Why contractors need commercial auto insurance
Contractors rely on vehicles to reach jobsites, transport employees, carry materials, tow trailers and move tools and equipment. Those business activities may not fit the terms or underwriting assumptions of a personal auto policy.
Commercial auto insurance can be structured around vehicles owned or leased by the contracting business. Depending on the selected coverage and policy terms, it may address liability claims, damage to covered vehicles and several other vehicle-related exposures.
A contractor should not assume that putting a magnetic sign on a personal pickup automatically requires or creates commercial coverage. The important questions are who owns the vehicle, how it is used, who drives it and what the policy actually covers.
Vehicles commonly used by contractors
A contractor commercial auto policy may include vehicles such as:
- Pickup trucks
- Cargo and service vans
- Utility-body trucks
- Flatbed trucks
- Dump trucks
- Box trucks
- Bucket trucks
- Passenger vehicles used for business
- Trailers
- Other specialized work vehicles
Larger vehicles, towing, permanently attached equipment and specialized operations may require additional underwriting information.
Commercial auto liability coverage
Commercial auto liability insurance may address covered claims when an insured vehicle or driver causes bodily injury or property damage to another party.
Contractors should consider the potential severity of an accident involving a loaded work truck, trailer or multiple vehicles. Written contracts may also require specific commercial auto liability limits.
Higher limits may sometimes be supported by a commercial umbrella policy, subject to the umbrella’s underlying-policy requirements, exclusions and terms.
Physical damage coverage
Physical damage coverage can help protect covered vehicles against certain direct damage losses. It commonly includes:
- Collision coverage: damage from collision with another vehicle or object, subject to the policy and deductible.
- Comprehensive coverage: certain non-collision losses such as theft, vandalism, fire, falling objects or weather, subject to the policy and deductible.
Contractors should provide accurate vehicle values and identify permanently attached equipment. Custom bodies, cranes, lifts, generators, compressors and similar equipment may require additional description or valuation.
Uninsured and underinsured motorist coverage
Uninsured and underinsured motorist coverage may respond when a covered vehicle or insured person is involved in an accident with a driver who has no insurance or insufficient insurance, subject to the policy and applicable law.
Available limits, selection requirements and coverage treatment should be reviewed as part of the overall commercial auto proposal.
Medical payments and other available coverage
Depending on the policy, insurer and state requirements, commercial auto coverage may include or offer:
- Medical payments coverage
- Towing or roadside assistance
- Rental reimbursement
- Lease or loan gap-related options
- Drive-other-car coverage in qualifying situations
- Employee hired auto coverage
These features are not automatically included in every policy. Confirm the forms, limits, deductibles and vehicles to which each coverage applies.
Hired auto coverage
Hired auto coverage may address certain liability exposures when a business rents, leases, hires or borrows a vehicle it does not own. The exact meaning of a hired auto depends on the policy wording.
Hired auto liability should not be confused with physical damage coverage for a rented vehicle. If the contractor wants coverage for damage to a hired or rented vehicle, that exposure should be discussed separately.
Learn more on the Hired and Non-Owned Auto Insurance page .
Non-owned auto coverage
Non-owned auto liability may address certain claims arising when employees use vehicles the business does not own for business purposes. An example could be an employee using a personal vehicle to pick up materials or travel between jobs.
This coverage is generally designed to protect the business’s liability exposure. It does not automatically replace the vehicle owner’s personal auto policy or provide physical damage coverage for the employee’s vehicle.
Employees taking work vehicles home
If employees regularly take company vehicles home, Ford Agency should be told before the policy is issued. The insurer may ask:
- Which employees take vehicles home
- Where the vehicles are garaged overnight
- Whether personal use is permitted
- Whether spouses or household members may drive
- How keys and vehicles are controlled
- Whether vehicles contain tools or materials overnight
A written vehicle-use policy can help establish expectations for authorized drivers, personal use, maintenance, mobile-phone use and accident reporting.
Trailers and towing
Contractors frequently tow utility trailers, equipment trailers, enclosed trailers, dump trailers and specialized units. Every trailer should be disclosed with its vehicle identification number, value, ownership and use.
Liability arising from a trailer and physical damage to the trailer are separate considerations. The equipment or materials carried on the trailer may also require inland marine coverage.
The towing vehicle’s weight, trailer weight, combined weight and operating radius may affect underwriting and regulatory obligations.
Are tools inside a work truck covered?
Commercial auto physical damage generally protects the covered vehicle—not every item carried inside it. Loose tools, materials and mobile equipment may need separate contractor tools and equipment coverage .
Contractors should also review limitations for property left in an unattended vehicle, overnight theft, employee-owned tools and unexplained disappearance.
Driver information and motor vehicle records
Insurance companies commonly review every driver who may operate a covered vehicle. Driver age, experience, license status, violations, accidents and vehicle assignment can affect eligibility and pricing.
Contractors should maintain:
- A complete authorized-driver list
- Copies of current driver’s licenses where appropriate
- Documented vehicle-use rules
- Procedures for reporting accidents and violations
- Driver screening and approval practices
- Records of safety or defensive-driving training
Do not send driver’s-license numbers or other sensitive personal information through ordinary email. Use the secure process requested by Ford Agency or the insurance company.
What affects commercial auto pricing?
Commercial auto eligibility and pricing may be influenced by:
- Vehicle type, age and value
- Gross vehicle weight
- Business use and materials carried
- Driver ages and driving records
- Operating and travel radius
- Garaging locations
- Vehicle ownership and financing
- Towing and trailer use
- Prior commercial auto losses
- Requested liability limits
- Physical damage deductibles
- Hired and non-owned auto exposures
Accurate vehicle and driver information helps Ford Agency compare available options consistently. A less expensive proposal should be reviewed for differences in limits, deductibles, covered-auto symbols and optional coverage.
Commercial auto within the contractor program
A vehicle accident can involve more than one policy. The commercial auto policy may address covered vehicle liability and vehicle damage, while other exposures may require:
- Contractor general liability insurance
- Workers’ compensation insurance
- Tools and equipment coverage
- Contractor inland marine insurance
- Commercial umbrella insurance
- Contractors pollution liability insurance
What to send Ford Agency
Useful information for a contractor commercial auto review includes:
- Year, make, model and vehicle identification number for each vehicle
- Current values and financing information
- Vehicle ownership and registration details
- Driver names and dates of birth
- Driver’s-license information through a secure process
- Vehicle use and materials carried
- Garaging addresses
- Typical and maximum travel radius
- Trailer information and values
- Permanently attached equipment descriptions and values
- Current commercial auto policy information
- Currently valued loss runs when requested
- Requested limits and contract requirements