Commercial auto policy is a coverage purchased to cover business auto which include private passenger automobiles, trucks and trailers. There are four coverage forms offered through business auto policy, the forms include business auto, business auto physical damage, coverage damage and truckers coverage.
Business auto coverage form is similar to the personal auto policy and includes coverage for physical and liability coverage. The form is used to insure commercial autos for all types of business except for garages, truckers and motor carriers. Where only coverage being written is only physical damages, a business auto physical damage form is used.
Automobile related business such as gas stations, car dealerships, and parking garages are excluded from business auto coverage form and are insured through garage coverage form. Trucker’s coverage form is designed to cover automobile of business dealing with hauling of goods and considers unique practices and regulations applicable to the trucking industry.
Business auto policy does not cover liability arising from operational of mobile equipments such as air compressors, sprayers, pumps or generators, even when permanently mounted on vehicle, the mobile equipment coverage is included under general commercial liability insurance. The mobile equipments are only included in business auto policy when the piece of equipment is being towed and the piece breaks or cause bodily injury.
The business auto policy can be purchased to provide liability coverage for owned vehicles, hired autos and non-owned autos. Hired autos are vehicles hired, rented, borrowed or leased. Non-owned vehicles are vehicles operated by volunteers, employees, or independent contractors in connection with servicing the business and are covered under non-owned liability auto coverage. The insured should tailor the coverage to serve his/her business needs.
Since the use of motor vehicles by employees can vary and extends to use by family members especially in case of one man business or in situation where employee of a company is provided with a vehicle, the policy can be endorsed to extend the coverage to include the inclusion of family or use of other vehicles such as rented vehicles for personal or business needs. The individual name insured endorsement can be used where an insured is an individual rather than a corporation. The endorsement is applicable where several names are insured and one is an individual. The endorsement extends the coverage to include family members when they drive passenger vehicles owned by the insured and when they drive non-owned vehicles. Drive other car coverage endorsement is used when named individual such as an employee of a company or a company officer does not own a vehicle and has no personal auto policy because he/she uses a company provided car. The endorsement extends the coverage to cover employee and family members when they drive vehicles they don’t own such as rental cars.
The business policy auto can be endorsed to include medical payments to pay for medical expenses resulting from car accidents and for funeral expenses. Tailored policy can reduce the coverage gap and save the company headache of financial burden from damages caused by vehicles. Some companies company have financial resources to organize auto vehicle pool liability fund to pay for damages caused by business vehicles and do not have to acquire business auto policy.