Everyone who owns a car is required to carry some form of automotive insurance in just about every state. In most cases, personal car insurance policies will work just fine. However, there are also circumstances where people need to take out commercial vehicle insurance instead, and sometimes, it’s not entirely clear when that’s the case. This article will offer an overview of what commercial vehicle insurance is and how to tell when it’s necessary.
What Is Commercial Auto Insurance?
Commercial auto insurance consists of policies designed to cover the costs of expenses should business-owned vehicles get into accidents. This form of professional coverage is very important since it covers every employee driving company trucks. Because it’s legally mandated by the state of California that businesses have commercial coverage, having a policy in place is also essential to avoid fines.
Who Needs Commercial Auto Insurance in California?
California’s laws are very clear. All companies that use vehicles for business purposes have to carry commercial vehicle insurance. Even if the vehicle in question is the owner’s personal car, if it’s being used for business purposes, it must be covered.
Both business owners and drivers should note here that personal auto insurance is adequate for driving to and from work, even if it doesn’t apply when people are on-the-clock. When people start using either company vehicles or their own for professional purposes, that’s when things change. The same car that could be covered adequately with a personal auto insurance policy will need commercial coverage as soon as it starts being used for picking up supplies, making deliveries, or meeting other work-specific needs.
Ultimately, it makes no difference whether a car is owned by the business owner but used to support the company’s core operations or if a fleet of trucks is owned by the business, itself, and gets used by a range of different workers. Either way, those vehicles need to be covered by a commercial auto insurance policy in California.
Potential Consequences for Failing to Adequately Insure Company Vehicles
Failing to adequately ensure company vehicles with a commercial auto insurance policy can have potentially serious consequences. Businesses that don’t carry liability insurance, at a minimum, can find themselves in legal and financial jeopardy.
In a worst-case scenario, a company vehicle could be involved in an accident where the driver is at fault. Should that happen, the business could be sued for damages, which won’t be covered under a personal auto insurance policy. The company will have to pay for everything from damage to the other vehicle and injuries to its driver or passengers to pain and suffering and court costs.
To make matters worse, businesses can face severe penalties for failing to get commercial auto insurance for their vehicles. The first fine for being caught without insurance is around $350, plus fees associated with getting the vehicle out of impound and a sometimes-substantial increase in insurance premiums. Repeat offenders can face increasing fines of up to $1,800 per incident and can even have their licenses suspended for up to four years.
Don’t Take Unnecessary Risks
Business owners who don’t want to pay for commercial auto insurance need to consider the alternatives carefully. They’re taking huge risks by not insuring vehicles used for business purposes appropriately and could wind up facing serious consequences or even bankrupting their companies as a result.
