If, like most business owners who own or operate vehicles, you carry commercial auto insurance, then one of the benefits that is central to your protection is liability insurance. This coverage is designed to protect your company in case it is at-fault for auto accidents that harm other people. It’s there to protect your business from the costly ramifications of lawsuits and other challenges.
Commercial auto liability insurance
is required by law in most states, and it is very important that you buy the proper coverage for your business above and beyond any state mandates. Therefore, let’s take a look at the coverage offered by this plan, and how you can tailor it to your business’s advantage.
How does liability insurance work?
North Carolina uses an at-fault auto insurance system. This means that drivers who cause wrecks have to pay for their own damage and the damage they do to others. Liability insurance is the coverage that will pay for these third-party losses. Because a business might have a legal responsibility to repay these parties, its commercial auto liability insurance will help it do so.
Most businesses need three types of commercial auto liability insurance
Bodily injury coverage: If another driver or pedestrian is injured in your at-fault accident, then this coverage can compensate them for their medical bills, lost income and related settlements. These policies will not cover the injuries of employee drivers or their passengers.
Property damage coverage: If the driver damages someone else’s property, such as their vehicle or building, then this coverage can pay them for their losses. The coverage will not pay for the business vehicle’s damage.
Hired/non-owned auto liability coverage: This liability coverage provides bodily injury and property damage coverage when a business employee drives their personally owned car on business and causes an accident. It insures the business’s investment in the driver’s mistakes.
Keep in mind, if you want to insure the cargo and equipment you carry in your vehicle, you will likely need inland marine insurance. This coverage insures both company items and third-party cargo when you are transporting it in a vehicle. Therefore, you will want to have this coverage to insure the liabilities you assume by transporting others’ belongings.
Do I have to buy liability coverage?
Like most states, Texas law requires registered drivers to carry minimum amounts of auto liability insurance. The minimum coverage required of all drivers, commercial drivers included, is:
$30,000 Bodily Injury Liability Coverage (per one person injured in an accident)
$60,000 Bodily Injury Liability Coverage (if more than one person injured)
$25,000 Property Damage Liability Coverage
Commercial drivers who are caught without at least this coverage could face significant financial penalties. However, it’s important to remember that if you are a commercial trucker, or if you transport passengers or hazardous materials, then you might have to carry additional liability insurance that reflects other industry requirements.
Still, even if you don’t have a requirement to carry higher liability coverage limits, that doesn’t mean you should not. After all, the more liability coverage you have, the better you can fight back against costly damage costs that you might owe to others.