Questions You Should Ask While Choosing Commercial Auto Insurance

Questions You Should Ask While Choosing Commercial Auto Insurance

If I drive my personal vehicle for business in the Houston, Texas area do I really need commercial auto insurance? Isn’t my personal auto insurance policy enough?

Yes, you do need commercial auto insurance if you’re using your personal vehicle for business purposes in Houston or anywhere else in Texas. Your personal auto insurance policy probably excludes anything that happens when you’re driving for work-related purposes.

What kinds of vehicles can be covered by a commercial auto insurance policy in Texas? What about a tow truck? Or a trailer? Or a taxi?

Any kind of vehicle used for business purposes is eligible for commercial auto insurance in Texas. It’s not the type of vehicle that matters, but the use of the vehicle. All commercial vehicles can be insured under a commercial auto insurance policy in Texas, but some carriers offer specialized policies under names like “business auto insurance,” or “tow truck insurance,” or “van insurance.”

You may also need commercial auto insurance for any vehicle that is registered in the name of a business, even if it is driven primarily for non-business reasons.

Several of my employees carpool together in a van one of them owns. It’s covered under his personal auto policy. Is that okay, or does the van need to be covered by commercial auto insurance even though I don’t own it?

If the van is being used to transport employees, under Texas law, commercial auto insurance is required. Your business could be held responsible if there is an accident while the van is carrying your employees.

What, exactly, is covered under a commercial auto policy in Texas?

All commercial auto insurance policies provide three types of coverage: liability, medical, and physical damage insurance.

What liability coverage does commercial auto insurance provide in Texas?

Liability insurance covers both property damage and any bodily injuries to others that result from an accident involving your commercial vehicle.

How is that different from the medical coverage provided by commercial auto insurance?
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The medical coverage pays medical bills when someone riding in a vehicle covered by your commercial auto insurance is injured in an accident, whether or not the vehicle is owned by your company. Only the driver and passengers in the vehicle are covered.

And what about the physical damage coverage? How is that different from the liability coverage for property damage?

The physical damage insurance covers damage to the vehicle covered by your commercial auto insurance policy. The liability insurance covers damage to property other than the covered vehicle that was involved in the accident. Physical damage insurance has two components: collision insurance and comprehensive insurance.

What’s the difference between collision insurance and comprehensive insurance under a Texas commercial auto insurance policy?

Collision insurance only covers the cost of repairs to the covered vehicle following an accident. Comprehensive insurance pays to repair damages to the covered vehicle stemming from other causes, like vandalism or storms.

What happens if my commercial vehicle is involved in an accident with a vehicle that is uninsured? Would my commercial auto insurance policy cover me for that? What about hit-and-run drivers?

Under the Texas Insurance Code, uninsured motorist and underinsured motorist coverage are both included in your commercial auto insurance policy unless you specifically opt out by signing a form rejecting the coverage. Uninsured motorist coverage also protects you in the event of a hit-and-run accident. You may want to think twice before rejecting uninsured motorist coverage because, according to the Texas Department of Motor Vehicles, about 20% of Texas drivers are uninsured.

How much commercial auto insurance do I need on each vehicle? Is there a minimum or maximum under Texas law?

The minimum amount of liability insurance required depends on the size and use of the vehicle.  As an example, a commercial vehicle with a gross weight of 26,000 pounds or more must carry liability coverage of at least $500,000.  A bus with a capacity of 26 passengers or more must have at least $5 million in liability coverage. Vehicles transporting hazardous materials may also be required to have $5 million in liability insurance. There are also limits as to the maximum amount of coverage you can obtain under a commercial auto insurance policy. This is an area you will need to discuss with your insurance agent or carrier.

What determines the rates I will pay in Houston, Texas for commercial auto insurance?

It’s all about the risk involved. The higher a carrier believes the risk of insuring you is, the higher your premiums for commercial auto insurance. Some of the factors considered are: the type of and number of vehicles to be insured; the uses of each vehicle; the weight of each vehicle; the average amount of time each vehicle will be driven; the number of drivers; the driving record of each driver; and more. Your agent will ask questions related to these factors while discussing your commercial auto insurance needs.

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