Commercial Auto Insurance: Liability Vs Full Coverage
The world of commercial auto insurance can be confusing. This is especially so when explaining liability vs full coverage to clients who know they need insurance but not the details of what they need. It can be mystifying to clients who only know auto insurance through the lens of personal coverage. Risks, coverage, and costs can be very different from those of commercial insurance.
As you know, commercial auto insurance has many purposes. They are all designed to cover the risks and damages associated with using vehicles for commercial reasons, including trucking, taxis and car services, shuttle services, buses, ride-sharing, and cargo delivery. Suitable auto insurance is critical. It’s well worth the effort of working with your clients to help them figure out the right solution. Being able to communicate the difference between liability vs full coverage ensures each client can feel assured that their risk is managed appropriately.
Let’s get into the basics of liability vs full coverage. We’ll look at how the differences can impact your clients and how to help them choose the right type of insurance for their needs.
Liability vs Full Coverage: An Explainer
Commercial auto insurance is vital. For commercial fleets, the annual accident rate is around 20%. It’s even higher in some industries. Two out of every ten commercial drivers will get into an accident that may trigger insurance coverage. Non-fleet drivers have a one in 15 chance of collision every year. It all adds up, with vehicle accidents costing employers almost $57 billion in 2017.
So, your commercial clients need to have auto insurance, but what kind? As an insurance producer, you are likely to be familiar with the ins and outs of various types of insurance, including liability vs full coverage. Unfortunately, a lot of that knowledge can be confusing to your clients.
When explaining liability vs full coverage, we recommend that you keep it simple. Focus on two facts. Liability is for covering the cost of your clients’ damages to others as the result of operating a vehicle. Full coverage, on the other hand, is aimed at covering the cost of damage to commercial vehicles and accessories, such as trailers. Full coverage auto insurance is typically a combination of various commercial insurance options that add up to protect the vehicle, the driver, and the company to the fullest extent possible.
Commercial Auto Insurance Options
For personal insurance, liability vs full coverage is a lot more straightforward. Your clients may already know those details from their lives outside of business. Commercial auto insurance is a bit more complicated, however, which is why you need to explain the options carefully.
Liability insurance covers third-party costs, whether that’s medical expenses, repair costs, or a client’s legal fees when at fault. For first-party coverage, your clients could consider collision insurance, comprehensive insurance, auto physical damage, drive away coverage, new operators coverage, and industry-specific coverage like motor truck cargo insurance and terminal operation insurance.
Perhaps your client has workers driving their own vehicles for company uses. Maybe they are using a company-owned fleet for their employees. Either way, a personal car insurance policy will not suffice regardless of liability vs full coverage. It leaves companies open to lawsuits.
For employees using personal vehicles for business reasons, introduce your clients to non-owned commercial auto insurance. If they rely on borrowed or rental cars, hired auto insurance may be the answer. Still, if your client chooses hired or non-owned liability insurance only, it will only cover third-party costs.
We know that each company’s commercial vehicle situation is different. No matter what, though, your clients must understand that they need commercial coverage.
Liability vs Full Coverage: Costs
Full coverage insurance protects your clients against more risks, so, naturally, it is likely to cost more than liability insurance alone. The cost of commercial auto insurance also tends to rise according to the type of vehicle and the level of risk involved. A commercial car, for example, will usually cost less than a cargo truck, a limousine, or a taxi cab, whether it’s for liability or full coverage. The make and model of the vehicle may also impact the cost. Other influencing factors include how many vehicles need coverage, the driving record of employees, and the distance the company vehicles will travel.
Deciding between liability and full coverage often comes down to how much a vehicle is worth and how much potential for lawsuits exists. Only your client can tell you about their risk tolerance. In our opinion, it is always best to carry full insurance for any commercial endeavor. We all know how costly legal costs and damages can be. If a client chooses liability insurance alone, make sure that the coverage is sufficient, and not just the minimum required by law.
Securing Commercial Auto Insurance
Knowing the ins and outs of liability vs full coverage insurance makes your services as an insurance producer more valuable to your clients. They will appreciate you cutting through the confusion to help them find the right insurance solution for their needs.
When you work with Prime Insurance Company, you can be even more competitive. We are dedicated to providing industry-specific insurance to as many clients as we can. If you have had a client turned down by other insurers in the past, please reach out to us to find out what we can do. Our experienced specialty underwriters work hard to deliver solutions for specialty risks. Our goal is to provide access to the right coverage at the right time. Even if you’re struggling to get insurance, don’t give up without contacting us.
To learn more about our commercial auto insurance products or to get a quote, contact us toll-free at 800-257-5590, or email us at email@example.com. We are also active on Facebook, LinkedIn, YouTube, and Instagram, so connect with us via social media to stay up to date.
Authored by Rick J. Lindsey, CEO, President, and Chairman of Prime Insurance Company
Rick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. Prime Insurance also specializes in helping individuals and businesses who live a lifestyle or participate in activities that make them difficult for traditional carriers to insure. If you’ve been denied, non-renewed, or canceled coverage, don’t give up quite yet. Chances are Prime Insurance can help.