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The Importance of Commercial Auto Liability Insurance

For companies whose owners or employees drive personal or company-owned vehicles for business, commercial auto liability insurance is extremely important.

For most companies big and small, a commercial automobile liability insurance policy is a key component in a well-rounded insurance strategy. But time and time again, business owners opt to skip this critical and inexpensive line of coverage because they mistakingly believe that personal auto insurance provides adequate protection. Let’s take a look at two different scenarios that demonstrate why this belief is wrong and why every company should purchase a business automobile policy.

directions_car Driving to Deposit a Company Check

Annual Commercial Vehicle Accidents

timeline 5.3 Million
Federal Motor Carrier Safety Administration

This seemingly low risk errand is completed by millions of American workers every day. However, let’s consider that on the way to the bank the employee accidentally runs a red light and hits another vehicle. Further, let’s assume that when the police arrive to document the accident, they ask the employee where they were going leading to the employee explaining that they were on their way to the bank to deposit a company check. This scenario is a prime example of when the employee’s company would become exposed to the potential costs associated with the accident. Depending on the severity of the damage and injuries as a result of the accident, the employee’s personal insurance limits might not provide enough coverage and the company would be responsible for the excess expenses.

For example, if the employee only has $50,000 in medical coverage but the driver and passengers of the other vehicle incur $75,000 in medical bills, the company will be responsible for covering the additional $25,000. The costs associated with a vehicular accident can become magnified greatly in cases where the result includes death or significant damage to property. This scenario is a perfect example of where commercial auto insurance would respond and where, without it, a company could be looking at hundreds of thousands or even millions of dollars in liability.

directions_car Renting a Car While Traveling for Business

Again, a very common scenario that occurs countless times all across the country each and every day. In this situation, there’s a chance that the business credit card used to pay for the rental car provides primary rental car insurance leading to the employee declining the coverage offered by the rental car company. But lets assume that either this benefit wasn’t provided by a credit card or the coverage amount wasn’t enough to cover the costs of an accident involving the rental car where the employee driving the vehicle was at fault. Chances are, the employee still declined to pay the additional $15 to $25 per day for insurance through the rental agency. Therefore, if the employee’s company doesn’t have an auto policy in place with hired auto physical damage coverage, then the company could be forced to come out-of-pocket for all or some of the costs associated with the accident. Once again, this scenario is easily avoidable and most commercial auto policies with hired auto protection cost less than $25 per month.

At the end of the day, an auto accident involving an employee driving for business purposes is, statistically, one of the more likely scenarios to trigger an insurance claim. Yet so many business owners continue to operate without commercial automobile insurance. Very few businesses operate where an owner or employee doesn’t at least occasionally use a car to conduct business. If you haven’t already, do yourself, your employees, your company, and drivers everywhere a huge favor and add this critical layer of protection to your current insurance package. The risk is simply too high not to.