A Business Automobile Policy provides coverage for any vehicles that drive on public roads and are used by a company to do business. A BAP or BACF is written so that coverage is chosen specifically for each vehicle insured, and different vehicles owned by the same company may carry different amounts and types of coverage.
It is recommended that a company obtain a business automobile policy even if it does not own vehicles if its employees use personal vehicles for business purposes. In the event of a serious accident, the employee may not have enough personal liability coverage to adequately protect the business.
A BAP covers both property damage and liability. There are three types of property damage coverage a business can purchase for its vehicles: collision coverage, comprehensive coverage or specified perils coverage. A business can purchase one or two types of coverage for each vehicle it insures.
Collision coverage pays in case one of the covered vehicles incurs damages from colliding with another object or if the vehicle flips over.
Comprehensive coverage pays in case one of the covered vehicles incurs physical damage resulting from anything but collision or flipping over, which are both covered under collision insurance.
Specified perils coverage may be referred to as fire, theft and Combined Additional Coverage, or CAC. It covers the same range of claims as comprehensive coverage, but it only covers those that are specified in the policy, For this reason it is less expensive than comprehensive coverage is.
A business that chooses to cover a vehicle for collision coverage may also insure it for comprehensive coverage or specified perils coverage, but would not buy both comprehensive coverage and specified perils coverage for the same vehicle.
Liability coverage pays for any bodily injury caused or any property damage caused by a covered vehicle. If a driver is found guilty of reckless driving or driving impaired, a court may award punitive damages, and in some states a BAP is not legally allowed to cover punitive damages.