Commercial vehicle insurance for contractors
Commercial vehicle insurance (also called commercial auto insurance) covers cars, trucks and vans used in conducting your business. Similar to your personal auto insurance, a commercial policy for contractors covers physical damage and liability. However, a commercial vehicle insurance will provide more coverage than personal auto insurance, and depending on the policy, covers multiple drivers and the transportation of valuable equipment.
Because a commercial policy is written specifically for business usage, the eligibility, definitions, coverage, exclusions and limits are not the same as on your personal auto policy. In fact, your personal policy may specifically exclude coverage of an accident or other loss that occurs while the vehicle is being used for business purposes.
Before you purchase a commercial vehicle insurance, compare policies from several different companies until you find the best insurance policy. Don’t be pressured into purchasing a policy that isn’t right for your construction company. You want to be sure the policy you buy fully protects you and your contractor’s business.
Most companies allow you to customize a commercial policy to match your business usage. The types of coverage you’ll want to consider are:
- Bodily injury liability coverage to pay for bodily injury or death resulting from an accident for which you are at fault. In many cases, it also provides you with a legal defense.
- Property damage liability coverage provides protection if your vehicle accidently damages another person’s property and may provide you with a legal defense.
- Combined single limit liability policies typically provide the same dollar amount of coverage per covered occurrence whether for bodily injury or property damage or for one person or several.
- Medical payments, no-fault or personal injury coverage usually pays for the medical expenses of the driver and passengers incurred as a result of a covered accident regardless of who was at fault.
- Uninsured motorist coverage covers your injuries and some types of property damage caused by an uninsured or hit-and-run driver. Underinsured motorist coverage may also be included for situations in which the at-fault driver has insufficient insurance.
- Comprehensive physical damage coverage pays for damage to your vehicle due to theft, vandalism, flood, fire, and other covered events.
- Collision coverage pays for damage to your vehicle.
If your small construction business only operates during specific months of the year, you may be able to purchase seasonal small business auto insurance. Also, if you have just started a contractor’s business, your insurance provider should be able to show you what coverage you’ll need and then adjust it as your business grows. And if you use a trailer, make sure the trailer and its contents are covered.
Some insurance companies actually provide commercial vehicle insurance for industry-specific categories. For example, Progressive offers plans designed for carpenters, contractors, electricians, landscapers, painters and roofers.
Ask about discounts. Insurance companies provide a number of discounts for businesses including:
- Commercial insurance customers with a Commercial Driver’s License (CDL) can save up to 20 percent.
- If you’ve been in business for more than three years, you may qualify for a discount of up to 5 percent.
- Buy several policies from one company and you should get a multi-policy discount.
If your contractor’s business belongs to an association, call them to find out if they work with any insurance companies. Sometimes, lower insurance premiums are offered to associations and organizations.