Commercial auto insurance covers the vehicles that drive your business

Investing in a company-owned fleet or hiring drivers who provide their own vehicles is among the many choices facing delivery businesses. Whether your company delivers pizza, flowers or restaurant supplies, this decision can affect business insurance premiums, as well as how much you can afford to pay your drivers.

When it comes to delivery businesses, there are many risks to insure. Drivers often are required to work alone and drive at night. According to the U.S. Bureau of Labor Statistics, truck drivers and driver/sales workers accounted for one of every six job-related deaths in 2007.

Company owners have several options for covering delivery vehicles:

  • Purchase company cars and commercial auto insurance: If the delivery business uses company-owned vehicles, the business needs to carry commercial auto insurance. Vehicles used for business are a higher risk for insurance companies because such vehicles spend more time on the road sometimes in dangerous driving conditions), increasing the chance of accidents. Therefore, commercial policies have higher premiums than personal ones do for the same types of coverage.

GEICO recommends purchasing liability coverage bodily injury and property damage), medical payments coverage for the driver and passengers), uninsured motorist coverage, comprehensive coverage and collision coverage. Liability limits on commercial policies are usually much higher than those for personal policies to protect the business's assets, according to the National Association of Insurance Commissioners.

  • Rely on employees to get covered: Business owners who ask their employees to use their own vehicles should inform them that their personal auto insurance policies likely won't be enough if they get in an accident. Most personal auto insurance policies do not cover a car when it's being used for business because of the higher risks involved, according to Progressive.

Employees who want to be covered while they're on the job must buy commercial auto insurance on their own. Any employee who doesn't will have no coverage for injuries and damage he causes if, for example, he gets in a crash while delivering pizzas during a blizzard.

  • Buy non-owned vehicle insurance: Businesses that rely on employees' vehicles, but want to shield themselves from liability, can buy non-owned auto insurance, according to Progressive. Delivery businesses essentially split the insurance coverage with their drivers. While the drivers are responsible for themselves and their vehicles, the business takes care of the third-party liability coverage damage the drivers cause to others and their property). This type of coverage also can cover a temporary rental van if the company-owned delivery van is in the shop.

Other insurance concerns

Delivery trucks often contain valuable items like generators, storage units and refrigeration units, which could be lost in a disaster. Therefore, business owners should increase their coverage on vehicles containing these items, according to the National Association of Insurance Commissioners.

Employee turnover, changes in parking locations and the addition of more vehicles to the fleet are things that are common for owners of delivery businesses. Business owners should frequently review their policies to make sure everything is up to date.

There also are steps that business owners can take to reduce their risks and their chances of filing an insurance claim. They should check the driving records of all employees before hiring and enroll in a "pull program," which allows a company to receive updates if an employee has a driving infraction after being hired, according to a white paper from Automotive Resources International. A company also can use a single vehicle model and a single repair shop to simplify the process of keeping the company's wheels in motion.

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