Commercial Auto Isn’t Just for Big Trucks
Suppose your company has any type of automobile, or you are utilizing your own car for business purposes such as delivering goods. In that case, it is wise to consult your insurance agent or broker. Underneath the basic plate registration, SGI insurance will provide physical damage coverage of either:
- The Actual Cash value of the vehicle
- Or up to $15,000 for a vehicle rated with a plate class of A,C,D, or TS
Depending on your operations, carrying an additional Commercial Auto policy may be required as your plate registration doesn’t cover most business-related uses and a mishap can put your business at risk.
Although fundamental plate insurance limits may be adequate for a personal driver, the exposure that business owners and commercial drivers experience can far exceed that of an average driver. They may be on the road more frequently, driving longer distances, carrying products or other potential exposures.
Let’s take a look at some of the more common coverages included under a Commercial Auto insurance policy:
All Perils Coverage:
All Perils refers to the coverage for physical damage loss on an owned vehicle, except those directly mentioned as exclusions in your policy. We suggest consulting your wording document to review the list of covered perils.
When purchasing All Perils coverage, you can buy down your deductible from the basic plate deductible. Basic plate deductibles can range from $350 to $2500 depending on the plate class on the vehicle or trailer.
You also have the option to choose a higher deductible on your Commercial Auto policy, which can reduce your insurance expense. For example, a higher deductible can lower the overall policy premium.
Replacement Cost Coverage:
You can add additional coverage to a vehicle that is purchased new and is the model from the current year or the immediate year prior. Pro tip: any accessories added to the auto purchase must be added to the policy within 120 days of purchase. To make things easier, a bill of sale should be shared with your broker so they can adequately record the replacement value.
If your vehicle is a total loss, the replacement vehicle will be of the same kind/quality without any depreciation.
The excess value applies to heavy vehicles and commercially plated trailers. To paint a picture, please see the example below:
Ex: 2018 Peterbilt worth a total value of $85,000:
Break out the value between the plate registration and the policy. We would place $15,000 under the registration, and the remaining $70,000 would be insured under the policy as the excess value.
As the owner, you do have the option to put the total value under the plate registration. However, if the value exceeds $15,000, the pricing under the plate is generally more expensive than the coverage the extension policy can offer. Refer to SGI’s Basic Auto Damage Insurance for more information regarding this topic.
Some agents or brokers refer to liability insurance as insurance for other people. The reason is that liability coverage helps cover the cost of injuries to others or damage to the property of others. Damages paid to others are referred to as 3rd party claims.
The liability limit carried under the plate insurance is $200,000. However, depending on your individual needs or contractual obligations, a policy can increase your limit anywhere from $1,000,000 to $10,000,000. is to satisfy a contractual obligation. However, liability risks are difficult to put a dollar value on in general due to the unpredictable nature of claim settlement. This is particularly true for injuries to others as they can very quickly add up to be a high cost, depending on possible court decisions.
A sometimes overlooked aspect of a Commercial Auto policy are drivers. A proper review of your drivers will help mitigate your potential loss exposure.
Most, if not all, insurance companies will review all drivers under a policy. They will consider all driver infractions (speeding tickets, distracted driving, etc.) or at-fault accidents within the last 3-5 years. These incidences can happen on personal time or while operating for a business.
This review helps the insurance company determine your insurance premium, the driver(s) eligibility, and whether they are approved to operate a company vehicle. It’s essential to review the driver’s history to ensure:
- They can legally drive, i.e. their license hasn’t been suspended or lapsed.
- They do not have restrictions on their license (IE: A DUI requiring vehicles they operate to be mounted with a blow box).
- They carry the proper licence class required to operate your company vehicles.
The additional coverages, differing deductibles, and increased limits are vast and can be daunting when you’re looking into purchasing a Commercial Auto policy. Speaking with a knowledgeable broker can help you to identify risk factors that you may not have considered. A proper assessment of your unique risk can help save you from a financial burden in the event of a future loss.
Review your auto insurance coverage regularly.
As a broker, we recommend a policy review every 12 to 18 months. Life changes and insurance needs can change as well. Often, a policy review can uncover coverage options you may want to change or even reveal additional discounts for which you may be eligible.