Commercial Auto Insurance Minimum Requirements in Iowa

Determine Whether You Need Commercial Insurance

If you are a sole proprietor who only uses your personal vehicle to make occasional business trips, you will most likely not need to purchase a commercial auto insurance policy. However, if you own multiple trucks with special equipment that your employees regularly drive, commercial insurance is a necessity.

Generally, you should use the following information when determining if commercial insurance coverage is required:

• The number of vehicles need to be insured.

• Whether or not the vehicles have business equipment attached.

• The primary purpose of the vehicles.

• The registered owner of the vehicles.

• Who drives the vehicles.

• If the limits on a personal auto policy are high enough to protect your business assets in the event of a lawsuit.

If you have questions regarding whether or not commercial insurance is required for your business, contact your nearest Department of Transportation (DOT) office.

Determine the Required Amount of Coverage

Minimum coverage amounts for commercial insurance are the same as what is required for your personal auto policy.

• $20,000 for bodily injury liability for one person

• $40,000 for bodily injury liability for more than one person

• $15,000 for property damage liability

Of course, many business owners decide to purchase more insurance protection than the minimum requirements. Some experts recommend a minimum of $500,000 in liability coverage, but there are many business owners who purchase up to $1 million in coverage. You can also add additional coverage through endorsements such as protection for medical payments, rental reimbursement, towing and labor, and auto loan or lease gap coverage.

A business umbrella policy is another option to consider as well. This type of insurance provides extra coverage for property damage or bodily injury costs after your other liability coverage limits are exhausted. The more assets your business has, the more likely it is that this type of insurance may be needed.

If you need assistance determining the proper amount of commercial coverage for your vehicle, talk with an insurance agent or contact the DOT.

Purchase a Commercial Policy

When you purchase insurance for your personal vehicle, shopping around is the best way to make sure you're getting a fair price for the coverage you need. This is also true for anyone who needs to purchase commercial insurance. Prices can vary significantly according to the carrier you select, so be prepared to obtain several quotes before choosing an insurance provider.

Additionally, you might want to keep in mind that there are insurance companies that specialize in providing insurance to business owners who need to cover multiple commercial vehicles.

Proof of Insurance and Financial Responsibility

While many states have electronic reporting of insurance, Iowa does not offer this service. Therefore, it is up to you to make sure you can provide the appropriate documentation as needed. After purchasing your policy, you'll receive insurance cards for each vehicle listed. Make sure all your employees know how to find the cards for the vehicles they will be driving.

Penalties for Failure to Maintain Financial Responsibility

Because Iowa does not have a compulsory insurance law, failure to maintain financial responsibility becomes a concern only after an accident occurs.

When that happens, if you have no proof of insurance, are found not to have valid insurance, and can't provide another form of acceptable proof of financial responsibility, you face suspension of your vehicle registration privileges according to the terms of the state's Financial & Safety Responsibility Act.

The larger concern for business owners, however, is the risk of being asked to pay a substantial settlement after an accident involving property damage or serious injury results in a lawsuit.