Costs You’ll Pay Within A Commercial Auto Insurance Policy

Businesses have budgets. So if you’re running one, you’ll need to keep an eye on what charges you rack up. However, you can’t get around the fact that you will have to pay continuing costs. Among these are the costs related to your commercial auto insurance. Some of these costs you will pay within regular intervals. Others will arise only if you file a claim on your policy. However, you will need to have money available to cover these costs. What can you expect? 

Commercial Auto Policy Costs In General 

If you were to have a wreck while driving a business vehicle, then commercial auto insurance might pay for some or all the repair and recovery costs. Therefore, the policy can greatly reduce the business’s risk of a financial hardship should accidents occur. 

However, it’s important to remember that car insurance policies are contracts that you make with insurance companies. These companies agree to pay for your losses, so long as you pay your fair share of the costs. Coverage, simply put, is not free. Nor, in fact, does it usually cover every cost associated with car accidents and other mishaps. You can think of policies in two cost categories. 

• In one category are your standard policy costs. These are the bills that you will pay to contract and maintain the policy. These vary from policy to policy, but most policies contain a few standard elements. 

• The second category of costs are your personal responsibilities within policies. These are costs that will arise only if you file a claim on the policy. Because policies don’t usually cover 100% of your claim costs, you can expect a few supplementary bills. 

The good thing is, many of the costs that might arise are simple to understand. Here, we’ve broken down a few of the bills that you might look for on your policy. 

Your Premium 

Almost universally, every insurance customer will pay a premium. This is the cost of your policy itself. Insurers determine the rate you’ll pay for your premium based on a variety of risks. These might include (among many things): 

Your premium rates might also change over time. For example, if you have a wreck and must make a policy claim, the insurer might raise your premium. That is because you’ll pose more of a cost risk to them because you had a wreck that cost the insurer money. 

Some insurers charge extra fees depending on when you pay your premium. If you pay monthly, then you might have to pay a nominal service fee each time you pay. However, if you pay your premium in-full when you start coverage, you might not have to pay this cost. Or you might only have to pay it once. That could lead to nominal savings. 

High-Risk Coverage Fees 

Some states have laws that force drivers who commit serious driving offenses to prove that they have insurance. These are best known as SR-22 or FR-44 penalties. You might get one if you commit an offense — such as a DUI, a DWI, an at-fault wreck or a violation for driving without insurance. These might impact your personal costs in a couple of ways. 

First, these penalties will signal that you are a high-risk driver. Therefore, your insurer will very likely increase your rates. Some will even cancel your coverage and force you to seek another policy. Second, you might have to pay a nominal processing fee to activate the penalty. 

Coverage Deductibles 

Nearly all commercial auto insurance policies will include deductibles. These are the share of a claim for which a policyholder has responsibility. In other words, you will file a claim for a certain amount of money. You will then pay the deductible’s share of the cost, and the insurer will cover the rest of the claim. Deductibles might apply to your policy’s: 

• Collision & Comprehensive Coverage 

• PIP Coverage 

• Uninsured/Underinsured Protection 

Liability coverage often doesn’t come with deductibles. Some other policy elements might have no deductible either. 

For example, if you have a wreck, your van might sustain $5,000 in damage, and you will file a claim for that amount. If you have a $1,000 deductible on your collision coverage, you will pay the $1,000, and the policy will pay the remaining $4,000 in the claim. Keep in mind, if your vehicle sustains damage for less than the deductible value, the policy won’t pay. Even $990 in damage with a $1,000 deductible in place won’t qualify. 

Planning For Your Costs 

Always remember, your commercial car insurance won’t cover every type of damage, and it will have maximum limits on what it will pay. Therefore, you could face other residual costs, should your damage fall outside the costs of your policy. Furthermore, policies typically won’t cover workers compensation costs, for which an employee driver injured in a wreck might qualify. 

It often won’t take much to plan for the costs of your commercial auto policy. For example, your premium costs might become a standard part of your operating budget. If you also work consciously to establish a Rainy Day Fund, then you might be able to tuck money away for the costs of deductibles and outstanding damage costs.