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    Business Auto Insurance

    Business Auto – Making sense of the differences.

    It seems there are as many different variations of business auto as there are business vehicles on the road, but we can break down categories using a few simple metrics.

    The first break down is whether we are talking about private passenger vehicles or trucks. Regular cars used in business are one category. Trucks are then categorized by weight:

    • up to 10,000 pounds,
    • 10,000 to 20,000 pounds,
    • 20,000 to 45,000 pounds,
    • and higher than 45,000 pounds fully laden

    Heavier weights cost more to insure because the danger and damage involved with a heavier truck is more than that of a lighter vehicle.

    The "use" classification of the vehicle is another factor that recognizes how the vehicle is used during the day, such as whether a vehicle is on the road all day, or just parked in a yard or job site. There are three categories

    • Service - for vehicles that are usually parked most of the day, such as a contractor going to the same job site every day
    • Retail - for vehicles that deliver things to retail customers
    • Commercial - for trucks that deliver products to or simply visit multiple commercial locations during the day

    Another broad category is the "territory". Or where you are located. This factor reflects the relationship between road density and accident frequency. Urban territories have higher rates because there are more vehicles on the road than in suburban or rural areas. This category considers the "garaging" location, that is where the vehicle spends the night, as its primary reference point.  A corollary to territory is the number of miles, the radius driven from the main garaging location, with under 50 mile radius being the smallest, 50-250 the next area, and over 250 mile radius for longer distance driving.

    Fleet vs. Non-fleet

    When a company owns five or more vehicles they are insured as a "fleet".  This typically will cost less to insure than five cars from five different companies because experience develops a better predictive credibility.  Greater predictability, used by projecting past losses into the future, is a tool underwriters use to projecting future losses.  That's why with fleets programs especially, we encourage driver and vehicle safety programs to reduce claims frequency, to keep the cost of future vehicle insurance low.

    The actual insurance coverages are fairly similar to a personal auto policy works, with a combination of liability coverages – when you're at fault and cause damage to someone else - and coverage for your car – collision and comprehensive – regardless of fault.   

    One exception on the most common structure of insurance is for liability. This refers to your legal obligation to other drivers if you are at fault in an accident. The personal auto policy breaks down different amounts for when you damage someone else's property (like their car) versus when you injure someone (bodily injury). Rather than have separate amounts for each of these, a commercial policy usually provides a single limit of insurance for any kind of liability. The most common combined single limit amount is $1 million.

    Similar to personal auto insurance with commercial vehicles you have the option of ensuring them for damage to the vehicles themselves, whether you're at fault or not. Thus, collision and comprehensive coverage, (everything other than collision, including theft or vandalism), are available just like a personal policy.  This remains optional for commercial vehicles, subject to financing requirements by a bank or other financing entity, which will often require coverage for damage to the asset they are financing.

    A Business Auto will also include coverage for employees or others when someone else is at fault, but has no insurance, as well as optional coverage for medical benefits that are needed because of an accident.. 

    For economical pricing, and protection against potential liabilities, contact Gordon Atlantic insurance to find the best business auto program for your business.

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