Insuring your business vehicle should be easy: Just buy a business insurance auto policy (BAP) and drive... Unfortunately, this is not always the case. The following article will show you some of the myths related to it and how to avoid making mistakes when purchasing a commercial / business auto policy.
Who needs Florida Business Auto Insurance?
In general, if an auto is used in tasks related to the operator's occupation, profession or business, other than commuting, a commercial policy is necessary.
- If you are using your auto to transport goods or people for a fee or if you use your auto to conduct a service such as patient visitation, realtors, rideshare or Uber or Lyft, you may need a commercial auto insurance policy.
- A commercial auto policy may be appropriate if you need higher limits of liability because of the nature of your work.
- Hauling a considerable weight in tools or equipment or towing a trailer used to conduct your business may require a commercial auto insurance policy.
- A commercial insurance policy may be needed if employees operate the auto or if ownership is in the name of a corporation or partnership.
Most Commercial or Business auto insurance are "named driver only" policies, meaning only those drivers listed on the policy can operate a covered auto, but some endorsement can be applied to the insurance policy to extend coverages to others.
Common Business Coverage Myths Exposed!
-MYTH: Your employee is covered by your BAP will driving his or her personally owned vehicle.
EXAMPLE: “Hey, Carl, I need you to drop these boxes off at UPS. Fred’s making deliveries with the company truck, so can you take your car?”
TRUTH: If Carl has an accident on this trip, his personal auto insurance will be on the hook, and his coverage may be limited or excluded (because the accident happened while he was using his personal car for business). Unless you specifically modify your BAP, it will not cover your employees. Our licensed agents at American US Insurance can help you add your employees to your BAP with the Insurance Services Office (ISO) endorsement, “Employees as Insureds” (CA 99 33).
-MYTH: The BAP for your company vehicle also covers any property, such as equipment or cargo, that is damaged in an accident while being transported in or towed by that vehicle.
EXAMPLE: You’re in an accident while driving your landscaping company truck. Not only is your truck totaled, but so is the tractor you were towing.
TRUTH: An auto insurance policy is not designed to cover damage to a business’s property, whether stored in or on the vehicle. Depending on the type of property, you can protect your business against such damage with a specialty insurance policy, such as commercial property, equipment or cargo.
-MYTH: If damage is caused by using equipment that is normally attached to your company vehicle, such as a pump or shovel, the BAP will cover the cost.
EXAMPLE: You’re pumping out a septic tank when the hose on your company truck bursts, covering your customer’s property with the tank’s contents. The high cost of the cleanup really, really stinks.
TRUTH: While damage to attached equipment may be covered by your BAP, damage caused by attached equipment is not. You may be able to insure against such damage through a general liability or other type of special liability insurance policy. Ask our trained Insurance Agents at American US Insurance to help you.
-MYTH: Your business is always covered by the BAP for accidents involving any vehicle, including those rented or borrowed, if they’re being used on behalf of the business.
EXAMPLE: Joan rents a car in your company’s name to travel to a regional sales meeting. But she texts while driving and causes an accident with injuries. The injured party then names both Joan and your business in a lawsuit.
TRUTH: Your BAP specifies which vehicles it covers with coverage symbol numbers that represent different tiers of coverage. There are several options and they all have different meanings. In the example above, your BAP would cover the business for Joan’s accident only if it included either coverage symbol 1 (liability for any auto) or coverage symbol 9 (liability for autos not owned by the business).
-MYTH: If your employee is injured in an accident while driving your company vehicle, the cost of that employee’s injury will be covered by your BAP.
EXAMPLE: While delivering flowers in your company van, your employee Mark hits a patch of black ice in the road, loses control, crashes into an embankment and sustains injuries that land him in the hospital.
TRUTH: Mark was injured while working for your company, so his medical bills and the benefits payable to him typically would be addressed by workers’ compensation, not a BAP. Your Trusted Choice® Independent Insurance Agent can explain the rules for workers’ compensation in your state and can help you choose an appropriate policy.
Auto Crash Statistics
- Almost 40,000 people died in motor vehicle crashes in 2016, according to the National Safety Council (NSC)
- Approximately 4.6 million people sought medical consultation after a crash in 2016 (NSC)
- Total motor vehicle injury costs were estimated at $416.2 billion in 2016. Such costs include wage and productivity losses, medical expenses, administrative expenses, motor vehicle property damage and employer costs (NSC)
- Average cost (economic only) for each death in a motor vehicle accident is $1.13 million (NSC)
- Average cost (economic only) for each nonfatal, disabling injury is $61,600 (NSC)
- Cell phone use was a factor in 14% of fatal crashes reported in 2015, according to the Insurance Information Institute (III)
- Speeding (17.8%) is the most commonly known cause of fatal crashes, followed by driving under the influence (10.8%) (III)
Commercial Auto Theft Statistics
- Albuquerque, New Mexico, leads the U.S. in vehicle thefts; all of the top 10 metro areas for auto theft are west of the Mississippi River, and five are in California, according to the National Insurance Crime Bureau (NICB)
- Of the 10 most commonly stolen vehicle models in the U.S., only three are model year 2015 or newer; six are model year 2006 or older, and none are classified as “luxury” (NICB)
Top 5 Myths about a Business Auto Insurance Policy (BAP)
- MYTH: An employee is covered by the BAP while driving a personally owned vehicle.
- MYTH: The BAP for a vehicle also covers any property, such as equipment or cargo, that is damaged in an auto accident while being transported in or towed by that vehicle.
- MYTH: If a business’s equipment, such as a pump or a shovel, is attached to the vehicle, any damage resulting from that equipment’s use is covered by the BAP
- MYTH: The business is always covered by the BAP for accidents involving any vehicle, including those rented or borrowed, if being used on behalf of the business.
- MYTH: If an employee is injured in an accident while driving a company vehicle, the cost of the employee’s injury is covered by the BAP.
Dodging Potholes: How to Navigate the Business Insurance Auto Policy
Insuring your business vehicle should be easy: Just buy a business insurance auto policy (BAP) and drive! If the vehicle is stolen or damaged in an accident or hailstorm, just call the insurance company, pay the deductible, get a check and keep on grinding!
Except it doesn’t usually work that way. Rats.
A BAP is not simple. Our licensed agents at American US Insurance can help you prevent or prepare for a coverage pothole.
Ask for Help
These are just a few of the common misunderstandings about the BAP. For more information on these and other BAP truths, get in touch with American US Insurance. Just call us at 1-800-868-9170 or visit www.amerinsured.com for a FREE no obligation consultation.