As a contractor working in California, I use my personal vehicle for business. Do I really need commercial auto insurance?

In a word—Yes.It’s all about protecting the business that you’re working so hard to build. Your personal auto policy may not cover you for an accident that happens while your vehicle is being used for work. Different risks are involved when a vehicle is used in contracting work than when it is driven for personal use only.

One of my employees drives his own van to work and picks up some of my other employees on the way. Why do I need commercial auto insurance for his van even though it’s not owned by my company?

The state of California requires commercial auto insurance on any vehicle used to transport your employees. If you fail to carry the required insurance, both your business and personal assets are at risk if there is an accident.

In California, what kinds of vehicles can I get commercial auto insurance for? Can I get coverage for a cement mixer? How about a trailer?

Pretty much any kind of vehicle used by contractors and their employees can be covered by commercial auto insurance in California: cars, vans, trucks (from small pickups to big rigs), trailers, and even cement mixers. It’s not the type of vehicle that matters, but rather its use. If a vehicle is used for commercial purposes you should be taking a look at commercial insurance for it.

What specific commercial auto coverage should I carry for my contracting business?

In California, as in any other state, the basics are liability, medical, and physical damage insurance:

  • Liability insurance provides coverage for bodily injuries or property damage resulting from anaccident.
  • Medical payments insurance makes sure your business is not saddled with medical bills for anyone injured in an accident involving a company-owned vehicle or personal vehicle covered by your commercial auto policy.
  • Physical damage insurance includes both collision insurance, which pays the repair bills after an accident, and comprehensive insurance, which covers repairs for damage from storms, vandals, thieves, and other causes.

You may also want to consider uninsured motorist insurance, which makes sure your business won’t be held liable if one of your covered vehicles is involved in an accident with an uninsured or underinsured driver. Uninsured motorist coverage also protects you in a hit-and-run situation.

Is there a minimum coverage requirement in California for commercial auto policies?

To get and keep a California Motor Carrier Permit, which is required for many commercial vehicles, you must provide proof that you have met certain liability insurance requirements. The minimum coverage depends on the type of vehicle and what is being transported. To determine whether you need a Motor Carrier Permit and access related insurance requirements, visit the California Department of Motor
Vehicles website: http://www.dmv.ca.gov/vehindustry/mcp/mcpfaq.htm#minins.

What will an insurance carrier consider when determining the rates I will pay in California for commercial auto insurance for my contracting business?

A number of factors enter into the calculation, such as how many and what type of vehicles need to be insured, how much time each vehicle will be on the road, and how many drivers will be covered and their driving records. As with any insurance, the higher an insurer thinks the risk is, the more you will pay in premiums.