Your truck isn’t just your transportation. It’s your traveling office, your lunchroom, and your toolshed. What would you think if you learned that one of your most valuable work resources isn’t insured properly?
Many contractors who use their personal truck for work purposes are relying on their personal auto insurance to cover it, should an accident occur.
You may be surprised to find out that there are holes in your coverage if you’re relying on your personal auto policy when using a vehicle for business purposes.
When Personal Auto Won't Cover Your Vehicle
There is a fine line that separates personal auto coverage and commercial auto coverage. But don’t worry - it doesn’t have to be confusing.
For example, if your employee decides to stop by a cafe to pick up coffee for themselves on the way to work in the morning, any accidents that may occur during that drive would be covered under his or her personal auto policy.
Adversely, if you ask an employee to run out and grab lunch for the crew, then any accidents occurring at that time may only be covered under a commercial auto insurance policy.
The easiest way to determine when commercial auto coverage is necessary is to ask yourself one question:
Is the vehicle being used for a work-related activity?
If you’re in the construction industry, odds are that the answer is yes.
Moving tools and equipment from job site to job site or transporting workers are definitely work-related uses, and that means you shouldn’t expect to be covered under a personal policy.
Do you need commercial auto?
Read through the following list to determine if commercial auto insurance is right for your construction business:
- Do you use your personal auto for work purposes?
- Do your employees use their own personal autos for your business?
- Do you ever let your employees use your auto for work purposes?
- Does your business own, rent, or lease autos?
Did you answer yes to any of the above? If so, your business is in need of a commercial auto insurance policy.
What Does Commercial Auto Cover?
Commercial auto insurance, just like personal auto, comes in a variety of different policy options. It’s important to understand which are required by law, which are recommended, and which may not be necessary for you.
Liability Coverage
In most states, liability coverage is required by law if you want to drive a vehicle. This coverage is essential if you are at fault in an accident, as it will pay for property damage and bodily injury incurred by you or a third party. Coverages paid out under liability for bodily injury can include lost wages, medical bills, and even pain and suffering.
Your commercial auto liability coverage can cover legal fees, including costs for a lawyer, settlements, and judgments if needed.
Collision Coverage
As the name implies, collision coverage helps cover the cost of damage from an actual collision. When an accident happens, someone is always at fault. And that someone just might be you. With collision coverage, you can ensure that you’re not left paying out of pocket for repairs after a crash.
Collision coverage is typically limited to the actual cash value of your vehicle. It’s important to note that, under this coverage, you cannot collect anything above the actual value of your vehicle, which will not necessarily equal the amount it would cost to replace your car. If you totaled your car and had standard collision coverage, you’d receive a check for the depreciated amount of your car, minus your deductible.
If your insurance carrier determines that the cost of repairs exceeds the value of the vehicle, they will likely opt to “total” it.
As with all insurance policies, choosing a higher deductible will lower your monthly premiums. However, keep in mind that, should an accident occur, you will be responsible to pay the full deductible – towards repairs or replacement – before receiving any payout from your policy.
Collision coverage doesn’t just help if you’re at fault in a two (or more) vehicle crash. This coverage can help if you crash your work truck into an object, instead of another car.
Comprehensive Coverage
While collision coverage is there to cover you if you crash your work truck into another vehicle or object, comprehensive coverage provides the necessary coverage for damages to your vehicle that take place outside of an accident. Should someone break a window to get to your tool bag or should heavy hail damage your windshield, comprehensive coverage will likely pay for repairs.
Comprehensive coverage generally covers damages from:
- Natural disasters
- Vandalism
- Theft
- Fire
- Hitting (or being hit by) a large animal
- Falling objects
The amount paid out of your policy is usually based on market value of your vehicle, which is most often determined by the Kelley Blue Book valuation. Therefore, it is important to know the value of your vehicle when determining what policies you should buy. If your vehicle isn’t worth the cost of the policy, you may consider foregoing comprehensive coverage.
Uninsured/ Underinsured Motorists Coverage
What happens if you’re hit by a driver with no - or very little - insurance coverage? Uninsured/ underinsured motorist coverage is there to help close the gap in this unfortunate situation.
Required in many states, this policy covers damages to your car and/ or your injuries if you are struck by a third-party who is uninsured. Furthermore, if the driver who hit you does carry insurance, this coverage can help to pay costs if they exceed the limits of the driver’s liability policy.
With a high number of uninsured drivers on the road, this coverage is essential. Additionally, it can cover the costs of medical expenses that go beyond that of your medical insurance.
Medical Payments
After an accident, a MedPay policy will cover medical bills for injuries sustained by both yourself and a passenger. Covering expenses from an accident that occurs when you’re driving your own vehicle, driving someone else’s vehicle (with permission), as well as injuries you or a family member might incur as pedestrians, this coverage will likely pay for medical expenses regardless of who is at fault. However, if a third-party involved is found at fault, it is possible that your insurer may try to recoup some of the costs from them.
Don’t get caught in a situation, be it an accident or vandalism that damages your truck, in which you aren’t covered by the right insurance policy. Keep your vehicle covered under a personal auto policy for your off-work hours, and protect it during the workday with commercial auto coverage.
