Ever go on business trips and rent cars? If you have a business of any kind, I’d be shocked if none of these scenarios apply to your daily/weekly/yearly operations.
Have you ever thought about what would happen if that employee you sent to pick up lunch hit a pedestrian and seriously injured or even killed them? Or if your sales rep was involved in an accident causing serious bodily injury or property damage to others involved? Unfortunately, accidents are not uncommon and when an employee causes an accident, the injured party will more than likely look to YOUR company to pay damages.
This is why you need to be certain ‘Hired & Non-Owned Auto’ liability is added as an endorsement to your commercial general liability insurance policy. Your business doesn’t need to own vehicles for this to apply.
Hired & Non-owned auto is a small endorsement which can have a huge impact on your general liability insurance coverage. It protects your business from bodily injury and property damage claims caused by a vehicle you rent or borrow; or caused by vehicles owned by others, such as your employees. It usually does not pay for physical damage to the vehicle itself; that’s covered by the owner’s insurance (although this option is sometimes available).
What’s great is that it’s incredibly inexpensive to add this coverage to your existing general liability insurance policy. Usually no more than $100-$200 annually for $1,000,000 in coverage! To be blunt, you would be dumb not to carry this endorsement if it is an option on your GL policy.
Be sure to check your current policy to see if this endorsement has been included. If it’s not, or if you’re uncertain, call your agent today to discuss! Accidents are not uncommon, so tomorrow may be too late!
-JK
About Me
I grew up in Fullerton, CA and graduated from Servite High School in Anaheim. I have my Bachelors degree from Loyola Marymount University in Los Angeles. I currently live in Tustin, CA.
Please contact me if you need help with any of the following lines of insurance for your business:
-Cyber / Data Breach
-Commercial Property
-Commercial General Liability
-Products Liability
-Workers Compensation
-Commercial Auto
-Umbrella/Excess Liability
-Errors & Omissions/ Professional Liability
-Employment Practices Liability
-Directors & Officers
-Life & Disability Insurance
Jimmy Kinmartin, CPCU 