10 Things to Know About Commercial Auto

February 24, 2008

1. When should an insured consider a commercial auto policy over a personal auto policy that is rated for business use? Generally speaking, when the vehicle is:

  • Used for business and owned by a corporation or partnership;
  • Driven by employees;
  • Used to haul tools or other equipment weighing more than 500 pounds;
  • Used to deliver things like pizza, newspapers or used in the courier business and;
  • Heavy enough that it is required to have state or federal filings.

Source: Dan Clark, national commercial auto sales manager for Drive Insurance from Progressive.

2. The top five writers of commercial auto insurance are State Farm, Travelers, Great West Casualty, United Financial Casualty and Zurich American.
Source: National Association of Insurance Commissioner

3. Only 48 percent of small businesses carry commercial auto insurance. The rest apparently rely on their employees’ personal auto coverage, which typically have lower limits and might even exclude business-related liability.
Source: National Association of Insurance Commissioner

4. Thirty-eight percent of brokers say commercial auto premiums dropped between 1 to 10 percent in the last quarter of 2007, while 32 percent said they dropped from 10 to 20 percent.
Source: The Council of Agents and Brokers

5. Nearly three-quarters of all 15-passenger vans have improperly inflated tires — leading to an increased chance of a rollover crash.
Source: National Highway Traffic Safety Administration

6. The highest-scoring 2008 vans for rollover and crash safety in 2008 are: Chrysler Town & County, Dodge Grand Caravan, Honda Odyssey, Hyundai Entourage, Kia Sedona, and the Nissan Quest. The top-scoring pickups for 2008 include: Chevrolet Silverado 1500, Dodge Dakota, GMC Sierra 1500, Honda Ridgeline, Mitsubishi Raider, and the Toyota Tacoma.
Source: National Highway Traffic Safety Administration

7. The Federal Motor Carrier Safety Administration has initiated programs to protect the public from terrorists using commercial motor vehicles as weapons or targets. For information, visit: www.fmcsa.dot.gov/safety-security/security/index.asp.

8. It is necessary for a motor carrier to generate an additional $1.25 million in revenue to pay the direct and indirect costs of a $25,000 accident, assuming an average profit of 2 percent. The amount of revenue required to pay for losses varies with the profit margin.

Direct accident costs
  • Cargo damage
  • Vehicle damage
  • Injury costs
  • Medical costs
  • Loss of revenue
  • Administrative costs
  • Police report
  • Possible effect on cost of insurance
  • Possible effect on cost of workers’ compensation insurance
  • Towing costs
  • Storage of damaged vehicle
Indirect accident costs
  • Lost clients/customers
  • Lost sales
  • Meetings missed
  • Salaries paid to employees in accident
  • Lost time at work
  • Cost to hire/train replacement employees
  • Supervisor’s time
  • Loss of personal property
  • Replacement vehicle rental
  • Damaged equipment downtime
  • Accelerated depreciation of equipment
  • Accident reporting
  • Medical costs paid by company
  • Poor public relations/publicity
  • Increased public relations costs
  • Government agency costs

Source: Federal Motor Carrier Safety Administration

9. Some of the special coverages in a commercial auto policy include hired auto and employer’s non-ownership liability; bobtail or non-trucking liability; on-hook towing liability; garagekeeper’s legal liability and drive other car coverage.

10. There is a Web site where small businesses can go to find out information on commercial insurance including auto. The information is available in Spanish as well as English. Visit: www.insureonline.org/smallbusiness.

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