Commercial auto insurance covers the value of your vehicle. If an accident occurs, this policy helps cover repairs to the vehicle. As a business owner, this may be critical to keep your company active. However, not all policies are the same. Coverage can differ from one policy to the other. And, you should customize it to meet your needs. So, how much property coverage is necessary?
The Value of the Vehicle
When choosing any type of insurance, base it on the value of the asset. Commercial auto insurance covers property damage. But, the amount you need depends on various factors.
The value of the vehicle is the amount you would receive if an accident occurs. Like with a passenger vehicle, damage too severe leads to the insurer totaling the car. This means the insurer provides a payment in the amount of the vehicle’s worth at the time of the incident. You need enough coverage to represent this amount.
Consider Replacement Cost
Is it just enough to get the current value of the car? This is not likely. For example, consider what could happen if your insurer totaled your work truck. Now, you cannot perform the duties necessary.
You'll want your coverage to help you get a new truck. But, the truck is older. The insurer cuts a check for $15,000. But, it costs $35,000 to get a new truck to meet your needs. In this situation, you run out of funds quickly. That's because they only paid you for the depreciated value of the truck.
If you choose replacement cost coverage, you can often find it a better type of coverage to obtain. In short, this means the coverage pays to replace the vehicle with one of similar function. It no longer is just the value that factors in here. And, as a result, your company can operate long term without risk.
What Else to Consider
Be sure to speak to your business insurance agent here for cargo coverage. Special equipment may also need a rider. Anything that adds significant value to your vehicle is going to play a role here. You need a policy that properly matches the costs to replace these items if an accident occurs.
It is also important to keep your commercial auto insurance policy up to date. The value of your vehicle can change. Your needs can change, too. Work with your business insurance agent at 512-989-6006 or 844-524-4744 to ensure your policy matches your risks. Try to perform an annual review to do this. It can help you keep costs low without limiting your protections.
Also Read: Will Commercial Auto Insurance Cover Claims of Passenger Injury?