A business automobile policy provides insurance coverage for vehicles used for business purposes. This type of policy provides coverage for specific vehicles. Different vehicles owned by the same company can have different types and amounts of coverage. In other words, not all business vehicles must have the exact same coverage.
A company should obtain a business automobile policy even if the company doesn’t have its own vehicles. This applies to situations in which employees drive personal vehicles for business purposes. In the event of an accident, the employee may not have sufficient personal liability coverage to protect the business. That puts the business at risk of facing a lawsuit.
The BAP covers property damage and liability. A business can purchase collision coverage, comprehensive coverage or specified perils coverage for all of its vehicles.
Collision pays if the vehicle collides with another object or flips over. Comprehensive pays for damages not caused by a collision or flipping over. Specified perils only covers specific incidents stated in the policy. If damage results from an uncovered peril, then insurance pays nothing.
If a business vehicle has collision coverage, then it can also get comprehensive coverage or specified perils coverage. But it’s unnecessary to get both comprehensive coverage and specified perils coverage for the same vehicle.
Then there is liability coverage, which pays for injuries or property damage caused by a covered vehicle. If the employee is at fault for an accident, then the court may award punitive damages. In some states, a BAP isn’t required to pay punitive damages. That means the business will likely have to foot the bill.