A Complete Guide To Commercial Car Insurance In New Jersey

Given the busy streets and dense traffic in New Jersey, you’re always at great risk of vehicle-related incidents, which may result in huge financial losses and liabilities.

While car insurance can often protect you from many of these incidents, it doesn’t offer ample protection for commercial businesses with large-scale operations.

This is where commercial car insurance comes in, a coverage policy that protects commercial vehicles, including work vans, food trucks, delivery trucks, and even company cars.

So, whether you’re a bakery delivering cupcakes in Hoboken or a small business renting delivery trucks, commercial car insurance can provide much-needed peace of mind.

Read on to learn more!

What Is Commercial Car Insurance: The Definition

Commercial car insurance is a type of policy that protects vehicles used for business purposes.

Unlike personal car insurance, which covers you and your personal vehicle, commercial car insurance includes cars, vans, and trucks that are owned, leased, or rented by a business.

This coverage offers financial protection in case your business vehicle faces an accident, theft, or other damage while performing business operations.

For example, if your delivery bike runs into a truck while transporting cupcakes (facing a total of $600 in damages), your commercial car insurance will pay these expenses.

Hence, this insurance safeguards your business vehicles and helps you resume your operations smoothly after a major setback (say, an accident or a theft).

It also protects you from out-of-pocket expenses in case of uncertainties, preventing your company’s bottom line from financial hits.

Commercial car insurance offers:

• Physical damage insurance – comprehensive coverage and collision
• Liability insurance – property damage or bodily injury
• Other insurance. – medical bills, loans, towing, and labor

What Does Commercial Car Insurance Cover?

Commercial car insurance protects you from the financial burden that may come from accidents, like vehicle repairs and medical bills.

Here are some common insurance coverages:

Collision Insurance

Collision insurance is a type of auto insurance that helps pay for the repair or replacement of your vehicle if it is damaged in an accident or collision.

For example, if the driver runs into an object (read: tree, pole, guardrail, or building) or hits another vehicle, this insurance will cover the amount needed to get your vehicle fixed.

Plus, collision insurance covers the cost of replacing or repairing your business vehicle if you face an accident, regardless of who is at fault.

Hence, this coverage is valuable in situations where the fault is disputed in court or if the accident involves a single vehicle (say, your delivery van hits a fence).

Liability Insurance

As a major part of commercial car insurance, liability coverage protects your business against legal claims.

Let’s say your commercial vehicle hits a passenger while delivering cupcakes, and the said person sues your business for this vehicle-related incident.

In this case, the liability insurance will compensate you for the legal defense costs.

Broadly speaking, liability coverage is divided into two parts:

• Bodily Injury Liability: This reimburses the costs related to injuries or death that your vehicles cause to other people in an accident. It helps cover legal fees, medical expenses, and loss of income for the injured party.
• Property Damage Liability: In case your business vehicle damages someone else’s property (buildings, vehicles, or structures), this part helps pay for the repair or replacement costs.

Comprehensive Insurance

This coverage includes damage to your business vehicle caused by almost all incidents other than collisions.

So, if your delivery van is affected by fire, vandalism, theft, natural disasters, collisions with animals, or fire, the comprehensive plan will pay for it.

Uninsured Motorist Insurance

If you’re hit by a driver who doesn’t have insurance, uninsured motorist insurance pays for your injuries and property damage.

Underinsured Motorist Insurance

This insurance covers you if the person at fault doesn’t have enough insurance to cover your bills.

This coverage can pay for medical bills and repair costs that exceed the other party's coverage limits.

Non-Owned & Hired Auto Liability

This insurance is a must-have if your employees occasionally use their personal vehicles for business purposes or if you rent vehicles.

It protects your business from liability claims if an accident occurs while a personal or rented vehicle is being used for business operations.

If you need some extra protection, you can avail these additional commercial car insurance coverages:

• New Vehicle Replacement: If your work vehicle is damaged beyond repair, a new vehicle replacement may help you pay for a comparable vehicle.
• Roadside Assistance Insurance: In case of a disabled car or broken vehicle, roadside assistance insurance can help pay for the tow and other services.
• Gap Insurance: If you owe more loan than the value of your damaged vehicle, gap insurance helps cover the difference.

What Does Commercial Car Insurance Not Cover?

There are a few things that commercial car insurance does not cover, including:

• Personal Use: If a vehicle allocated for business use is being used for personal reasons at the time of an incident, the damages may not be covered under a commercial car insurance policy.
• Intentional Damage: Any damage intentionally caused by the business owner or employees is not covered. This includes situations where a vehicle is damaged on purpose to claim the insurance money.
• Racing and Speed Tests: Standard commercial car insurance policies do not cover damage from racing, speed testing, or competitive driving. These activities are considered high-risk and require specialized coverage.

Cost of Commercial Car Insurance, NJ

Commercial car insurance costs $147 per month or $1764 annually.

However, the premium you pay for such insurance policies depends on the nature of your business and the vehicles you insure.

For example, if you have heavy commercial vehicles or operate in high-risk industries, you may receive a higher quote.

Broadly speaking, here are a few factors that impact the cost of commercial car insurance:

• Driving Record: It's one of the biggest factors that can determine the cost of your insurance. The more clean your driving record, the less you have to pay. Similarly, if your drivers have a history of traffic violations, be prepared to pay a higher premium.
• Location: If your business runs in a region with high traffic or high rates of accidents/thefts, you may have a higher premium than one that operates in rural areas.
• Types of Coverage: The choice and limits of your coverage will also impact the insurance cost. If you obtain add-ons like collision, comprehensive, and uninsured motorist coverage, your insurance will cost more than the basic plan.
• Vehicle Usage: Think about how often and how far your vehicles travel. The more your vehicles are used and the higher your mileage is, the higher your premiums shall be (due to an increased risk of accidents). Similarly, your rates will be lower if you drive less.
• Type of Business: Industries with high-risk goods might see higher insurance rates than those with a lower perceived risk. For example, those who carry heavy equipment may pay higher rates than those who use cars for food deliveries.

Commercial Car Insurance: The Bottom Line

Commercial car insurance protects the assets and profits of your business by insuring your work vehicles against accidents, theft, and injuries.

This policy steps in to shoulder the financial burden in case your food delivery truck or business van hits passersby or runs into a pole during its normal operations.

It also compensates you for legal fees and medical bills of the injured party in case of lawsuits and liabilities, making it a go-to for businesses with vehicles.

So, if you want to avoid out-of-pocket expenses and legal troubles, opt for a reliable commercial car insurance plan today!

Frequently Asked Questions

1. Do I need both commercial car insurance and personal car insurance ?

Yes, you need both policies if you own a personal car and a business thatdeals with vehicles. In simple words, commercial car insurance protects yourbusiness, while personal car insurance safeguards you and your family.

2. What is the difference between a car and a commercial car?

Commercial cars or any commercial vehicle are used for business purposesonly, like delivering food or trading. On the other hand, a personal car is onethat is used for your personal activities, such as dropping your child off at
school or doing grocery runs.

3. Why is commercial auto insurance more expensive than personal car insurance?

Commercial vehicles are used more often than personal cars, which means they are less innocuous and more prone to accidents. For this reason, insurers charge higher premiums to make sure coverage remains reliable. Hence,
commercial auto insurance is more expensive than personal car insurance policy.