What You Need to Know
Focus on What You Can Control
Many businesses rely on vehicles to keep operations running smoothly, whether it’s delivering products, transporting employees, or servicing customers.
Commercial auto insurance is designed to protect businesses from the financial risks associated with vehicle use in business operations.
If you’re running a business, relying on personal auto insurance isn’t enough, as it doesn’t provide the coverage required for vehicles used for commercial purposes.
That’s where a comprehensive commercial auto insurance policy comes in.
Understanding Commercial Auto Insurance
Commercial auto insurance provides both liability coverage and physical damage coverage for vehicles used in business activities.
Whether you operate a delivery service, own a fleet of trucks, or provide company cars for employees, commercial auto insurance is essential to protect your business from financial losses due to accidents, property damage, or bodily injury.
Key Elements of a Commercial Auto Policy
A commercial auto policy can either be part of a comprehensive Commercial Package Policy (CPP) or purchased as a monoline policy.
It consists of:
- Common policy declarations
- Common policy conditions
- A specific coverage form (such as business auto, truckers, or motor carriers)
- Optional endorsements based on business needs
Business Auto Coverage Form
The business auto coverage form is the most commonly used form for commercial auto insurance, covering private passenger and commercial vehicle exposures.
This form is ideal for most businesses, excluding garages, truckers, and motor carriers, which require specialized forms.
Coverage Under Business Auto Policies
- Liability Coverage: Protects your business if you’re held responsible for bodily injury or property damage caused by your business vehicles.
- Physical Damage Coverage: Provides protection for damage to your business vehicles, including collision, comprehensive, and specified causes of loss.
- Supplementary Payments: Includes bail bond costs, court costs, and lost earnings (up to $250/day).
Optional coverages like uninsured motorist, underinsured motorist, and medical payments can be added as endorsements to enhance coverage.
Understanding Covered Autos
Commercial auto insurance allows businesses to select which vehicles are covered through a numerical symbol system. These symbols help customize the policy to meet specific business needs.
| Symbol | Description |
| 1 | Any auto (broadest coverage) |
| 2 | Owned autos only |
| 7 | Specifically described autos |
| 8 | Hired autos only (leased, rented, or borrowed) |
| 9 | Non-owned autos only (e.g., employee-owned vehicles used for work) |
The broadest coverage is provided by Symbol 1, which includes any auto used during the policy period, while Symbol 7 restricts coverage to autos specifically listed in the policy.
Additional Covered Autos for Liability Coverage
In addition to business-owned vehicles, the policy may cover:
- Temporary substitutes: If a covered vehicle is disabled, a borrowed or rented vehicle is covered.
- Trailers: Trailers with a load capacity of 2,000 pounds or less.
- Mobile equipment: Covered while being towed by a covered auto.
Specialized Commercial Auto Coverage Forms
Certain businesses, such as auto dealers, garages, and trucking companies, have unique insurance needs. The business auto coverage form may not provide sufficient protection for these businesses, which is why specialized forms are available.
Garage Coverage Form
This form is specifically designed for businesses like auto dealerships, repair shops, and garages. It provides liability and physical damage coverage.
- Symbol 30: Covers customers’ autos while in the insured’s possession for service or repair.
- Symbol 31: Covers auto dealers’ inventory of vehicles for sale.
Garagekeepers Coverage
Protects customer vehicles in the care, custody, or control of the business.
Truckers Coverage Form
Trucking companies must use the truckers coverage form, which includes liability coverage, physical damage coverage, and trailer interchange coverage.
The trailer interchange coverage protects trailers that the trucker doesn’t own but is responsible for under a written interchange agreement.
Motor Carrier Coverage Form
For businesses that transport their own goods and may occasionally haul goods for others, the motor carrier coverage form is more appropriate.
This form is similar to the truckers coverage form but allows coverage for owned private passenger autos, which the truckers coverage form does not.
Endorsements for Added Protection
There are several endorsements that can be added to commercial auto insurance to enhance coverage based on your business’s specific risks:
- Drive Other Car (DOC): Extends coverage to non-owned vehicles driven by a named individual.
- Individual Named Insured: Extends coverage to family members of the named insured, similar to personal auto insurance.
- Additional Insured-Lessor: Treats leased vehicles as owned vehicles for coverage purposes.
- Bobtail Endorsement: Provides coverage for trucks when not used for commercial hauling.
- Mobile Equipment Endorsement: Includes mobile equipment under auto coverage when otherwise excluded.
Regulatory Compliance and MCS-90 Endorsement
The Motor Carrier Act of 1980 established minimum financial responsibility requirements for trucking companies.
The MCS-90 endorsement provides public liability coverage to meet these requirements, ensuring that truckers can cover bodily injury, property damage, and environmental restoration costs.
Required Liability Limits Under the Motor Carrier Act
- $750,000 for non-hazardous property
- $1,000,000 for hazardous materials (e.g., oil, waste)
- $5,000,000 for larger quantities of certain hazardous materials
FAQs
1. What does commercial auto insurance cover? Commercial auto insurance covers liability for bodily injury and property damage caused by business vehicles, as well as physical damage to the vehicles themselves.
2. What’s the difference between business auto and truckers insurance? Business auto insurance covers typical company vehicles, while truckers insurance is tailored to businesses hauling goods for others, including special coverages like trailer interchange.
3. Do I need garagekeepers insurance? If you run a garage, auto shop, or dealership where customers leave their vehicles, garagekeepers insurance protects against damage to those vehicles while in your care.
4. What is the MCS-90 endorsement? The MCS-90 endorsement is required for trucking companies to provide public liability coverage under the Motor Carrier Act, ensuring that financial responsibility is met for any liability arising from trucking operations.
5. Can I add personal auto coverage to my commercial policy? Yes, endorsements like Drive Other Car or Individual Named Insured can extend personal auto-like coverage to business owners or family members.
We Are Here When You Need Us
Whether your business owns a fleet of delivery vehicles, rents trucks, or simply relies on employees driving their own cars for work, commercial auto insurance is essential for protecting your assets and ensuring compliance with legal requirements.
By understanding your coverage options, from business auto to truckers and garage coverage, you can select a policy that fits your unique needs and minimizes risk on the road.
If you’re interested in learning more about how Armor Insurance Agency in Miles City, Montana, can help you navigate commercial auto insurance for your business, our team is here to assist.