Business Auto Policy
Automobile Maintenance

What Is a Business Auto Policy?

Do you have company vehicles driven by your employees? If so, you’ll need protection from a business auto policy.

Your driver may have a good driving track record. Most of your employees may already have insurance coverage. However, they don’t protect your business from rising cases of commercial fleet accidents.

There are many advantages to signing a business auto insurance policy. One of the benefits you’ll enjoy is higher liability limits. However, there are intricacies that you should consider before contacting an insurance company.

We’ll make the information easier to understand. Here are six things you should know about a business auto policy, so keep reading to learn more.

What Is a Business Automobile Policy?

Business Automobile Policy (BAP) is the alternative car insurance made for companies. Insurance agencies also call it Business Auto Coverage Form (BACF).

This policy complements well with an employee’s personal insurance policy. It gives better coverage in case of accidents.

The policy does not only cover physical damages. It also provides liability coverage that a personal auto insurance policy cannot insure. A few examples of these are limitations on amounts, situations, and usages.

What Vehicles Does a Business Automobile Policy Cover?

BAP can provide coverage to any type of vehicle used for business purposes. Vehicles could include:

  • Food trucks
  • Work vans
  • Service utility trucks and pickups
  • Box trucks

It’s common to see trucks and construction vehicles on the list. Most construction companies use a modified version of BAP known as fleet insurances. However, the policy can also include regular cars and service vans.

BAP can also cover different vehicle ownerships:

  • Employee-owned vehicles used for business purposes
  • Vehicles leased by your company
  • Company-owned vehicles

You won’t have to worry if you have a particular automobile you want to include. A business auto insurance policy can have adjustments to meet your needs.

What Can an Auto Policy Coverage Give You?

You and your employees often use a vehicle for business purposes. It’s one reason your company needs to have auto policy coverage.

What if one of your employees gets involved in a severe car accident? You’ll need to have liability coverage to shield your business.

The employee’s personal insurance takes precedence when resolving damages. However, some financial obligations may overflow and affect your business. If this happens, you’ll incur more losses on your part.

If you have a business auto policy, you won’t have to worry. You’ll have adequate protection for your business.

BAP provides coverage to your business in any vehicular accidents in three ways:

  • Hospital and other expenses from sustained injuries
  • Repair or replacement expenses to damaged properties
  • Costs needed for repairing the damage of vehicles involved in the accident

Some personal auto insurance does not cover any damages to the policyholder. It won’t make a difference even when the accident happened while conducting business.

What’s Inside a Business Auto Insurance Policy?

The agent will use a specific form to itemize the coverage included. Some of the information they’ll gather when you apply for business auto insurance are:

  • Number of vehicles to include
  • The type and specific model of each vehicle
  • Causes of accidents to cover
  • Type of damages to pay for
  • Obligations of both the business and insurance provider

The form your agent creates for you have the following five sections:

  • Covered autos: These are the types of vehicles covered with symbolic number designations
  • Liability coverage: It explains how to protect your company from third-party liability claims
  • Physical damage coverage: It provides details on protection for your company-used automobiles
  • Business auto conditions: This section outlines your obligations and the coverage territory and specifies how the policy rules apply if other insurance plans exist
  • Business definitions: This section explains the meaning of key terms in the policy

The numerical designations in the covered autos will give you a quick overview. It will list details about the vehicles in the policy.

Each of the numeric symbols represents a specific category. For example, “1” means any kind of automobile, while “2” is for any vehicle your company owns.

Levels of Coverage

There different levels of coverage an auto can have depending on the type of automobile. The insurance is not the same for vehicles the company owns and those on lease.

Collision Coverage

What happens if your insured employee is at fault? You’ll receive reimbursement for the damages sustained by the vehicle.

Theft and vandalism are not part of the coverage, though. You can only get collision coverage if you bought liability and comprehensive coverage.

Comprehensive Coverage

Your company receives coverage from damages other than collisions. You get indemnity from acts of nature such as tornados and storms. You’ll also receive compensation from theft or vandalism.

Specified Perils Coverage

Specified perils coverage offers more freedom than the usual causes of accidents. You can receive compensation depending on the condition. The cause of the damage must be from a particular hazard or event specified in the policy.

What makes a claim valid? You need to show facts and pieces of evidence giving proof of the cause of the accident.

Liability Coverage

With liability coverage, your company receives protection against claims from injuries. It also includes claims from damages to both people and property. However, it’s a different story if the court found the driver guilty of being reckless. A business auto policy cannot cover the punitive damages.

What Are Business Auto Policy Exclusions?

There are some factors in which a business auto policy does not apply. These exclusions are high-risk activities and conflicts with other insurance coverage. Here are the exclusions in detail.

Expected or Intended Injury

BAP does not cover damages that did not result from an actual accident. They do not apply the policy to situations where the crash is intentional.


Another exclusion applies if the vehicle your employee is driving carries pollutants. Vehicles with interaction to a hazardous chemical don’t have coverage. It doesn’t matter whether the use was for transportation or disposal.


You won’t be able to use your BAP if your employee using your vehicle for racing. Demolition contests and organized racing excludes coverage altogether.

Protect Your Company With a Business Auto Policy

These six crucial pieces of information about the business auto policy can help you. Now you have ample knowledge on how to protect your company. You can start listing down the type of coverage you want even before meeting with your agent.

Do you want more guides and tips to protect your business? Check our other related articles. You’ll learn how to keep your company secured while you’re growing it.