Four Things You Need To Know About Commercial Auto Insurance

Understanding Commercial Auto Insurance: Why You Shouldn't Hit The Road Without It

Cheryl Wortzel -- Associated Construction Publications, 12/15/2006

As a business owner, the vehicles you use in your business are your lifeblood. Just like you'd never consider going on a job without all the necessary tools of your trade, you should never consider driving your business vehicle without the right insurance coverage.

"Insurance can be complicated and, for a business owner, making sure you've got adequate coverage means you're protecting your livelihood," said Chris Homewood, product manager, Drive Commercial Auto, the third-largest commercial auto insurance group in the United States. "Understanding what coverages and service options are available is the first step toward making better, more informed decisions so that you and your business are properly protected."

Here are four easy steps to help you figure out your commercial auto insurance needs:

1. Decide How to Buy — self vs. full service?

Commercial auto coverages are understandably more complicated than private passenger auto coverages. While some business owners are comfortable buying commercial auto policies directly from a company online or on the phone, others choose the in-person counsel of an independent insurance agent.

Independent agents represent multiple companies, so they can offer you a choice of coverage packages, prices and service levels that best meet your needs. And, because you likely have multiple insurance coverage needs — auto, general liability, workers' comp, an umbrella policy, perhaps — they can put together an insurance package that matches up "best of breed" companies so your overall coverage package is made up of specialist companies.

Once you select how you're going to buy your commercial auto policy, it's time to think about what companies to consider.

2. Select a Carrier — and it's not just about price!

There are a lot of companies offering commercial auto coverages. It's important that you select one that meets the needs of your business. Chances are, getting your vehicles back on the road fast is one of those needs. And, we're going to guess that you're pretty busy all day during the week, so if you have questions you may want to ask them at night or on weekends, or get your answers online.

Some questions to consider asking include:

• How long has this company offered commercial auto coverages? Are they considered expert in this field?
• How are claims handled? Are they handled by company representatives or contracted third-party representatives? Are the people handling commercial auto claims specially trained?
• Does the company offer 24/7 claims service, ensuring that my claim is handled quickly so I can get back on the road — and back to work — fast?
• Does the company offer me choices in coverage options that meet my business needs?
• Do I have the flexibility of choosing a six-month vs. a 12-month policy?
• Does the carrier offer flexible payment plans?
• Can I manage my policy online?

"While price is important it's not the only thing to consider when buying insurance. To be profitable, you need to keep your business vehicle on the road, so getting a damaged vehicle back quickly is critical and choosing a carrier with superior claims service is the only way to this," said Homewood. "Unlike most commercial auto carriers that depend on independent adjusters to write estimates for large vehicle and truck repairs, Drive Commercial Auto also has in-house field specialists located throughout the country. The field specialist team continues Progressive's commitment to settling claims fairly, accurately and quickly by offering in-depth knowledge and expertise in preparing commercial auto repair estimates."

3. Know What to Buy — having the right coverages is important.

Coverages vary by state; a standard commercial auto policy generally includes those that provide coverage for injury or damage that you cause to someone else, your injuries, injuries and damages caused by uninsured or underinsured drivers, and damage to or theft of your vehicle(s).

Here's what you need to know:

Coverage for Injury or Damage That You Cause to Someone Else

• Generally referred to as Bodily Injury and Property Damage liability (BI/PD); covers your legal liability, up to the limit of liability you select, for an accident in which there is damage or injury to someone else
• Generally pays for the cost to replace or repair damaged property, the medical bills and wage loss incurred by an injured person, and other damages you are legally obligated to pay as a result of an accident. Does not cover your injuries, if you are the driver of your vehicle, or damage to your vehicle. If your insurance carrier covers an accident for which you are sued, they should also pay for a lawyer to defend you.
• Subject to a "limit of liability" that you select. 100/300/50 means your carrier will pay $100,000 for bodily injury per person involved in a claim, $300,000 for bodily injury per accident and $50,000 for property damage.
• You may instead choose "combined single limits" (CSL). If you choose CSL of $300,000, that is the maximum amount your insurance carrier will pay for the total of all damages — Bodily Injury and Property Damage — resulting from any one accident.

• Coverage varies by state. Medical Payments covers the cost of reasonable and necessary medical care provided to you as the result of a motor vehicle accident and applies no matter who is at fault.
• You will be asked to select a limit amount which represents the maximum amount your insurance carrier will pay per accident.
• Personal Injury Protection (PIP), available in some states, generally covers medical bills and often covers wage loss and other costs. PIP coverage is subject to a limit often set by the state and applies no matter who is at fault.

Coverage for Injuries and Damages Caused by an Uninsured or Underinsured Driver

• Uninsured Motorists Bodily Injury and Property Damage covers medical treatment and damage to your vehicle (and sometimes other property) caused by someone who doesn't have insurance.
• Underinsured Motorist Bodily Injury generally provides protection when the other person has liability insurance, but not enough.

Coverage for Damage to or Theft of Your Vehicle(s)

• Collision and Comprehensive cover the cost to repair or replace your vehicle if it is stolen or damaged in an accident, regardless of who is at fault. Collision covers you if your vehicle collides with another vehicle or object other than an animal. Comprehensive covers damaged caused by an event other than a collision, such as fire, theft, vandalism, and weather-related damage as well as crashes with animals.
• Both coverages are subject to a deductible you choose; a higher deductible can mean a lower rate, but it's also the amount that you'll need to pay first in the event of a claim.

4. Know How the Policy is Priced — you can control some of your insurance costs.

Insurance companies generally price to cover the cost of future accidents. To do this, they use information about you, your vehicle(s) and your driving history, along with historical claims information.

Here are some tips for controlling commercial auto insurance costs:

• Driving history influences rates. Business owners should run Motor Vehicle Reports (MVRs) on potential hires. Ask your agent for help with this. While a Commercial Driver's License (CDL) may not be required in your state to operate your vehicle(s), you may find that drivers who have them are more skilled.
• Proof of prior insurance is important. Never let your insurance lapse; if you do, you most certainly will pay more for your next policy.
• Ask your agent about discounts. There are a lot of them out there, including paid-in-full and renewal discounts.
• Credit. Some insurance companies use information about your credit history in helping to determine your rate. Ask your agent specifically what information each company looks at so that you understand what's influencing your premium — positively and negatively.

Be smart about your commercial auto insurance policy to be certain you're covered. Just as your customers call on you as a professional, consider calling on an independent agent as a professional, in your corner, advocating on your behalf.

An independent agent can help you with all of your insurance needs, assembling a package that combines insurance companies that specialize in each type of insurance your business needs, providing the level of service you want at a price that's right for you.

Drive Commercial Auto, one of the nation's fastest-growing commercial auto insurance groups, specializes in fulfilling the commercial auto insurance needs of small businesses, insuring fleets of up to 20 vehicles with policy limits of up to $1 million. The company provides flexible payment plans and secure online payment processing by credit or debit card.

Progressive's commercial auto coverages are available in two ways: directly to consumers by phone and over the Internet through the Progressive Direct(SM) brand or from a local independent agent through the Drive® Insurance from Progressive brand.

The Progressive Group of Insurance Companies