The Truth About Business Auto Liability Coverage

Personal auto insurance covers a driver and their car for almost any kind of automobile-related incident, from accidents to theft, depending on your coverage. However, there is one time when personal auto insurance will not cover an otherwise covered incident: when you are driving for business purposes. Therefore, it is important that your business offers some sort of coverage to accommodate the gap in coverage. However, business auto liability coverage is limited and may only cover certain specified incidents. It is important to understand what is covered and what is not in order to make sure you do not have any gaps in coverage and are covered under any and all circumstances.

The Law

North Carolina, like most states, has a very specific legal standard regarding the minimum coverage required for commercial liability insurance. North Carolina states that commercial insurance must provide coverage for injuries to third parties, damage to cargo, and injuries to people riding in their vehicles at a minimum of 30/60/25.  The standards by which the premiums are determined vary and are not mandated by law; however, many insurance companies take into account the vehicle, the driving record of employees, training, and supervision, to name just a few factors.

The Coverage

The most important factor to consider when understanding business liability auto insurance is the purpose of the driving at the time the accident occurs. Whether the vehicle is owned by the business or the individual employee, coverage may be granted if the purpose of the drive at the time of the accident was related to business: for instance, an employee picking up equipment for his employer in her or her own vehicle. Assuming the employee is not running personal errands as well, if an accident occurs the employer’s business auto liability coverage will be the responding insurance carrier. However, should the employee be running personal errands when the accident occurs, the personal insurance may be the responding insurance depending on several key factors to be decided by the insurance carrier. In other words, when driving a personal vehicle for business purposes, coverage is rarely cut and dry. Several factors must always be considered, including the purpose of the trip and whether the personal vehicle is mostly used for commercial or personal business.

A more easily determined coverage issue is when the vehicle is a commercial vehicle. If a commercial vehicle is involved in an accident while being used for commercial business, the business auto liability insurance will likely be used to cover losses. Most policies cover losses related to damaged property, such as other vehicles, telephone poles, and buildings. They also typically cover damage to transported property, such as packages. Finally, injuries to passengers in either vehicle, as well as any other involved party are typically covered in these circumstances. Lastly, damage to the commercial vehicle is also covered by a business auto liability policy.

To learn more about the difference between business liability auto insurance, personal liability auto insurance, and the specified coverages, contact the agents at Protective Agency Insurance at (877) 739-9367. With over sixty years’ experience, Protective Agency Insurance works diligently to insure their clients while focusing on quality and affordability.