Common Questions

Who needs commercial auto insurance?

In most states, auto liability insurance is mandatory for on-road vehicles, which includes vehicles used for business purposes and/or owned by a business. In addition, auto liability insurance is a relatively low-cost way for businesses to manage risk. Consider the following scenario:

You, or your employees, are driving a company vehicle to a service appointment. Rain is falling and the roads are slippery. Traffic stops abruptly in front of the company vehicle. The driver applies the brakes, but slides into the back of another vehicle, which damages both cars and injures the other driver. The driver of your company’s vehicle is found 100% liable for the accident for not maintaining a safe following distance given the road conditions. Your company is exposed to the full extent of the total bodily injury and property damages, plus any legal fees incurred leading up to a financial settlement or jury verdict. If your company vehicle is uninsured, the financial loss would come out of the company’s assets.

However, if your vehicle is insured for liability, your insurance company would cover the damages and legal costs up to the agreed upon limit of the policy contract. The relatively small premium you pay each year for liability coverage would be a financial hedge against the potentially very large accident liability.

Coverage for physical damage to your company vehicle is also available. In return for the paid premium, you get insurance that would pay to repair or replace your vehicle in the case of an accident. Again, the relatively small premium you pay each year for physical damage coverage would be a financial hedge against the potentially very large sum necessary to repair or replace a vehicle.

 What vehicles are covered by commercial auto insurance?

Your business doesn’t need to own a big truck to obtain commercial auto insurance coverage. In fact, most vehicles licensed for road use are eligible for a commercial auto policy, assuming that other eligibility criteria are met. This includes private passenger-type vehicles, such as sedans and SUVs, as well as trailers and a wide variety of trucks from small pickups to large semi-tractors.

 When do I need commercial auto insurance (as opposed to personal auto insurance)?

There are many reasons why you may need commercial coverage. Here are a few:

• If a vehicle is used for business purposes, it may be (and in most cases would be) ineligible for personal auto insurance.
• Many businesses require higher liability coverage limits than personal auto insurance provides.
• Vehicles like medium and large trucks, some vans, and most trailers are usually ineligible for personal auto insurance.
• Commercial auto insurers, such as WCF, provide many fleet safety and management resources that personal auto insurers don’t.

The decision about choosing commercial versus personal auto insurance usually comes down to five key parameters:

Vehicle ownership
If a business owns the vehicle, it will probably need to have commercial coverage. Sometimes vehicles owned by the sole proprietor of a business can be insured on a personal policy as long as other eligibility criteria are met.

Drivers
Vehicles owned by a business, but driven by a person or people unaffiliated with the business, can be covered by a personal auto policy subject to other eligibility criteria. In this case, the principal driver of the vehicle, or vehicles, would be listed as the primary insured party, with the business listed as an additional insured party.

Vehicle use
Commercial insurance is designed to cover vehicles used for business purposes. Claims service and coverage are designed to protect businesses from financial hardship when something goes wrong on the road during vehicle operation. Vehicles not used for business purposes are a better fit for personal insurance.

Vehicle type and weight
Larger trucks, specialty vehicles, trailers, and other vehicles designed or converted for commercial use are generally not eligible for personal auto coverage, but are eligible for commercial coverage.

Liability coverage limits
Available limits of liability are significantly higher on most commercial auto policies than on most personal auto policies. Businesses that require or want a higher coverage level are best served with commercial auto coverage.

 

 What peril does commercial auto insurance cover?

Liability
Auto liability insurance has two components—bodily injury and property damage—included under combined single limits (CSL). Liability insurance covers injuries or damage to other people or property if you are at fault in an accident. Bodily injury  coverage pays for the injured person’s, or peoples’, medical bills, pain and suffering, lost wages, rehabilitation, etc. Property damage coverage pays for third party vehicle damage, infrastructure damage, etc., caused by your vehicle. Legal defense costs, if incurred as a result of the accident, are also covered by liability insurance. Liability coverage is mandatory in most states, including Utah.

Personal injury protection
Some states, including Utah, require all motorists and commercial vehicle operators to carry personal injury protection (PIP) insurance. This coverage applies regardless of who is at fault for the accident.

Collision
Collision coverage is considered first party coverage because it pays to repair or replace your vehicle when it is involved in a collision, even when you are at fault for the accident that damages the vehicle. It allows you to quickly get your vehicle back on the road or, in the case of a total loss, replace your vehicle so your business can continue to operate at full strength. Collision coverage is subject to a deductible, meaning that you pay the amount of the deductible first before your coverage kicks in and pays the rest. Coverage is based on the current value of the vehicle and any attached equipment.

Comprehensive
Comprehensive coverage is multi-peril insurance that pays to repair or replace your vehicle when it is damaged by vandalism, theft, fire, flood, hail, wind, collision with an animal, etc. This is also the coverage that pays for broken glass. The structure of the coverage is very much like collision insurance, with payments based on the current value of the vehicle and any attached equipment, subject to a deductible.

Uninsured / underinsured motorist
This coverage is also first party insurance and covers you, and other occupants of your vehicle, for bodily injury caused by an at-fault uninsured motorist (UM) or underinsured motorist (UIM) who cannot indemnify you for your medical costs, pain and suffering, etc. In many states, including Utah, this coverage is mandatory unless the insured party signs a waiver. UM property damage coverage is also available for vehicles not covered by collision insurance.

Other coverage includes:

• Non-owned auto liability
• Hired auto
• Rental reimbursement
• Loan/lease gap
• Towing and labor
• Employees as insureds
• Mobile business interruption
• And more

Utah commercial auto specifics
Do you own and/or operate a business in Utah? Do you use vehicles in your operations? Below are some things to consider as you insure company vehicles:

• Utah law requires all motorists to carry liability coverage
  • Bodily injury minimum limits – $25,000 per person, $65,000 per accident
  • Property damage minimum limits – $15,000
  • Minimum CSL – $80,000
• Utah law requires all motorists to carry PIP coverage. Standard PIP limits are $3,000 for medical expenses and $250 per week for work loss benefits. Higher limits are available.

• Uninsured motorist coverage is mandatory at coverage limits equal to the liability limits on the same policy. You may sign a waiver, however, to decline coverage altogether or buy it at limits lower than the underlying liability limits.

 Where can I access safety and management advice for drivers and fleet managers?

All prospective and current employees considered drivers for business purposes, whether in a company or personal vehicle, must be qualified. This process should entail a review of records, including driver’s license, motor vehicle report (MVR), and proof of insurance (where applicable). In addition, an in-vehicle evaluation of the employee’s driving abilities and habits should be completed.

Driver training
After being hired, all drivers should receive initial training on their company’s vehicle operation policies and procedures. All drivers should be trained in basic defensive driving. Depending on the vehicle to be operated and the driver’s experience in that type of vehicle, in-vehicle practical training should also be required.

As part of ongoing safety training, employers should include driver safety topics. Employers should also offer a defensive driving refresher course every three years. Remedial driver training should occur following a driving incident (ticket, accident, close call, etc.).

Safe operating practices
WCF employs some of the most experienced and reputable safety professionals in the western United States. Our expert consultants recommend the following safe operating practices, among others:

• Obey all federal, state, and local laws governing vehicle use on public roads.
• Drive defensively to prevent vehicle accidents, regardless of the actions of other drivers and the presence of adverse driving conditions.
• The use of seatbelts is a law in Utah. All employees should wear a seatbelt on company and personal business.
• To minimize the potential for distracted driving, employees should follow these rules:
  • No use of cell phones while driving, including reading, texting, and making or taking a phone call. Note that hands free devices can still be a distraction.
  • Drivers should not wear headphones or earbuds while driving.
  • Drivers should not eat while behind the wheel.

Reducing expenses
Following a few simple guidelines while driving on company business can save your company a lot of money. Below are some suggestions:

• Company vehicles should undergo regular preventive maintenance. In addition, every time an employee uses a company vehicle, the vehicle should be checked to make sure it is operating at maximum efficiency (correct oil levels, good tires, etc.) to maximize gas mileage.
• Drivers should not idle company vehicles for more than a couple of minutes. If the vehicle is going to be stationary for longer, it should be turned off. This also improves gas mileage (and has the side benefit of keeping the air cleaner).
• Drivers should know the shortest and fastest routes to drive (apps and GPS systems can automate this). Driving efficient routes maximizes work time, whether that be with customers, tasks, etc. “Windshield time” is typically some of the least productive time at work. As a bonus, efficient routes save gas, put fewer miles on vehicles, and make traffic accidents less likely.