Driving back to the office a deer jumps in front of your vehicle. You did everything you could to make it back to the office safely. Unfortunately, due to circumstances beyond your control, you are now on the side of the road sitting in a damaged vehicle. Rest assured; you know that your business has prepared for this type of occurrence. Your company has transferred auto-related risk to a business auto insurance policy.
Having the right insurance coverage helps your business operate efficiently. Business Auto is an important insurance coverage to include in your insurance package. Depending on your operations, the complexity of your business auto coverage may vary. In this article, I will point out a few advantages to having business auto coverage, provide an overview of business auto coverage, and share some of my favorite business auto policy endorsements to enhance your policy.
Business auto covers vehicles used for regular business activities, such as driving to meetings or running business-related errands. Vehicles typically include cars, SUVs, and trucks used for business purposes. A few advantages of having a business auto policy include:
- Business Continuity: Covering the costs associated with vehicle repairs and liability claims, business auto insurance helps ensure that your business can continue operating smoothly after an accident.
- Employee Protection: Ensures that your employees are covered while driving company vehicles, which can help with employee retention and satisfaction.
- Peace of Mind: Knowing that your vehicles, employees, and business assets are protected allows you to focus on running your business without worrying about potential financial losses from vehicle-related incidents.
Business owners and employees use vehicles to meet clients, run errands, and boost business productivity. It is important to have the correct auto coverage in place for your business to ensure coverage when the unexpected occurs. When you hit a deer, when you are in a fender bender, or when you rent a vehicle for a business trip these are the essential coverages to include in your business auto policy:
- Liability Coverage: Protects your business from financial loss if one of your vehicles is involved in an accident that causes injury or property damage to others. It covers legal fees, medical expenses, and repair costs.
- Physical Damage Coverage: Includes collision coverage (for accidents involving other vehicles or objects) and comprehensive coverage (for non-collision incidents like theft, vandalism, weather, and hitting animals like deer).
- Medical Payments Coverage: Covers medical expenses for the driver and passengers in your business vehicle, regardless of who is at fault in an accident.
- Uninsured/Underinsured Motorist Coverage: Protects your business if one of your vehicles is involved in an accident with a driver who has insufficient or no insurance.
- Hired and Non-Owned Auto Coverage: Protects the business by providing liability protection when employees use their personal vehicles for business purposes or when you rent vehicles for business use.
- Rental Reimbursement: Covers the cost of renting a replacement vehicle while your business vehicle is being repaired after an accident.
Outside of the core business auto coverages, there are a few policy endorsements that enhance coverage for your business and employees. There are hundreds of endorsements you can get with your business auto policy. These are a few of my favorite business auto endorsements that you should consider for your business:
- Employees as Insureds: This provision ensures that employees are protected while conducting business activities in their own vehicles. It extends liability coverage to employees when they use their personal vehicles for business purposes, granting them individual insured status. The endorsement responds as excess over any other collectible insurance. This means the employee's personal auto policy would respond first, followed by the business auto policy to provide additional protection. Without this endorsement, the individual would not have any excess liability coverage, although the business would still be protected by its Hired and Non-Owned Auto liability coverage.
- Employee Hired Autos: Ensures that employees are protected when they rent vehicles for business purposes, reducing potential out-of-pocket expenses for damages. Extends the business auto policy to cover physical damage to vehicles that employees rent or hire in their own names while conducting business activities.
- Broad Form Drive Other Car (BFDOC): When a business provides a vehicle to an executive or employee (often a salesperson) who, along with their spouse, does not have a personal auto policy, BFDOC ensures that they have personal hired/non-owned liability coverage. The vehicle, owned by the business and insured under the business policy, is covered, and the BFDOC endorsement extends protection to the individual and their spouse, even when they drive other vehicles.
- Auto Loan/Lease Gap Coverage: If your vehicle is totaled, this endorsement covers the difference between the actual cash value of the vehicle and the remaining balance on your loan or lease, preventing financial loss.
In this article, I hope you have learned how a business can transfer automobile-related risk. A business auto policy provides coverage for liability and out-of-pocket expenses. There are also a few endorsements that can provide coverage for your day-to-day business operations. It is always wise to check your policy for coverage details. If you have any questions or want to confirm or modify coverage, please contact your insurance agent for guidance.
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