When building your business’s vehicle fleet, part of the process will involve buying commercial auto insurance. All vehicles have to be properly insured to operate legally, after all. However, your legal requirements might only be to carry liability coverage, which pays for third-party losses. How will you pay for damage to your own vehicles?
To receive this coverage, you will need to add physical damage benefits to your commercial auto insurance. Physical damage coverage can be very diverse, and you have a lot of opportunities to tailor it to your advantage. Consider just a few of the reasons you should buy it.
Understanding Physical Damage Insurance
There are two types of physical damage insurance available for most commercial vehicles:
- Collision insurance pays for damage to vehicles after wrecks.
- Comprehensive coverage pays for damage to vehicles after non-collision hazards, such as fires, theft, severe weather or vandalism.
Though you will have to tailor each benefit to your advantage, there are numerous advantages to always having it on your company’s plan. Let’s look at just a few of them:
You Might Have to Buy It
If you finance or lease your company’s vehicle(s), then you might have to buy physical damage insurance. Lenders and dealerships want to protect their investments in the vehicles. Therefore, getting coverage might hinge on your loan eligibility.
You Can Use It to Pay off Your Loan (If Necessary)
An added type of physical damage insurance is called gap insurance. If you have a loan or lease on your vehicle, then you will want to pay this value off if a wreck totals the car. However, a standard collision or comprehensive damage settlement might not cover the full value of the loan. Gap insurance, however, will help you pay off the difference so you can free yourself of the debt.
It’s Very Affordable
The damage that your commercial vehicle might sustain in an accident might be exceptionally expensive. That’s thousands of dollars that your business might not be able to afford. However, the premium for physical damage coverage is almost always going to cost less than the cost of an accident. By integrating it into your full commercial auto policy, you will be able to manage this cost easily.
It Can Help You Buy New Vehicles
If you total your commercial vehicle in an accident, then your physical damage insurance can pay you a settlement to help you replace the vehicle. While some policies will only pay you based on the old vehicle’s value at the time of the accident, you can upgrade your coverage to pay based on the replacement cost value needed to buy a new, similar vehicle.
Getting the right physical damage insurance for your commercial vehicles will require some attention to detail on the part of the business. However, with your insurance agent’s help, you can create far-reaching and valuable coverage that will always work to your advantage.