In 1955, the Alabama Supreme Court stated that an owner of a commercial vehicle who received compensation for damages could not also receive compensation for damages for loss of the use of the vehicle. This has recently changed. An appeal by Huntsville Cab Co. claimed that although they received compensation for the totaled cab, they also deserved $7,000 in income that was lost over the course of a month while waiting for a replacement. The Supreme Court agreed and changed their standard, noting that those additional damages were to be subject to a reasonable amount of time. While not everyone in Alabama or other states own a cab company, there are many professionals operating company cars and small businesses that consistently use vehicles to conduct day to day operations. How should these drivers and business owners handle the details of commercial car insurance?
What Qualifies as a Commercial Vehicle?
A commercial vehicle is defined as any type of vehicle that is used for transporting good or paying passengers. If a vehicle is titled to a business, it is also considered a commercial vehicle. But if the vehicle is listed in an individual’s name who is a sole proprietor of a business, it could be considered a commercial vehicle. Several examples of vehicles that could be listed as commercial vehicles include: passenger bus, minivan, flatbed truck, delivery van, wheelchair van, and hearse.
Commercial Insurance Rates
Just like when you seek personal car insurance, there are several factors that will determine what kind of rates you receive. If a vehicle is listed as a commercial vehicle, there is a probability that it will have multiple drivers. The insurance company will need to know the age and personal driving record of all possible drivers. Depending on the vehicle’s make and model, driver may need a special license to operate it. If all of your employees must use the vehicle, it will be important to disclose this information in the job description. Other factors that can be considered include the type of cargo the vehicle may be transporting as well as the number of passengers. How far and often the vehicle travels is also taken into consideration. After this information is compiled, the amount of risk assumed by the insurance company is what determines your commercial quote. Do not try to cover a business vehicle with a personal policy. While it may seem like an attractive alternative due to lower policy rates, it can lead to higher amount of uninsured claims if something unexpected happens. A good rule of thumb when trying to decide how to insure your car is to take a look at the title. If it is a personal title, insure it with a personal policy but if it is a business title, pay the extra money and obtain the appropriate insurance.
Driving a Company Car
But let’s say you don’t own your own business but have the perk of driving a company car. This car should be covered under a commercial car insurance policy and your employer has gone through the step we mentioned above. But that doesn’t mean you hold no responsibility and the vehicle use is free. The rules of the road still apply. When driving a company car, you are covered for injuries and damage you may cause to others through your employer’s insurance policy. This can come with restrictions.
Some policies may only cover the car when used for business purposes. While this makes total sense, many people that have the use of company cars tend to use them for personal errands as well. It is important to discuss with your employer what kinds of restrictions are placed on the car. You may be surprised to find that personal use is okay with limitations. If you happen to get into a fender bender when driving to the grocery store with the company car, your personal auto policy may cover that under liability or some type of extra insurance, also known as secondary coverage. Speaking with your employer first and then your insurance agent when approaching this subject is the best way to make sure that all bases are covered. This can help you cover any damages incurred if you injure a co-worker as well. Adding an extended non-owned auto endorsement to your personal policy could help offset any charges due to an accident.
Companies are quickly realizing that letting employees operate company cars put them at a higher risk than normal. This is why many businesses will place tighter restrictions on company cars. While talking on the phone while driving is not illegal in some states, companies might choose to ban this type of risky behavior when an employee is operating a company vehicle. How this is monitored is left up to the company.
When you find out that you are driving a company car or looking into purchasing a car for your business, consider how the car will be used and the risk associated with the drivers. Speaking not only with your employer but your personal insurance company will ensure that any gap coverage can be obtained and you will be driving safely.