Underinsured Motorist Insurance For Commercial Vehicles
Even if your business is smart enough to carry commercial uninsured driver protection, it could still benefit from underinsured motorist insurance.
Uninsured and Underinsured: What's the Difference?
There's a slight―but important―difference between the two commercial auto insurance coverages.
Uninsured driver protection applies to auto accidents with drivers who don't have any type of car insurance. Meanwhile, underinsured driver coverage applies to accidents with underinsured drivers―drivers who do have auto insurance coverage, but not enough to pay for the damages they caused in an accident.
And, yes, for either insurance to kick in, the other driver must be found liable for the accident.
Two Main Types of Commercial Underinsured Driver Insurance
Some carriers offer underinsured coverage as a single entity, but most split it into two categories:
- Bodily injury: Covers medical-related expenses from an accident, such as hospital bills, doctor's visits, therapy, prescription medication, and funerals.
- Property damage: Covers repair-related costs to your commercial vehicles.
How Commercial Underinsured Motorist Coverage Works
An underinsured driver crashes into one of your company's vehicles, causing $22,000 in damages. The driver's property damage coverage has a $15,000 limit.
How are you going to make up that $7,000 difference?
You could take legal action against the other driver. But, you'd need to collect on a successful lawsuit. Think about that. If a driver carries such skimpy amounts of car insurance, what are the odds you'd easily be able to pry $7,000 out of them? Plus, there's the hassle and time factor associated with going through the court system.
However, if you had underinsured coverage, your carrier would pay for the $7,000, and you could return your focus to your business.
Just like with other types of car insurance, you'll need to set a policy limit for your coverage.
Does Your Company Need Commercial Underinsured Motorist Coverage?
If your company is financially stable and able to easily absorb blows such as the one mentioned above, perhaps you get can by without underinsured protection.
But, realize this coverage helps your employees who drive your commercial vehicles as part of their job. If they're injured in an auto accident by an underinsured motorist, they could have to pay the remaining medical bills on their own. (Even if they have personal underinsured motorist coverage, it probably won't apply in this situation.)
If you happen to be an independent contractor who uses your vehicles for business purposes, check with your car insurance carrier to see if your commercial activities are covered under your personal auto policy.Compare Commercial Insurance Rates in 3 Steps
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