Commercial Auto Liability Insurance

What is Commercial Auto?

Why do you need it?

• Legal Requirement
  In most jurisdictions, carrying a minimum amount of auto liability insurance is a legal requirement for operating vehicles. Without this insurance, businesses risk legal penalties, including fines and the suspension of vehicle registrations.
• Contractual Obligations
  Often, contracts with clients, partners, or government entities require businesses to maintain certain levels of auto liability insurance, making it a necessity for fulfilling contractual commitments.
• Employee Protection
  For businesses that rely on employees to operate vehicles, this insurance is crucial for protecting employees from liability claims arising from accidents while on duty.
• Financial Protection
  Accidents involving business vehicles can result in substantial costs from injuries, fatalities, or property damage. Commercial Auto Liability insurance protects the business from significant out-of-pocket expenses by covering these liabilities.
• Business Continuity
  After an accident, the financial burden of legal fees and damages can be overwhelming for a business. This insurance helps ensure that such costs don’t disrupt business operations or lead to financial instability.
• Reputational Risk
  Being involved in an accident and unable to compensate the injured party can harm a business's reputation. Adequate insurance coverage demonstrates responsibility and commitment to public safety, which can be beneficial for the company's image.

Common coverage parts

• Bodily Injury Liability
  Covers medical expenses, legal fees, and settlement costs for injuries the policyholder or authorized driver causes to others.
• Property Damage Liability
  Pays for damage to someone else’s property caused by the insured vehicle.
• Combined Single Limit (CSL)
  Provides a single limit that applies to both bodily injury and property damage liability claims from the same incident.
• Uninsured/Underinsured Motorist Coverage
  Protects against accidents involving drivers without sufficient auto liability insurance.
• Medical Payments/Personal Injury Protection (PIP)
  Covers medical expenses for the driver and passengers of the policyholder’s vehicle, regardless of fault.
• Non-owned Auto Liability
  Extends liability protection when employees use their own vehicles for business purposes.
• Hired Auto Liability
  Provides liability coverage for vehicles rented or leased by the business.
• Loading and Unloading Liability
  Offers protection against claims arising from loading or unloading goods from a vehicle.
• Drive Other Car (DOC) Coverage
  Extends protection to individuals driving vehicles not owned by the company, acting as personal auto coverage.

Common exclusions

• Intentional Damage
  Any damage or injuries resulting from intentional acts, such as deliberate vandalism or harm caused by the insured, are typically not covered.
• Non-Business Use
  While Commercial Auto policies cover vehicles used for business purposes, personal use by employees or executives without proper endorsement may not be covered.
• Employee Injuries
  Injuries to employees are generally covered under workers' compensation insurance, not Commercial Auto Liability insurance, and are thus excluded.
• Pollution
  If a vehicle is involved in an incident leading to environmental damage, such as a spill of hazardous materials, cleanup costs may not be covered without specific environmental or pollution liability coverage.
• Equipment Damage
  Damage to mobile equipment or tools not considered part of the covered auto itself can be excluded from property damage liability coverage. This might require additional inland marine coverage or a floater.
• War and Nuclear Hazards
  Incidents resulting from acts of war, insurrection, or nuclear hazards are generally excluded from coverage in most insurance policies, including Commercial Auto Liability.

Limits and deductibles

• Per-Accident Basis
  Commercial Auto Liability insurance typically specifies coverage limits on a per-accident basis, providing a set amount of financial protection for each separate incident, without an aggregate limit capping the total payout for all claims within the policy period.
• Factors Influencing Limits
  The chosen limits are influenced by the type of vehicles operated, their use, the assets at risk, and legal or contractual requirements the business might face.
• Typical Limits
  The typical limits for Commercial Auto Liability insurance vary based on the business's risk exposure and requirements. Common policy limits for small to medium-sized businesses range from $500,000 to $1 million per occurrence. Larger businesses, or those with higher risk profiles, might opt for limits of $5 million or more, especially if they transport hazardous materials or operate in jurisdictions with high litigation costs.

• Typical Deductibles
  Deductibles for Commercial Auto Liability insurance can range widely. For many small businesses, deductibles might start as low as $500 to $1,000 per incident. For larger businesses or those seeking to lower their premium costs, deductibles might be set higher, at $5,000 or more.
• Impact on Premiums
  Higher deductibles usually result in lower premium payments because the policyholder assumes more financial risk upfront. It's a strategic decision businesses must make based on their financial stability and risk tolerance.

Typical cost

• Type of Vehicles
  Larger, heavier vehicles typically cost more to insure due to the potential for greater damage in an accident. The make, model, and usage of the vehicle also play significant roles.
• Business Use
  The nature of how vehicles are used in business operations significantly impacts insurance costs. High-mileage vehicles or those used for hazardous material transport, for example, are likely to have higher premiums.
• Technology Used
  Vehicles equipped with telematics or higher levels of automation (L2 and above) can get better premiums.
• Driving Records
  The driving records of those who will be operating the vehicles affect premiums. A history of accidents or traffic violations can lead to higher costs.
• Coverage Limits
  Higher coverage limits provide more protection but also increase the cost of the policy. Businesses must balance their need for protection with the associated costs.
• Deductibles
  Choosing a higher deductible can lower premium costs but increases out-of-pocket expenses in the event of a claim.
• Location
  The geographical location of the business and where the vehicles are operated can influence insurance costs due to varying risks of accidents, theft, and vandalism.

• Small Businesses
  For small businesses with a few vehicles, annual premiums might range from a few hundred to several thousand dollars per vehicle. Light vehicles used for less risky operations generally fall at the lower end of this spectrum.
• Medium to Large Businesses
  Businesses with larger fleets or those involved in higher-risk operations (like long-haul trucking or transporting hazardous materials) can expect significantly higher costs, potentially reaching tens of thousands of dollars annually for the fleet.
• High-Risk Operations
  Specialized vehicles or those used in exceptionally high-risk conditions may see even higher premiums, reflecting the elevated risk level.

Useful statistics

• Claims Costs
  The average cost of a commercial auto liability claim has been rising, with figures indicating average costs can range significantly depending on the severity, from $3,000 to over $100,000 for severe accidents involving commercial vehicles.
• Industry-Specific Data
  For the trucking industry, one of the largest consumers of commercial auto insurance, the average cost per accident involving a fatality can exceed $3 million, and accidents involving injuries average around $200,000 per incident, according to the FMCSA.

Why have it with Koop?

• Industry Expertise
  Koop understands the unique risks and challenges faced by technology companies. This specialized focus means they can offer policies tailored to the specific needs of tech businesses, such as coverage for software development risks, data breaches, and intellectual property issues.
• Risk Management Automation
  Koop offers integrated compliance and security automation that allows companies to effectively manage contractual requirements, reduce risk through risk controls, and unlock insurance benefits such as insurance discounts and simple renewals. Additionally, the tool saves a lot of time on insurance and compliance tasks.
• Customized Solutions
  Unlike one-size-fits-all policies, Koop provides customizable insurance solutions that can be adapted to fit the unique operational needs of your tech company. Whether you're a startup or an established enterprise, Koop can tailor a policy to match your specific risk profile and business model.

How to get started?

1. Click "Sign Up" to instantly create an account on our platform
2. Go in, select Commercial Auto, and fill out an application
3. Get a quote, carefully review it, and hit "Accept"