Top Determine Whether You Need Commercial Insurance

When trying to figure out whether you should purchase a commercial insurance policy, you should first consider:

• How many and what kind of vehicle(s) you need to insure

• How the vehicle(s) is being used

• Who drives the vehicle(s)

• Who owns the vehicle(s)

By addressing these details, it might become clearer whether you can get by with a personal policy or if you need to sign up for a commercial one. Generally, business-owned vehicles fall under the category of those that should have commercial insurance. The same goes for those used for farming and the pickup or delivery of goods or people.

With so many variables to consider it can be hard to make that determination. For example, if you are a sole proprietor using your own vehicle for business trips, a personal policy might suffice. But if you own multiple, employee-driven trucks with special equipment, then signing up for commercial coverage is a must. Or if you are an employee of a fleet company, perhaps your employer is the one who takes care of getting commercial coverage on your behalf.

Here are a few more scenarios that could mean a commercial policy is right for you and or your business:

• Your business equipment cannot be removed from the vehicle(s).

• You or your business picks up and delivers goods and/or people.

• You have multiple vehicles used by craftsmen or skilled workers (aka artisan use).

• The coverage limits on a personal auto policy are not high enough.

• You need to protect your employees when they use your company vehicle(s) or their own vehicles on company time.

If you are still not sure whether you should opt for commercial insurance, contact the CA DMV.

Top Determine the Required Amount of Coverage

If you have decided to go the way of a commercial auto insurance policy, be prepared to discuss the following with an insurance provider:

• Who owns the vehicle(s)

• Weight of the vehicle(s)

• Usage of the vehicle(s)

• Liability limits requirements

While figuring out how much coverage you need, also consider details such as the vehicles’ value, what they transport, if they have special equipment, whether they haul valuable or potentially dangerous cargo, etc. In some cases, you might only have to purchase a policy that covers the state liability minimums:

• $15,000 for injury/death to one person

• $30,000 for injury/death to more than one person

• $5,000 for damage to property

If you're still unsure, contact the CA DMV to determine required coverage on a case by case basis.

Top Purchase a Commercial Policy

Once you have done your homework and it’s time to settle on an insurance provider that meets your individual or business needs, be prepared to shop around. Some insurance companies that offer private policies might additionally offer commercial ones.

Keep in mind there are also insurance companies that specialize in commercial coverage, offering blanket policies to those who need coverage on multiple vehicles.

Electronic Reporting

After buying commercial coverage, your provider might electronically report the details to the CA DMV. That’s because not all commercial vehicles are covered according to Vehicle Identification Number (VIN).

For example, a commercial insurance agent might sell you a blanket policy that covers your 15 trucks without insuring each one specifically by VIN. Because the electronic reporting system only accommodates vehicles using a VIN as identification, a vehicle that is identified otherwise will not have its coverage automatically reported to the DMV. Therefore, be sure your provider takes care of this. It might not also be a bad idea to just report coverage yourself.

If you are certain the insurance agent reports your commercial coverage electronically, be well aware the system is automatic. The moment you allow your coverage to lapse, the state will suspend your registration for failure to maintain financial responsibility. For more info on the penalties associated with this, scroll down.

Top Proof of Insurance and Financial Responsibility

In order for you to prove financial responsibility, the state might require you to:

• Get a document or ID card from your commercial insurance company stating you have adequate coverage. Then you will submit it the DMV. Keep in mind the state will not return any such documents that you submit.

• Turn in a DMV authorization letter proving you made a cash deposit or that you are self-insured.

• Get a California Proof of Insurance Certificate (SR-22) for either broad coverage or an owner's policy and submit this to the DMV. Submitting proof alone of an operator's policy will not suffice if the state has already determined you need to proved an SR-22.

• Get proof that the vehicle is publicly owned or leased (as defined in Government Code 811.2).

• If the state defines you as motor carrier (in California Vehicle Code 34601), you can turn in a statement of facts stating you have filed proof of insurance with the Public Utilities Commission or DMV pursuant to California Vehicle Code 34630.

Top Penalties for Failure to Maintain Financial Responsibility

• Your commercial vehicle registration could be suspended by the state if the following occurs:
  • You don’t replace your liability insurance policy within 45 days once it has been canceled.
  • You do not provide evidence of insurance within 30 days after the state issued you a registration card on a commercial vehicle that has never before been registered in California.
  • You submit false evidence of insurance.

• You could receive a traffic ticket ($1,000 or more) if a cop pulls you over and you have no proof of insurance or evidence of financial responsibility.

• Your commercial vehicle could be impounded, and you could be fined.

• You could be financially responsible for damages associated with an auto accident you had any part in causing. In other words, you could be personally liable and forced to pay for any injuries or damages.

NOTE: The CA DMV does not offer vehicle financial responsibility services. If your registration is rendered invalid you have to deal with the Vehicle Registration Financial Responsibility Program. Simply call (866) 664-4545.