What Is Commercial Vehicle Insurance? - Zupnick Associates

(By: Brittany Brooks)

Commercial Vehicle Insurance is insurance coverage for company-owned vehicles and trucks. You can also extend the policy to cover the employees driving your commercial vehicles – as well as their (employees’) own vehicles, if they’re being used for work. 

The biggest difference between personal and commercial auto insurance is simply that Commercial Auto Insurance is more expensive (because of the special protections added for commercial vehicles). But let’s explore further…

Commercial Auto Insurance

Sometimes you or your employees might use a personal vehicle to drive to a worksite, deliver items, or drop off equipment. Unfortunately, personal auto insurance wouldn’t cover it if an incident were to occur with the car, while conducting business.

Personal auto insurance does not cover accidents during business usage, leaving you to obtain a company vehicle and commercial auto coverage. 

You also can’t add your personal vehicle to a commercial vehicle policy, since there are specific guidelines the car must fall within, to qualify as a commercial vehicle. 

What qualifies as a commercial vehicle?

First, the commercial vehicle must be classified for business use, on record. This way, the car will be covered if it’s in an accident while you or your employee is driving on the job. 

Classifying the vehicle for commercial use will also increase your coverage limits and handle more complicated insurance claims.

The qualifications for a commercial vehicle vary from state to state. Check your state laws to find out what applies to you specifically. For this article, we’re going to look at the qualifications for the state of New York:

Commercial Vehicle Qualifications

  1. Any vehicle made or transactionally used to transport eight passengers or more.
  2. Any vehicle used to transport fifteen passengers or more and not for compensation.
  3. Vehicles with a gross vehicle weight or a combined weight of 10,001 pounds or more.
  4. Vehicles used to transport hazardous materials or a high quantity of goods that require a placard to meet regulations.

Commercial Vehicle Uses

  • Transportation of clients or employees
  • Deliver goods or services
  • Hauling work-related loads
  • Towing
  • Transportation of passengers for a fee in your vehicle
  • Transportation of goods for a client in your vehicle

What is hired and non-owner auto insurance?

To understand hired and non-owner auto insurance (HNOA), let’s define what a hired and non-owner vehicle actually is.

Hired Vehicle: any vehicle the company rents, borrows, or hires for business use (i.e., rental trucks, cars, and vans)

Non-Owner Vehicle: Any vehicle that is not owned by the company, but used for work-related purposes for the organization (i.e., an employee’s personal car)

Remember when we said your personal auto insurance wouldn’t cover an accident if your personal vehicle was used for business?

Having HNOA insurance helps cover your employees’ vehicles if an incident occurs while driving for work-related reasons.

You can have this as a stand-alone policy, or partner it with a commercial auto insurance plan, by adding it as a rider. An HNOA policy provides liability coverage and it also covers:

  • Legal fees 
  • Judgments
  • Settlements

However, it does NOT cover physical damage sustained by the hired or non-owner vehicle. For instance, if your employee is driving a rental car for company use, and the car is involved in a collision, HNOA insurance will not cover any physical damage done to the rental car.

HNOA insurance also doesn’t cover accidents while you or your employees are commuting or running personal errands.

For both HNOA and commercial auto insurance:

Employees must be licensed drivers to be eligible for addition to your commercial vehicle policy. If you’re wondering, yes, there are many aspects of the employee that can factor into the policy cost. For example: 

  • Your employees’ driving records
  • Where the vehicle is parked overnight
  • What state you’re in
  • Credit score
  • Age, sex, and marital status
  • Your company’s claims history
  • Whether the vehicle has safety mechanisms
  • Type of commercial vehicle
  • What you’re transporting
  • The deductible and coverage amount you select

It’s safe to say that personal auto coverage is not a viable option to protect your company vehicle – or your employees driving it. You need commercial vehicle insurance to cover your business… from bumper to bumper.

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