The purchase of your commercial automobile insurance policy is not as simplified as the purchase of your personal automobile policy. Aside from liability to protect against claims of bodily injury and/or property damage to a third party for which you are legally liable you do need to maintain comprehensive and collision damage to protect your owned or leased business use vehicles in the event of physical damage to the unit. However there are several important endorsements you need to consider to truly round out your business automobile insurance policy.
Hired Automobile Physical Damage coverage – A hired auto is a covered auto owned by someone other than you that is hired by or rented to you. This endorsement insures against comprehensive and collision damage to the rented unit. The endorsement will have a limit per unit or vehicle for physical damage coverage, generally $50,000 to $75,000. A deductible will apply to each covered claim.
Non-Owned Business Automobile Liability coverage – The use of this endorsement is for your employees who use their own vehicle on your company business such as business meetings or simply running company errands. The endorsement does not replace your liability as the employer. It protects you as the employer if you are named in a claim or law suit as a result of your employees’ negligence. This endorsement will provide you with a defense and settlement if necessary. Without this endorsement you can only hope your employee maintains high limits of liability on their personal automobile policy. Your limit of protection on this endorsement will be $1,000,000. It is not likely your employee carries a limit that high on their own personal auto policy. It is possible, but not likely.
Employee Hired Auto Coverage – The endorsement requires that hired auto coverage for both liability and physical damage coverage is in force. The endorsement is triggered when employees hire vehicle in their own name rather than your company name and the vehicle they hire is used for business purposes at the direction of the employer.
Rental Reimbursement – The endorsement is obvious. You are reimbursed for the cost of a rental vehicle at a rate per day for X number of days. There is a caveat. This endorsement should include loss of use of the rental vehicle by the car rental company. If the unit is damaged or destroyed while in your care, custody and control regardless of liability you can be held to reimburse the car rental company for the time the vehicle is not in use but could have been in use had the loss not occurred. Be aware of the terms of a rental agreement you enter into.
Auto Loan Physical Damage Extension – The endorsement provides coverage for the difference of the actual cash value of the damaged vehicle and the amount of the loan balance.
Auto Lease Gap – Similar to the above mentioned auto loan physical damage endorsement this applies when the vehicle is leased rather than purchased.
Driver Other Car Coverage – If you need to borrow, test drive, rent, or lease a vehicle, Drive Other Car insurance will extend the coverages you’ve purchased for your commercial auto insurance policy. It converts to the terms you would have had if you had a personal auto policy rather than a business auto policy.
As always enlist the advice of your professional insurance agent at EZ Center Insurance Services when you are making important decisions to protect your company.