Rebel “Insurance Insider” reveals closely guarded trade secrets to Protect Restaurant Owners from Costly Mistakes with their Business Autos

Almost every business venture has some exposure to vehicle liability or physical damage to a vehicle as a normal part of their operations, whether you own a vehicle or your employees/independent contractors use their vehicles while conducting business for you. An auto is probably the single largest exposure to loss you have.  Each time your autos go down the street your Entire Bank Account rides with it! Make sure you are properly protected!

Here’s a Little Known Fact about business auto insurance: There Are At Least Nine Distinct Coverages Available in a Business Auto Policy:

 Let’s take a peek:

 Bodily Injury Liability – It pays the medical and other expenses of those people injured or even killed in accidents you cause. This is required by most states, usually with a minimum coverage of $15,000 for any person involved in an accident with you and no more than $30,000 for all the persons in the accident.

Property Damage Liability – It covers the damage your car causes to property. Usually, that’s the other car or cars involved in the accident, but it also covers damage you do to any object you hit. Garages, buildings, lampposts, fences, whatever. This is also required in most states, usually with a minimum coverage of $5,000.

Collision – This is for damage done to your car when it collides with other vehicles (your fault) or other objects (again, your fault).

Comprehensive – This covers damage to your car that results from something other than a collision with another vehicle. As examples, damage caused by vandals or a wind-blown tree hitting your car. It also includes coverage for theft.

Medical Payments – It pays medical, and even funeral, expenses for you as well as members of your family and passengers in your car if it is involved in a collision, regardless of who caused the accident. It also covers you as a pedestrian if a vehicle hits you.

Uninsured/Underinsured Motorist – This pays for injuries to you and others in your vehicle in an accident caused by someone who is uninsured. Some policies also cover damage to your car. In most states, more than 10% of motorists don’t have any insurance. In some states, as many as three out of 10 drivers don’t have coverage.

Hired Auto – This protects you for liability for any vehicle you rent or borrow for use in your business. Note, this does NOT include comp and collision for rented or borrowed vehicles. This coverage must be purchased separately

Non-Owned Auto – Protects your business from liability resulting from vehicle accidents while non-owned vehicles are being used in your business

Rental Vehicle Benefit – Provides a dollar amount benefit to pay for a rental vehicle if your covered vehicle is stolen or while your covered vehicle is being repaired. For business vehicles, consider buying as much coverage as possible

 What are the Various Options for These Different Coverages?

While there are six main coverages in an auto insurance policy, there are numerous options to consider for each coverage.

How much insurance do you need?

 Bodily Injury Liability – You can buy the minimum required by law, say $15,000 per person, $30,000 per accident. Or you can buy limits as high as $500,000, even $1 million or more. Remember that someone you hit can sue you for everything you have.

• Tip.  If you have a home, own stock and have a decent income, you should probably buy, at minimum, limits of $100,000 per person, $300,000 per accident. If you have more than $300,000 in assets, you should buy higher limits or an umbrella policy.  Consult with your professional agent about this!

Many auto insurance companies now sell what are called combined single limit (CSL) coverages, which have no per-person limit. If you buy, say, $300,000 CSL that means your policy will pay a maximum of $300,000 per accident. All of that could go to one person, if needed. Some companies include property damage liability in the CSL, which means that if you total someone’s antique car, your policy could pay up to $300,000 for property damage. CSL coverage costs more than traditional limits, but it can be worth it if you have any significant assets. 

• Tip. Many insurance agents believe CSL is important to have, they strongly urge their clients to buy it if it is available.

Property Damage Liability – Several years ago, $25,000 was considered the maximum most people needed for this coverage. Not anymore. There’s a lot of $50,000, $60,000, even $70,000 cars and sport utility vehicles on the road these days.

• Tip.  Because of all the super-expensive cars on the road today, you should seriously consider at least $100,000 of coverage. To be safe, $300,000 or more might be preferred.

Collision – Consider how much you can afford to pay to have your car fixed if you have an accident. Auto policies have several deductible options.

• Tip.  Deductible? That’s the part you pay before the insurance kicks in. You can buy deductibles of $100, $250, and $500, even $1,000. Obviously, the lower the deductible, the more this coverage will cost.

Unless you’re planning to have a lot of accidents, it’s probably a good idea to have a deductible of at least a couple of hundred dollars. (By the way, the deductible does not apply if someone else hits you and that person’s insurance is used to pay for your car’s damages.)

Comprehensive – Like collision, there’s a deductible with comprehensive, although it is often lower. For example, if you have a $250 deductible for collision, your comprehensive deductible will be, say, $100.

• Tip. While collision and comprehensive will pay for the damage or loss to your car, neither coverage will pay for everything on or in your vehicle. Most policies exclude things like CB radios, two-way radios, car phones, cassettes and CDs.

Further, if you add special features to pickups, vans or SUVS, these things probably will be excluded as well. In fact, it’s a good idea for you to talk to your insurance agent about any high-tech equipment or special features you have added to your vehicle.

Many, perhaps even most, of these features aren’t covered in the standard policy. It is possible, however, to obtain special coverage for the high-tech equipment or special features in your vehicle. Your agent can advise you of the options.

 Medical Payments – Some people elect not to buy this coverage because they believe their health insurance is enough in this regard. That’s true – to an extent.

• Tip. Unlike your health insurance, medical payments coverage can reimburse you for income lost as a result of injuries suffered in an auto accident. However, medical payments coverage is not nearly as comprehensive as most health insurance plans. Still, medical payments coverage, which usually costs less than $100 a year, is probably a good buy for most people.

In addition, medical payments coverage provides protection for passengers in your vehicle for medical expenses incurred and income lost. In some states, medical payments coverage is not relevant. These are states that have so-called no-fault auto insurance systems. Basically, regardless of who’s at fault, your insurance company pays for damage to your car and/or injuries you incur. Personal injury protection is included as part of your coverage.

 Uninsured/Underinsured Motorist – For most people, it’s a good idea to have the same limits for UM/UIM as they have for bodily injury liability. But remember, UM/UIM coverage is for you. It pays for your injuries and, in some policies, damage to your car if the person at fault in an accident with you cannot. Since you based your liability limit on what you have to lose, you should do the same with UM/UIM. Many of those who do have insurance don’t have enough to cover the damages and injuries that would result in a major collision. If you don’t have this coverage, which is often referred to as UM/UIM, you are taking a risk. UM/UIM also provides coverage for any injuries you suffer if a driver with inadequate or no insurance hits you while walking or riding a bicycle.

• Tip. If you are self-employed, look at this scenario – You are hit while driving by someone with no insurance, injuries keep you in the hospital for one month, you cannot earn income, medical bills are in the $100,000’s. Yes, medical insurance will cover you here, but what about your income? Your only source to recoup this money will be uninsured motorists or a disability insurance policy

 Hired Auto – This protects you for liability for any vehicle you rent or borrow for use in your business. Note, this does NOT include comp and collision for rented or borrowed vehicles. This coverage must be purchased separately

• Tip. Never automatically assume you are fully protected while renting any vehicle. Always call your agent or insurance provider before renting. Also, what about the loss of use for the rental vehicle? If the rental vehicle is involved in an auto accident and is in the shop for 3 weeks being repaired, who is going to pay the rental car company their loss of income? Usually you the renter will. Most policies do NOT cover this. The only to protect yourself is to purchase the insurance offered by the rental car facility.

 Non-Owned Auto – Protects your business from liability resulting from vehicle accidents while non-owned vehicles are being used in your business

• Tip.  This coverage may be the most under used secret for business owners. For a few dollars a month, you can protect your business for many auto accidents out of your control, like an employee having an accident while running to the bank in their own vehicle. Remember, this coverage does not and cannot include comp and/or collision coverage.

 Rental Vehicle Benefit – Provides a dollar amount benefit to pay for a rental vehicle if your covered vehicle is stolen or while your covered vehicle is being repaired. For business vehicles, consider buying as much coverage as possible

• Tip. This coverage usually does not start until your vehicle is delivered to a repair facility or until the loss is reported to your insurance provider. Once a settlement is offered, this benefit will end. Be prepared, always call and ask questions!

 What is covered and what is not covered by an insurance contract is challenged every day in court. Needless to say the scope of what your insurance contract will cover also changes. The description above is intended for informational purposes only. If you have any legal questions, please contract a lawyer.

 Read your policy - it is a legally binding contract between you and your insurance carrier.

 Be a smart consumer...but don't try to be your "own agent." Protection for you and your business requires constantly vigilance....and a partnership between you and your professional agent. For the latest information on how to save money AND get the best protection for yourself and the people you care most about, here's 3 easy ways to reach us:

Toll-free Phone - 877-994-6787

Toll-free Fax - 888-467-7968

Email - chef@zipdrip.com

© 2004 Stromsoe Insurance Agency, Inc. The reader assumes all responsibilities for his/her own actions in regards to any items discussed in this report. Adherence to all applicable laws and regulations, federal, state and local, governing the use of any product or service described in this report in the US or any other jurisdiction is the sole responsibility of the reader. The publisher and author assume no responsibility or liability whatsoever on the behalf of the reader of these materials. The reader is encouraged to consult directly with his/her insurance

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