Commercial Vehicle Insurance: What You Need to Know

If you own or operate a business that uses vehicles for work purposes, you need commercial vehicle insurance. Commercial vehicle insurance is a type of insurance that covers the vehicles, drivers, and cargo that are involved in your business operations. It protects you from financial losses in case of accidents, theft, vandalism, or lawsuits.

Commercial vehicle insurance is not only a legal requirement in most states, but also a smart investment for your business. According to the Federal Motor Carrier Safety Administration (FMCSA), there were more than 12 million commercial vehicles registered in the US in 2019. These vehicles traveled more than 300 billion miles and were involved in more than 400,000 crashes, resulting in more than 4,000 fatalities and 100,000 injuries.

In this article, we will explain the different types of coverage that commercial vehicle insurance can offer, the factors that affect the premiums, and the tips to save money on commercial vehicle insurance. By the end of this article, you will have a better understanding of how commercial vehicle insurance works and how to find the best policy for your business.

Types of Coverage

Commercial vehicle insurance can offer various types of coverage, depending on your business needs and preferences. Here are some of the most common types of coverage that you can choose from:

• Liability coverage: This covers the damages or injuries that you or your drivers cause to other people or property in an accident. It includes bodily injury liability and property damage liability. For example, if your driver hits another car and injures the driver, liability coverage will pay for the medical expenses and repair costs of the other party.
• Collision coverage: This covers the damages to your own vehicle in an accident, regardless of who is at fault. For example, if your driver collides with a tree and damages the vehicle, collision coverage will pay for the repair costs of your vehicle.
• Comprehensive coverage: This covers the damages to your own vehicle caused by events other than collision, such as fire, theft, vandalism, or natural disasters. For example, if your vehicle is stolen or damaged by hail, comprehensive coverage will pay for the replacement or repair costs of your vehicle.
• Medical payments coverage: This covers the medical expenses of you or your drivers, regardless of who is at fault in an accident. For example, if your driver is injured in an accident and needs medical treatment, medical payments coverage will pay for the medical bills.
• Uninsured/underinsured motorist coverage: This covers the damages or injuries that you or your drivers suffer from an accident caused by a driver who has no insurance or insufficient insurance. For example, if your driver is hit by a driver who has no insurance or whose insurance limit is lower than the damages, uninsured/underinsured motorist coverage will pay for the difference.
• Cargo coverage: This covers the damages or losses to the goods or materials that you transport in your vehicle. For example, if your vehicle is carrying perishable items and they are spoiled due to an accident or a breakdown, cargo coverage will pay for the losses.

Commercial vehicle insurance is different from personal auto insurance in several ways. First, commercial vehicle insurance typically has higher limits and deductibles than personal auto insurance, because commercial vehicles tend to have higher values and risks. Second, commercial vehicle insurance covers a wider range of vehicles and drivers than personal auto insurance, such as trucks, vans, buses, trailers, and employees. Third, commercial vehicle insurance may have additional requirements and regulations than personal auto insurance, such as filing proof of insurance with the state or federal authorities.

Factors that Affect Premiums

The cost of commercial vehicle insurance depends on various factors that influence the risk level of each policyholder. These factors include:

• Vehicle type: The type of vehicle that you use for your business affects the premiums, because different vehicles have different values, sizes, weights, and safety features. For example, a large truck may cost more to insure than a small car, because it has a higher value and can cause more damage in an accident.
• Vehicle usage: The usage of your vehicle for your business affects the premiums, because it determines how often and how far you drive your vehicle. For example, a vehicle that is used for long-distance deliveries may cost more to insure than a vehicle that is used for local services, because it has a higher mileage and exposure to accidents.
• Vehicle location: The location of your vehicle affects the premiums, because it reflects the traffic conditions and crime rates in your area. For example, a vehicle that is parked or driven in a high-risk area may cost more to insure than a vehicle that is parked or driven in a low-risk area, because it has a higher chance of being stolen or vandalized.
• Driver history: The history of you or your drivers affects the premiums, because it shows your driving record and experience. For example, a driver who has a clean driving record and a good credit score may cost less to insure than a driver who has a history of accidents, violations, or claims, because they are considered more responsible and less likely to cause accidents.
• Deductible: The deductible is the amount of money that you have to pay out of your pocket before the insurance company pays for the rest of the claim. The deductible affects the premiums, because it determines how much risk you are willing to share with the insurer. For example, a higher deductible may lower your premiums, but it also means that you have to pay more in case of a claim.

Insurers use these factors to assess the risk level of each policyholder and adjust their rates accordingly. The higher the risk level, the higher the premiums. The lower the risk level, the lower the premiums.

Tips to Save Money on Commercial Vehicle Insurance

Commercial vehicle insurance can be a significant expense for your business, but there are some practical tips that you can follow to reduce the cost without compromising on coverage or quality. Here are some of them:

• Improve driver safety: One of the best ways to save money on commercial vehicle insurance is to improve driver safety. You can do this by providing driver training, monitoring driver performance, implementing safety policies and procedures, and rewarding safe driving behaviors. By doing this, you can reduce the frequency and severity of accidents, claims, and lawsuits, which can lower your premiums and improve your reputation.
• Maintain vehicle condition: Another way to save money on commercial vehicle insurance is to maintain vehicle condition. You can do this by conducting regular inspections, repairs, and upgrades on your vehicles. By doing this, you can prevent mechanical failures, breakdowns, and malfunctions, which can cause accidents or damage your vehicles. You can also improve the value and appearance of your vehicles, which can increase their resale value and reduce depreciation.
• Shop around for quotes: A third way to save money on commercial vehicle insurance is to shop around for quotes. You can do this by comparing policies from different insurers, agents, or brokers. By doing this, you can find the best coverage and price for your business needs and budget. You can also negotiate discounts with insurers based on your loyalty, volume, or safety record.

Conclusion

Commercial vehicle insurance is a type of insurance that covers the vehicles, drivers, and cargo that are involved in your business operations. It protects you from financial losses in case of accidents, theft, vandalism, or lawsuits. Commercial vehicle insurance can offer various types of coverage, such as liability, collision, comprehensive, medical payments, uninsured/underinsured motorist, and cargo. The cost of commercial vehicle insurance depends on various factors that influence the risk level of each policyholder, such as vehicle type, usage, location, driver history, and deductible. You can save money on commercial vehicle insurance by improving driver safety, maintaining vehicle condition, and shopping around for quotes.

If you own or operate a business that uses vehicles for work purposes, you need commercial vehicle insurance. It is not only a legal requirement in most states, but also a smart investment for your business. Finding the right balance between coverage and cost for your business needs and budget can be challenging, but not impossible. Contact a reputable insurer today and get a customized quote for your commercial vehicle insurance. You will be glad you did.