Commercial Auto Insurance Minimum Requirements in Rhode Island
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Rhode Island law holds all drivers to a minimum standard of financial responsibility for injury or damage they may cause with their vehicles in the future. If you can’t prove you have adequate financial responsibility, you cannot legally drive on public roads in the state.
If you own a business, you’re obligated to adhere to the same minimum requirements for each of your company vehicles, just like individual drivers. Whether your vehicles are cars, trucks, vans, trailers, motorcycles, or buses, you’re financially responsible for them all.
Ways to Establish Financial Responsibility
For most drivers, the easiest way to establish financial responsibility is to purchase a vehicle liability insurance policy―but it’s not the only option available. The following are the various "proofs" the state will accept when it comes to potential vehicle liability:
- A liability insurance policy covering your vehicle(s).
- A surety bond issued by a company authorized to do business in Rhode Island, or signed by two state residents who own property with a combined value of at least two times the bond amount.
- A deposit of $60,000 in cash or securities given to the state treasurer.
- A self-insurance certificate issued by an authorized Division of Motor Vehicles (DMV) employee (this option is available only if you own more than 25 vehicles).
It’s up to you, basically, to choose whether you get a personal insurance policy on each vehicle or an umbrella-type of commercial vehicle insurance that covers all your vehicles. But the first questions to consider in the process are:
- How many and what kind of vehicle(s) you need to insure
- How the vehicle(s) is being used
- Who drives the vehicle
- Who owns the vehicle
The answers to the items above can guide you in your decision. Typically, business owners should get commercial insurance if they have vehicles for business purposes only, or if they employ multiple workers who drive the business vehicles. If you only have one or two cars and you drive them both for work and for personal use, a simple personal car insurance policy could suffice.
A good example of a business that needs a commercial policy is a plumbing company. The owner has five trucks that carry all the necessary equipment for the job, as well as seven employees who drive the trucks on various shifts.
A good example of a business that could be fine with a personal vehicle insurance policy is a computer repair specialist who makes house calls. This owner drives his own car during business hours, and doesn’t have any additional employees.
In other words, you’ll most likely need commercial vehicle insurance if:
- You have a business that primarily transports people or products.
- You have a trade business that requires multiple vehicles driven by multiple workers.
- Your business vehicles include specialized built-in equipment used solely on the job.
- You want to cover the employees who drive your business vehicles, or their own vehicles for business purposes.
- You need an auto policy with a coverage amount higher than a personal auto policy.
If you need help determining whether you need commercial vehicle insurance, you can contact the DMV or a state-licensed insurance agent.
Gather the following information before meeting with an insurance agent, because it will be used to determine how much coverage you need:
- Who owns the vehicle(s)
- Weight of the vehicle(s)
- Usage of the vehicle(s)
- Liability limits requirements
It’s probably fairly obvious that the more coverage you purchase, the better you can avoid any future financial risk in regard to your business or even personal assets. The amount of coverage is up to you. For purposes of driving, the state only requires the following minimum amounts per vehicle:
- $25,000 bodily injury coverage for one person in a single accident
- $50,000 bodily injury coverage total in a single accident
- $25,000 property damage coverage for one person’s property in a single accident (or $75,000 property damage coverage total in one accident)
Much of the time, business assets have a higher financial value than an individual’s personal assets. That’s why insurance providers typically urge business owners to insure their combined vehicles for $1 million, or at the very least for $500,000.
If you’re still unsure about which type of coverage you need, contact the DMV to get more information and discuss your individual situation.
You have many insurance providers to choose from, and they’ll all be thrilled to be of service. There are companies that specialize solely in commercial vehicle insurance, but other companies offer many different types of coverage.
Check out your options before making a commitment; rates can vary widely, but so can quality of services. Only you can know which company or coverage is best for you.
When registering your business vehicles, you’ll need to provide proof of at least the minimum liability coverage on each vehicle. If you don’t have insurance, or can’t prove that you do, the DMV will not issue your registration certificates.
If law enforcement ever pulls you over and can’t show proof of insurance when asked, the officer can give you a citation and also suspend your registration and possibly license.
Rhode Island laws require insurance companies to report their cancellations and terminations to the DMV. This means that even if your car is already registered, the DMV will know if you let your insurance lapse. And they’ll take quick action.
Don't let the DMV or law enforcement catch you with no proof of insurance. The penalty for letting insurance lapse on any or all of your business vehicles is suspension of registration for all the vehicles under your name―and possibly your driver's license. That can put a stop to business in a hurry.
Your registration and/or license will remain suspended until you can do the following:
- Show current proof of insurance or financial responsibility and maintain your policy without lapses for three years.
- Pay any applicable state or county fines, as well as reinstatement fees.
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