If you are an independent contractor such as an electrician, plumber, or roofer, you may often need to travel to your workplace, whether at a construction site or a client’s home. Also, to carry the specialized equipment required to offer your services, you must own a vehicle or a fleet, depending on your type and scope of work.
As you buy commercial insurance to cover your business from a wide range of perils, buying commercial auto coverage is equally important to ensure that your vehicle, which is an integral part of your business operation, is protected against damage and loss. An out-of-pocket expense may result in a significant financial setback for your business.
In this blog, we will discuss in detail what commercial auto insurance is, how it differs from personal auto insurance, and the other insurance coverages you may need for the overall financial protection of your contractor business.
Table of Contents
- What Is Commercial Auto Insurance?
- Commercial Auto Insurance vs. Personal Auto Insurance
- Other Important Insurance Coverages for Contractors
- Get Specialized Business Insurance Coverage with Pierce Insurance Group!
What Is Commercial Auto Insurance?
All types of vehicles specifically used for business purposes need specialized protection with commercial auto insurance, a type of coverage offered as a part of a business insurance policy. The insurance covers several areas, including:
- Liability Insurance: It covers repair and medical expenses for property damage or injuries you cause in an accident. It also covers legal and associated fees if the other person files a lawsuit against you.
- Medical Payments: It covers treatment costs for you and your co-passengers injured in a motor accident.
- Physical Damage InsuranceIt covers physical damage to the vehicle that can be due to an accident or other factors, and depending on the cause, it has been classified into:
- Collision insurance: covers repair costs for damages in an accident
- Comprehensive insurance: covers repair costs for damages by a covered peril such as fire, theft, vandalism, or certain natural elements
- Uninsured/Underinsured Motorist Insurance: It covers payments for medical bills and vehicle repairs for injuries and damages caused in an accident by an uninsured or underinsured driver.
- Guaranteed Asset Protection Insurance: It covers the difference between the amount you owe for a car totaled in an accident and its actual cash value.
Commercial Auto Insurance vs. Personal Auto Insurance
Commercial Auto Insurance
- Provides coverage for vehicles that are used primarily for business purposes
- Offers higher coverage limits and liability protection to protect the business from financial loss in the event of an accident
- Can cover a fleet of vehicles under a single policy
- May have additional coverage options such as hired and non-owned auto coverage for employees using personal vehicles for business purposes
- Typically has higher premiums due to the increased risks involved with commercial driving
Personal Auto Insurance
- Provides coverage for vehicles that are used primarily for personal use
- Offers lower coverage limits compared to commercial auto insurance
- May have limitations on coverage for business use of the vehicle
- Typically covers only the named insured and members of their household as drivers
- Typically has lower premiums due to the lower risks involved with personal driving
A commercial auto insurance policy may be necessary to provide adequate coverage if a vehicle is being used for personal and business purposes.
Other Important Insurance Coverages for Contractors
Besides auto coverage, the other important coverages that you may consider in your commercial insurance policy are:
- General liability insurance
- Commercial property insurance
- Business interruption insurance
- Contractor’s tool and equipment insurance
- Business owner’s policy