Commercial auto insurance in Arizona.
Commercial auto insurance is one of the most misunderstood types of insurance coverage for small business owners. Many small company owners in Arizona think that it's:
These are all myths.
Let's start debunking these myths right now.
- Not necessary for them.
- Only for large companies.
- Too difficult to understand.
These are all myths.
Let's start debunking these myths right now.
A general guideline.
A general guideline to use when thinking about whether or not you need commercial auto insurance in Arizona is this: if your vehicle is used for more than just getting to your job, you should keep reading, and then call you local insurance agent for a consultation.
Your financial future may depend upon it.
Your financial future may depend upon it.
Your personal policy may not be enough.
As a local Farmers insurance agent in Chandler, I'm often asked:
"Joe, will my personal auto policy cover business use?"
I usually answer that question with: "Yes, sometimes."
I'll expand on that answer:
Occasional business use of your private passenger auto, pickup or van is generally covered under many standard auto insurance policies.
Many personal auto policies use language from the "standard" auto policy recommended by the Insurance Services Office, Inc. (ISO). Here is a pdf of a sample policy. On page 3, in section 7, you'll see that all business use is excluded. But there is a broad exception to that exclusion, which states that it does not apply to private passenger auto, pickup or van.
There. Have I confused you yet?
In simple English... if you drive a personal vehicle, you are covered for business use, according to the basic suggested policy framework. This "exception to the exclusion" was primarily to protect people like accountants, consultants, doctors, lawyers, Avon representatives, part-time sales people and others who occasionally and incidentally use their personal vehicle in their line of work.
But there are pitfalls to having a personal policy if you are a business person.
1. Not all policies are worded the same.
The ISO may suggest language, and provide a basic framework, but many insurance companies expand upon these exclusions. You should read all the exclusions in your personal auto insurance policy. If you want someone to help you do that, and you live in Arizona, give me a call at (480) 940-0909.
2. The term "private passenger auto" implies private use of your vehicle.
A big part of figuring out whether or not you need a commercial auto policy in Arizona is by working closely with your local insurance agent to determine if your vehicle is a "private passenger" vehicle or a "business" vehicle. By fully disclosing every use of your vehicle, you are making sure the underwriters at the insurance company fully understand the risk that they'll be insuring. Then each side - insured and insurer - is making the deal with full knowledge before claim time.
Many Arizonans have claims denied after the fact because they should have had a commercial auto insurance policy instead of a personal auto insurance policy.
"Joe, will my personal auto policy cover business use?"
I usually answer that question with: "Yes, sometimes."
I'll expand on that answer:
Occasional business use of your private passenger auto, pickup or van is generally covered under many standard auto insurance policies.
Many personal auto policies use language from the "standard" auto policy recommended by the Insurance Services Office, Inc. (ISO). Here is a pdf of a sample policy. On page 3, in section 7, you'll see that all business use is excluded. But there is a broad exception to that exclusion, which states that it does not apply to private passenger auto, pickup or van.
There. Have I confused you yet?
In simple English... if you drive a personal vehicle, you are covered for business use, according to the basic suggested policy framework. This "exception to the exclusion" was primarily to protect people like accountants, consultants, doctors, lawyers, Avon representatives, part-time sales people and others who occasionally and incidentally use their personal vehicle in their line of work.
But there are pitfalls to having a personal policy if you are a business person.
1. Not all policies are worded the same.
The ISO may suggest language, and provide a basic framework, but many insurance companies expand upon these exclusions. You should read all the exclusions in your personal auto insurance policy. If you want someone to help you do that, and you live in Arizona, give me a call at (480) 940-0909.
2. The term "private passenger auto" implies private use of your vehicle.
A big part of figuring out whether or not you need a commercial auto policy in Arizona is by working closely with your local insurance agent to determine if your vehicle is a "private passenger" vehicle or a "business" vehicle. By fully disclosing every use of your vehicle, you are making sure the underwriters at the insurance company fully understand the risk that they'll be insuring. Then each side - insured and insurer - is making the deal with full knowledge before claim time.
Many Arizonans have claims denied after the fact because they should have had a commercial auto insurance policy instead of a personal auto insurance policy.
Contractors often need a commercial auto policy.
If you aren't just driving to work- but driving is a part of your work, keep reading. A personal auto insurance policy may be putting your business at risk.
First, let's look at a list of questions that should trigger a call to your insurance agent about commercial auto insurance. These don't mean that you automatically need business auto insurance, but they do mean that you should have a discussion with your agent.
If you answer "yes" to any of these, but you don't have a commercial (business) auto policy, call your agent now. You may also call me, if you live in Arizona, and I'll be happy to answer any questions you have with no obligation. I'm in Chandler, AZ. My number is (480) 940-0909.
Questions:
Many self-employed artisan contractors answer "yes" to one or more of these questions. If you are a drywall contractor, ceiling tile installer, taper, carpenter, home or residential general contractor, electrician, flooring installer, glazier, HVAC contractor, a maintenance or repair professional, roofer, pool cleaner, landscaper, or someone who uses tools for your trade, and you travel from job site to job site- you may need a commercial auto policy in Arizona.
An easy rule of thumb:
If your vehicle is essential to your business- you may need commercial auto insurance.
First, let's look at a list of questions that should trigger a call to your insurance agent about commercial auto insurance. These don't mean that you automatically need business auto insurance, but they do mean that you should have a discussion with your agent.
If you answer "yes" to any of these, but you don't have a commercial (business) auto policy, call your agent now. You may also call me, if you live in Arizona, and I'll be happy to answer any questions you have with no obligation. I'm in Chandler, AZ. My number is (480) 940-0909.
Questions:
- Do you use your car, truck or van for business?
- Do you travel from one job site to another?
- Do you carry work equipment in your vehicle?
- Do you transport supplies for your business in your vehicle?
- Do your employees ever borrow or use your vehicle to run errands, pick up supplies, or go from job to job?
- Is your van, truck or car registered in your business name or your DBA?
- Does your vehicle have special equipment attached that is essential for your business, like ladder racks, other types of racks/shelves, hydraulic lifts, winches or tool boxes?
Many self-employed artisan contractors answer "yes" to one or more of these questions. If you are a drywall contractor, ceiling tile installer, taper, carpenter, home or residential general contractor, electrician, flooring installer, glazier, HVAC contractor, a maintenance or repair professional, roofer, pool cleaner, landscaper, or someone who uses tools for your trade, and you travel from job site to job site- you may need a commercial auto policy in Arizona.
An easy rule of thumb:
If your vehicle is essential to your business- you may need commercial auto insurance.
Other people need business auto insurance too.
If you aren't a contractor, and you don't drive around with a van full of tools, you may still need commercial auto insurance. An experienced insurance agent can help you decide.
You are a sales or service related business
If you spend your day driving from location to location, the insurance company may consider that "using your vehicle for business." That means that you may need commercial auto insurance, or at least a special rating on your personal policy.
You are an S-Corp, C-Corp, Partnership, DBA or an LLC
If you title your vehicles in the name of your business- you need commercial auto insurance.
Your business is in multiple locations.
If you own a business with several locations, even if you don't "use your car for work," you are likely traveling between your locations checking up on things. That could easily be seen by an insurance company as "using your vehicle for business." And that could require a business auto insurance policy, or a special rating on your personal Arizona auto insurance policy.
Your business has significant assets.
If you or your business (the courts often don't care about this distinction) have significant assets, then you could be exposed on two fronts to a lawsuit that arises from a car accident.
Commercial auto policy limits are usually much higher than personal policy limits. And you may need those higher limits.
For example: You’re running late to a meeting with your employees. You’re on your cell phone with a client, and you just don't see that car that pulled out in front of you. It causes an accident where others are injured. So you get sued. And you lose.
Time for insurance to pay up.
First, your personal auto policy pays out to its limits. But then the plaintiffs come after your company assets. The legal reasoning is that you were using your vehicle for "company business." The practical reason is that your company may have more money.
This is a situation where having the higher limits of a commercial auto policy could save your company from bankruptcy.
You are a sales or service related business
If you spend your day driving from location to location, the insurance company may consider that "using your vehicle for business." That means that you may need commercial auto insurance, or at least a special rating on your personal policy.
You are an S-Corp, C-Corp, Partnership, DBA or an LLC
If you title your vehicles in the name of your business- you need commercial auto insurance.
Your business is in multiple locations.
If you own a business with several locations, even if you don't "use your car for work," you are likely traveling between your locations checking up on things. That could easily be seen by an insurance company as "using your vehicle for business." And that could require a business auto insurance policy, or a special rating on your personal Arizona auto insurance policy.
Your business has significant assets.
If you or your business (the courts often don't care about this distinction) have significant assets, then you could be exposed on two fronts to a lawsuit that arises from a car accident.
Commercial auto policy limits are usually much higher than personal policy limits. And you may need those higher limits.
For example: You’re running late to a meeting with your employees. You’re on your cell phone with a client, and you just don't see that car that pulled out in front of you. It causes an accident where others are injured. So you get sued. And you lose.
Time for insurance to pay up.
First, your personal auto policy pays out to its limits. But then the plaintiffs come after your company assets. The legal reasoning is that you were using your vehicle for "company business." The practical reason is that your company may have more money.
This is a situation where having the higher limits of a commercial auto policy could save your company from bankruptcy.
More unique exposures that can be costly.
Finally, let's talk about common situations where Arizonans regularly have claims denied because they thought that their personal auto policy would cover them- and it didn't.
Part-time delivery service.
If you (or your kids) are delivering pizzas- CALL YOUR AGENT RIGHT NOW. This goes for delivering anything, from newspapers to sub sandwiches. If you deliver pizzas part time, and you have an accident, your personal auto policy may not cover the claim.
Rideshare driver. (Uber is your side job.)
I've written before about rideshare insurance in Arizona. But let's say it again loud and clear- if you are a rideshare driver (Uber or Lyft), you have SPECIAL INSURANCE REQUIREMENTS. In short- your personal auto policy stops covering you the minute you turn on your app and get ready to accept a passenger. Uber and Lyft don't cover you until your ride is actually in the car. You have what's known as the "rideshare gap" problem.
Fortunately, Farmers insurance can add rideshare insurance coverage to your personal auto policy that covers this gap in coverage, so you don't need to buy a commercial auto policy.
At Joe's Insurance, we specialize in rideshare insurance. Call us at (480) 940-0909.
Part-time delivery service.
If you (or your kids) are delivering pizzas- CALL YOUR AGENT RIGHT NOW. This goes for delivering anything, from newspapers to sub sandwiches. If you deliver pizzas part time, and you have an accident, your personal auto policy may not cover the claim.
Rideshare driver. (Uber is your side job.)
I've written before about rideshare insurance in Arizona. But let's say it again loud and clear- if you are a rideshare driver (Uber or Lyft), you have SPECIAL INSURANCE REQUIREMENTS. In short- your personal auto policy stops covering you the minute you turn on your app and get ready to accept a passenger. Uber and Lyft don't cover you until your ride is actually in the car. You have what's known as the "rideshare gap" problem.
Fortunately, Farmers insurance can add rideshare insurance coverage to your personal auto policy that covers this gap in coverage, so you don't need to buy a commercial auto policy.
At Joe's Insurance, we specialize in rideshare insurance. Call us at (480) 940-0909.
The benefits of commercial auto insurance in AZ.
We've seen that:
If you are just realizing that you might need a business auto policy (a commercial policy), keep reading so you have an overview of some of the unique features to a commercial insurance policy. Then call an experienced agent for help.
If you live in Arizona, you can call me for a no-obligation question and answer time to discuss your unique needs. Call me (Joe) at (940) 480-0909.
Now let's talk about the unique advantages of a commercial auto insurance policy.
I've already mentioned that commercial auto insurance in Arizona will typically have higher liability limits. So let's start there.
- Commercial auto insurance is necessary for many people.
- Commercial auto insurance isn't just for large businesses.
If you are just realizing that you might need a business auto policy (a commercial policy), keep reading so you have an overview of some of the unique features to a commercial insurance policy. Then call an experienced agent for help.
If you live in Arizona, you can call me for a no-obligation question and answer time to discuss your unique needs. Call me (Joe) at (940) 480-0909.
Now let's talk about the unique advantages of a commercial auto insurance policy.
I've already mentioned that commercial auto insurance in Arizona will typically have higher liability limits. So let's start there.
Higher liability limits.
One of the advantages for you as a business owner in having a commercial auto insurance policy is higher liability limits. A typical business auto policy starts at $500,000 in liability coverage; many companies and agents recommend at least $1,000,000 in coverage.
There's another difference in liability. Commercial auto usually has a Combined Single Limit, also known as a CSL, which simply means there is one large liability "bank" to draw from if there's a claim, instead of separate limits for property damage and bodily injury.
There's another difference in liability. Commercial auto usually has a Combined Single Limit, also known as a CSL, which simply means there is one large liability "bank" to draw from if there's a claim, instead of separate limits for property damage and bodily injury.
Specialized Coverages.
Commercial auto insurance offers beautiful custom-tailored solutions. Just like personal auto insurance, it offers the same great protection, plus some features that you may not have known you needed. And you still get all of the standard coverage that you would expect on any good auto policy, such as:
In addition, you can pick up some additional coverage unique to commercial auto. I'll touch on just two them, since they are commonly needed by business owners:
There are many more optional coverages. Your agent will go through them all with you.
- Bodily Injury Liability
Protection for your business in case you or an employee have an accident that injures someone else. Legal defense fees are generally included. - Property Damage Liability
Have a fender-bender with another car and it's your fault to the tune of $2,500? Your commercial auto policy uses this feature to make things right. - Collision
Did one of your employees "not notice" that big wall behind them and wrinkle the back end of your van? No worries. This provision is used to repair the damage. - Comprehensive
You watched the hail storm on the news and winced. The next day you saw the dimpled hoods on all of your company vehicles. This feature fixes it. - Uninsured and underinsured motorists
Nothing is worse than hearing the guy who hit you say "I don't have any insurance." Don't panic- UM and UIM was created to make up for his negligence.
In addition, you can pick up some additional coverage unique to commercial auto. I'll touch on just two them, since they are commonly needed by business owners:
- Hired auto coverage
If your business "hires" a vehicle that it doesn't own, such as leasing or renting it, there is still risk and exposure for the activities that occur as it's being used in the business. This can even apply to a borrowed vehicle. This feature extends coverage to these vehicles. Here's a big exception though: this does not apply to "hired" or borrowed vehicles from your family, employees or partners. - Non-owned auto coverage
In a small business, it's a common occurrence to use vehicles that neither the owner nor the company owns. You might borrow your employee Bob's truck. Since Bob's personal policy wouldn't cover a business-related claim, and the vehicle doesn't belong to the business, this gap needs to be protected. This is where "non-owned" coverage shines. It fills the need created by the exception in "hired auto" coverage.
There are many more optional coverages. Your agent will go through them all with you.
My advice.
I've only scratched the surface of issues related to commercial auto insurance in Arizona. Because of this, you can't really make the best decision on what to do based on this article alone. And you certainly can't count on this general overview to be a guarantee of how a future claim might be handled.
So call a commercial insurance expert.
Make an appointment to do a complete review of your insurance needs.
You can do this over the phone with any experienced & licensed Arizona insurance agent.
Then put a plan in place to protect you and your business.
If you'd like help or advice, with no obligation, call me at (480) 940-0909.
~Joe
So call a commercial insurance expert.
Make an appointment to do a complete review of your insurance needs.
You can do this over the phone with any experienced & licensed Arizona insurance agent.
Then put a plan in place to protect you and your business.
If you'd like help or advice, with no obligation, call me at (480) 940-0909.
~Joe
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