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Commercial Auto Insurance Policy Information

Business Auto Insurance

Commercial Auto Insurance. It is difficult to imagine a commercial business enterprise that does not have some type of automobile liability and/or physical damage exposure. Losses may arise from operations of owned, leased, hired, rented, or non-owned vehicles and certain mobile equipment subject to financial responsibility or other motor vehicle insurance laws.

Even with an exposure as simple as an office employee driving his or her personal auto to pick up supplies, the potential liability exposure is significant because even a private passenger vehicle is capable of producing deadly results.

The Business Auto Coverage Form (commercial auto insurance) is designed to respond to the commercial vehicle exposures and requirements of most business enterprises and has many different endorsements available to customize it to respond to special needs or situations. It provides selected liability and physical damage coverages on vehicles used for commercial purposes.

Commercial auto insurance protects your business from liability and physical damage lawsuits from accidents caused by company vehicles, such as cars, trucks and vans - with rates as low as $67/mo. Get a fast quote and your insurance card now."

Below are some answers to commonly asked business auto insurance questions:

How Much Does Commercial Auto Insurance Cost?

The average price of a standard $1,000,000 Commercial Auto Insurance policy for small businesses ranges from $67 to $99 per month based on location, number of vehicles and drivers, industry, driving records, experience and more.

Do I Have To Carry Commercial Auto Insurance?

Personal auto insurance policies may provide enough coverage for some smaller businesses. But if you require specific commercial auto insurance coverages, higher liability insurance limits, transport goods or people, or have other needs, then you'll probably need business auto insurance.

Not sure whether you need a commercial auto or personal insurance policy? Following are some questions and answers that shed light on the differences between business auto policy (BAP) vs personal auto insurance policies (PAP):

Do you need a commercial auto policy?

If you use a vehicle for work, you probably need a commercial policy.

Who owns and/or drives the vehicles for insurance purposes?

If your car, van or truck is owned by the business, then you'll probably need a business auto insurance policy.

How is the vehicle used?

If you use your vehicle for business purposes, you'll most likely need a commercial auto insurance policy.

What is the weight & type of vehicle?

If the car, truck or van you drive weighs more than a normal size pickup or SUV, like a dump truck, tow truck, or tractor trailer, you might require a business auto insurance policy.

Do you have any federal, state or contractually required liability limits?

If your business car, van or truck requires higher liability limits, like for the FMCSA, state agencies or for a contract - you will probably need commercial auto insurance. Business auto insurance policies offer higher limits than personal ones.

How Do The Business Auto Coverage Form and The Personal Auto Policy Handle Losses Involving Intentional Acts?

The following Personal Auto Policy exclusions are not in the Business Auto Coverage Form. There is no coverage:

  • For property rented to or used by an insured
  • For vehicles used for public or private livery
  • If the insured is in the business of selling or caring for autos
  • If the vehicle is used in business
  • If someone uses a car without reasonable belief that he or she has permission to do so

What Are The Differences In Physical Damage Coverage Options Between The Business Auto Coverage Form vs The Personal Auto Policy?

Physical damage coverage in the Personal Auto Policy is called Coverage for Damage to Your Auto and is similar to the Physical Damage Coverage provided in the Business Auto Coverage Form. The Personal Auto Policy's coverage applies to all owned and non-owned cars. The Business Auto Coverage Form's coverage is based on the symbols on the declarations. The Business Auto coverage Form has three physical damage coverage options and the Personal Auto Policy has two.

What Does Commercial Auto Insurance Cover?

The person injured in an automobile accident may be a young child, a wage earner, a surgeon, or a homeless person. The costs of the accident may be relatively small or run into the millions of dollars, depending on the victim and his or her injuries. Do you have the assets to handle such costs? Moreover, is that the way you want to use them? If not, the Insurance Services Office (ISO) Business Auto Coverage Form is designed to protect you.

The ISO Business Auto Coverage Form protects your assets in several ways:

  • Covered auto liability coverage insures your legal obligations that arise from an accident, including lawsuits and their associated costs. The limits you purchase should be high enough to handle the potentially serious injuries and loss of earnings a victim may sustain.
  • Uninsured and underinsured motorists coverages protect you when you are involved in an accident caused by a driver who has no insurance or insurance with relatively low limits. The limits you select for this coverage should be the same as your liability limits.
  • Physical damage coverage on vehicles directly protects your assets. Comprehensive, Specific Causes of Loss and Collision are the coverage options available. Deductibles should be as high as you can comfortably absorb to maximize the protection provided relative to the premium cost.
  • Medical payments coverage and towing expense costs for private passenger vehicles are other optional coverages to consider.

The insurance company pays all sums an insured is legally obligated to pay as damages because of bodily injury or property damage covered by this insurance and caused by an accident resulting from owning, maintaining, or using a covered auto. Pollution cost or expense that is a consequence of the same covered accident is also covered.

The company has both the right and duty to defend any insured in a suit requesting such damages or pollution costs and expenses but only if coverage is available under this insurance. The insurance company makes the decision as to when and how to investigate, settle, or litigate, as it deems appropriate. Any defense obligation ends when the liability limit of insurance is used up paying judgments and settlements.

What Doesn't Commercial Auto Insurance Cover?

Every business insurance coverage form or policy has limitations and exclusions. This is because either the coverages are needed by only specific types of businesses or the risk or exposure to loss is not considered insurable for one or more reasons. Some of the more common exclusions are:

  • Bodily Injury To Employees
  • Care, Custody Or Control
  • Certain types of electronic devices
  • Contractual
  • Expected Or Intended Injury
  • Handling Of Property
  • Operations and Completed Operations
  • Pollution
  • War
  • Wear and Tear

What Type Of Vehicles Are Covered Under A Commercial Auto Insurance Policy?

The coverages available are listed on the declarations. A box with numbers in it is next to the coverage. These are called symbols. They explain which autos are insured for the particular coverage. Each coverage can have one or more symbols. The symbols translate as follows:

  • 1 - All autos are covered. No additional symbols are needed.
  • 2 - All autos you own are covered.
  • 3 - Only private passenger autos you own are covered.
  • 4 - Only autos you own that are not classified as a private passenger are covered.
  • 5 - Autos you own for which no-fault coverage is required are covered.
  • 6 - Autos you own for which uninsured motorists coverage is required are covered.
  • 7 - Only scheduled autos are covered.
  • 8 - Any auto you hire, borrow, or lease is covered.
  • 9 - Any auto not owned by you but used by an employee, volunteer or partner for your business is covered but only for your benefit.
  • 19 - Mobile equipment if subject to financial responsibility laws

If symbol 1 is used, no other symbols are needed. However, a combination of the other symbols is normal when symbol 1 is not used.

Auto Insurance Financial Responsibility Laws

The fifty states and the District of Columbia have security-type laws that prohibit anyone involved in any accident from driving unless he or she can show that he or she can pay damages.

COMPULSORY AUTO LIABILITY INSURANCE

Forty-seven states and the District of Columbia currently require that financial security be in effect on all registered vehicles regardless of involvement in an accident.

Most compulsory auto liability statutes require that all motor vehicles maintain a minimum limit of security. Farm equipment and vehicles not designed for use primarily on highways generally are excluded.

The limits specified are minimum requirements for amounts recoverable on account of injury to or death of any one person in an accident, on account of injury to or death of all persons in one accident, and on account of property damage arising out of the use of a motor vehicle in one accident.

Penalties for noncompliance vary among the jurisdictions. Some require proof of insurance at the time of registration. A majority of the statutes extend to out-of-state operators.

FINANCIAL RESPONSIBILITY LAWS

Administrative officers responsible for enforcing financial responsibility laws of the various states require sufficient security to satisfy any judgment from a vehicle operator involved in an accident resulting in bodily injury or in damage to property in excess of amounts ranging from $100 to as much as $1,000 in some states.

Financial responsibility requirements are not necessarily made obsolete by statutes requiring the maintenance of liability insurance or no-fault insurance.

Proof of financial responsibility may be required for one or more years following an accident. Security usually is not required when the vehicle owner's insurance company furnishes a notice (SR-21) stating that an acceptable amount of automobile liability insurance was in effect at the time of the accident.

An operator's license is suspended when the operator is unable to furnish security or proof of financial responsibility. Such suspension continues until security or proof is filed or until one or more years after the accident, if no action is filed.

State-By-State Minimum Auto Insurance Requirements

Keep in mind business auto insurance limits are usually required to be higher than the state miniums - either by state or federal regulations - or by contract.

State Minimum Required Auto Insurance Limits
Alabama
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Alaska
  • $50,000 bodily injury liability per person
  • $100,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Arizona
  • $15,000 bodily injury liability per person
  • $30,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
Arkansas
  • $15,000 bodily injury liability per person
  • $30,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
California
  • $15,000 bodily injury/death liability per person
  • $30,000 bodily injury/death liability to more than one person
  • $5,000 property damage liability per accident
Colorado
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $15,000 property damage liability per accident
Connecticut
  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $25,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
Delaware
  • $15,000 bodily injury or death per person
  • $25,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
Florida
  • $10,000 property damage liability per accident
  • $10,000 personal injury protection
Georgia
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Hawaii
  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $10,000 personal injury protection
Idaho
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $15,000 property damage liability per accident
Illinois
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $20,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
Indiana
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Iowa
  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $15,000 property damage liability per accident
Kansas
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $25,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
Kentucky
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $10,000 personal injury protection
Louisiana
  • $15,000 bodily injury liability per person
  • $30,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Maine
  • $50,000 bodily injury liability per person
  • $100,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $50,000 uninsured motorist coverage per person
  • $100,000 uninsured motorist coverage per accident
  • $2,000 medical payments coverage
Maryland
  • $30,000 bodily injury liability per person
  • $60,000 bodily injury liability per accident
  • $15,000 property damage liability per accident
Massachusetts
  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $5,000 property damage liability per accident
  • $20,000 uninsured motorist coverage per person
  • $40,000 uninsured motorist coverage per accident
  • $8,000 personal injury protection
Michigan
  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
Minnesota
  • $30,000 bodily injury liability per person
  • $60,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $25,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
  • $40,000 personal injury protection
Mississippi
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Missouri
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
Montana
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $20,000 property damage liability per accident
Nebraska
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
Nevada
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $20,000 property damage liability per accident
New Hampshire
  • Auto insurance is not mandatory in NH. There is no minimum car insurance requirement, but state law does require you to pay for any bodily injury or property damage arising from your operation of a vehicle that you own.
New Jersey
  • $15,000 bodily injury liability per person
  • $30,000 bodily injury liability per accident
  • $5,000 property damage liability per accident
  • $15,000 uninsured motorist bodily injury
New Mexico
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
New York
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $50,000 liability for death per person
  • $100,000 liability for death per accident
  • $10,000 property damage liability per accident
  • $50,000 personal injury protection
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
North Carolina
  • $30,000 bodily injury liability per person
  • $60,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $30,000 uninsured motorist coverage per person
  • $60,000 uninsured motorist coverage per accident
  • $25,000 uninsured motorist property damage coverage per accident
North Dakota
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $25,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
  • $30,000 personal injury protection
Ohio
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Oklahoma
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Oregon
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $20,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
  • $15,000 personal injury protection
Pennsylvania
  • $15,000 bodily injury liability per person
  • $30,000 bodily injury liability per accident
  • $5,000 property damage liability per accident
  • $5,000 medical benefits
Rhode Island
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
South Carolina
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
  • $25,000 uninsured motorist property damage coverage
South Dakota
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
  • $25,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
Tennessee
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $15,000 property damage liability per accident
Texas
  • $30,000 bodily injury liability per person
  • $60,000 bodily injury liability per accident
  • $25,000 property damage liability per accident
Utah
  • $25,000 bodily injury liability per person
  • $65,000 bodily injury liability per accident
  • $15,000 property damage liability per accident
  • $3,000 personal injury protection
Virginia
  • VA has special conditions around auto insurance. You do not necessarily have to buy auto insurance, according to the DMV, Virginia law requires that all drivers have a way to pay for injuries or property damage resulting from a car accident.
Vermont
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $50,000 uninsured/underinsured motorist coverage per person
  • $100,000 uninsured/underinsured motorist coverage per accident
  • $10,000 uninsured/underinsured motorist property damage coverage per accident
Washington
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
Washington D.C.
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $20,000 uninsured/underinsured motorist coverage per person
  • $50,000 uninsured/underinsured motorist coverage per accident
  • $5,000 uninsured/underinsured motorist property damage coverage per accident
West Virginia
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
Wisconsin
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $10,000 property damage liability per accident
  • $25,000 uninsured motorist coverage per person
  • $50,000 uninsured motorist coverage per accident
Wyoming
  • $25,000 bodily injury liability per person
  • $50,000 bodily injury liability per accident
  • $20,000 property damage liability per accident


'Real Life' Court Cases Involving Business Auto Insurance:

Insurance Legal Cases
Seals vs. Erie Insurance Exchange

Stephen Seals was injured in an automobile accident while test-driving a car owned by Atlantic Motors (Atlantic). Atlantic's insurance company was Erie Insurance Exchange (Erie). Seals made a claim for underinsured motorist coverage under the Erie policy and Erie, in turn, filed a declaratory judgment action asking the court to determine if Seals was entitled to the coverage. The lower court found in favor of Erie. The Supreme Court of Virginia granted Seals an appeal.

The language of the policy's uninsured/underinsured motorist coverage endorsement provided: "We will pay, in accordance with the Virginia Uninsured Motorist Insurance Law, all sums that anyone we protect is legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle." "Anyone we protect" was defined as "anyone else occupying a covered auto." "Covered auto" was defined as "a motor vehicle . . . with respect to which the bodily injury or property damage liability coverage of the policy applies."

To determine if the "bodily injury or property damage liability coverage of the policy applied," the lower court referenced the "Liability Protection" section of the policy. That section had its own definition of "anyone we protect," which stated: "The term 'anyone we protect' means any person or organization listed below . . . (2) Anyone else while using an auto we insure with your permission, except . . . (d) your customer who has other available insurance with limits at least equal to those required by law in the state where the auto is garaged."

Based on this language and the fact that Seals had "other available insurance with limits at least equal to those required by law in the state where the auto is garaged," the circuit court determined that Seals was not entitled to either liability or underinsured motorist coverage under the Erie policy. On appeal, Erie argued that Seals was not entitled to coverage under its policy because Seals was not occupying a "covered auto." Erie also argued that the Virginia Underinsured/Uninsured Motorists Statute did not require it to provide Seals with underinsured motorist coverage because Seals was not entitled to liability coverage under the Erie policy.

The Supreme Court of Virginia disagreed with both of Erie's arguments. In reaching its decision, the court first noted that Virginia's "garage keeper's exclusion" made it permissible for Erie's policy to exclude Seals from liability coverage. That statute provided, in pertinent part: "Each policy or contract of bodily injury or property damage liability insurance which provides insurance to a named insured in connection with the business of selling . . . motor vehicles, against liability arising from the ownership, maintenance, or use of any motor vehicle incident thereto, shall contain a provision that the insurance coverage applicable to those motor vehicles shall not be applicable to a person other than the named insured . . . if there is any other valid and collectible insurance applicable to the same loss covering the other person under a policy with limits at least equal to the financial responsibility requirements specified in [the relevant statutory provision]."

Because Seals had other insurance that met the statutory requirements, Erie's policy could exclude Seals from coverage.

The court next addressed the issue of whether or not the policy provided Seals with uninsured/underinsured motorists coverage. As a preliminary matter, the court noted that its finding that Seals did not have liability coverage under the Erie policy was irrelevant to the issue of whether he had uninsured/underinsured motorist coverage. It then focused on the language of the policy. The Virginia Supreme Court found that in reaching its decision the lower court had incorrectly relied on the "Liability Protection" section of the policy.

According to the Virginia Supreme Court, the "proper inquiry" was whether Seals was operating a "motor vehicle" . . . the "Autos We Insure" section of the policy, which provided: "The Declarations shows [sic] which of the following are autos we insure under this policy." The "Declarations" section of the Erie policy stated: "AUTOS WE INSURE: ANY AUTO-OWNED, HIRED & NON-OWNED AUTOS." The court concluded that because Seals was operating a vehicle owned by Atlantic, he was operating a "motor vehicle . . . with respect to which the bodily injury or property damage liability coverage of the policy applied." Thus, Seals was entitled to underinsured motorist coverage under the Erie policy.

The decision of the lower court was reversed.

(Seals vs. Erie Insurance Exchange-Record no. 081331-Supreme Court of Virginia-April 17, 2009-674 South Eastern Reporter 2d 860)

James David Miller and Magnum Plastics, Inc., Plaintiffs–Appellants, v. Hartford Casualty Insurance Company, Defendant–Appellee

In May 2002, a vehicle leased to Magnum Plastics, Inc. (Magnum) and driven by James David Miller was involved in an accident with a bicycle that resulted in the bicyclist's death. At the time of the accident, Magnum was insured under a commercial general liability policy issued by Hartford Casualty Insurance Company (Hartford) and an automobile policy issued by Progressive Insurance Company (Progressive).

Only the Progressive declarations pages were available. They revealed the following:

  • The policy provided the coverages the lease required.
  • Magnum was listed as the insured.
  • The vehicle was listed as an insured vehicle.
  • Miller was listed as a driver.
  • General Motors Acceptance Corp. (GMAC) was listed as the loss payee.

The policy did not describe either Magnum's or GMAC's interests in the vehicle. Miller may have been named as an additional insured on the auto policy but that was not clear based on the portions of the policy on the record.

The Hartford policy excluded bodily injury that arose from ownership, use, or entrustment to others of any automobile rented or loaned to the insured (the automobile exclusion). It also had an endorsement that partially restored coverage that stated the following:

"A. Under B., Exclusions, 1. Applicable to Business Liability Coverage [the automobile exclusion] does not apply to any 'auto' that is a 'non-owned auto.' A 'non-owned auto' is an 'auto' you do not own, including but not limited to: 1. An 'auto' that you lease, hire, rent, or borrow... "This does not include a long-term leased 'auto' that you insure as an owned 'auto' under any other auto liability insurance policy or a temporary substitute for an 'auto' you own that is out of service because of its breakdown, repair, servicing, or destruction."

The deceased bicyclist's heirs sued Magnum and Miller for negligence. In turn, they requested that Hartford provide defense and indemnification. Hartford denied coverage and refused to defend or indemnify. In order to limit their exposure, Magnum and Miller settled with the deceased bicyclist's heirs after notice to Hartford. They then sued Hartford, asserting claims for declaratory relief, breach of an insurance contract, and bad faith breach of an insurance contract.

Hartford responded by denying coverage based on the endorsement's exception. Both parties moved for summary judgment. The trial court granted Hartford's motion, concluding that it did not have a duty to defend or indemnify because the leased vehicle involved in the accident was not a covered vehicle. Magnum and Miller appealed.

On appeal, Magnum and Miller argued that the trial court erred in concluding that Hartford did not have a duty to defend. The appellate court noted that the duty to defend arises when the underlying complaint alleges any facts that might fall within the policy's coverage. The insurance company has the responsibility to establish that the policy does not cover the claims asserted in the complaint because they are "solely and entirely within the exclusions in the insurance policy' and they "are not subject to any other reasonable interpretations."

It then noted that the Hartford policy excluded coverage for "bodily injury...arising out the ownership...[or] use of any...auto...owned or operated by or rented or loaned to any insured." On this basis, the appellate court determined that Hartford did not have a duty to defend or indemnify Magnum and/or Miller.

Magnum and Miller then argued that the policy did not define "long-term" and that it was reasonable to believe that the vehicle was a long-term leased vehicle. The appellate court again disagreed, citing various sources that defined the term as being something that involved a number of years.

Magnum and Miller finally asserted that the phrase "insure as an owned auto" was ambiguous because it was subject to more than one interpretation. The court again disagreed. Hartford stated that the word "as" functions as a simile and means "after the manner of; the same as; like." In contrast, Magnum and Miller argued that, because Magnum had insured the vehicle as a leased vehicle instead of as an owned vehicle, it was reasonable to believe that this phrase did not apply to this situation.

The court noted that the record did not offer anything to support that assertion. However, even assuming that it was true, because a leased vehicle, by definition, is not an owned auto, it agreed with the Hartford definition as the only logical one.

To summarize, the appellate court ruled that the vehicle was a "long-term leased auto" within the meaning of the insurance policy's exclusion and the vehicle was insured "as an owned auto" within the meaning of the insurance policy's exclusion. It affirmed the trial court's decisions.

(Colorado Court of Appeals, Div. 1. James David Miller and Magnum Plastics, Inc., Plaintiffs–Appellants, v. Hartford Casualty Insurance Company, Defendant–Appellee. No. 05CA2412. April 5, 2007. 160 P.3d 408)


Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Commercial insurance steps in to help you manage these risks, avoiding a situation which requires you to pay exorbitant costs out-of-pocket.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Additional Resources For Small Business Insurance

Protect your company and employees with the right commercial insurance policies. Read informative articles on small business insurance coverages - and how they can help shield your company from legal liabilities.


Small Business Commercial Insurance

Your small business faces many potential disasters including: fire, floods, theft, equipment breakdown, lawsuits from clients or customers and current & former employees. Any many other risks you haven't even thought about.

A small business commercial insurance program should provide protection for both larger and smaller disasters. The obvious things like fire, flood and theft most business owners think about... but what if a hacker infects your computers with a virus - and files containing private customer information like credit card and Social Security numbers are stolen?

Who is going to pay to fix your customers credit rating etc...? Will your insurance pay for the cost? You need to know that.

Your commercial insurance program should cover events that can close down your company, or cause it to lose revenue. Anything less than that is not enough coverage. Commmercial insurance doesn't cover everything, and all policies have exclusions and limits.

You need a written plan that allows you to get your operations back up and running as quick as possible.


Commercial Auto Insurance
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