Commercial Auto Insurance
( Virginia )
Virginia has a financial responsibility law which requires you to show that you can pay for losses resulting from motor vehicles you own or operate in connection with your business. There are several ways you can demonstrate financial responsibility:
Financial Responsibility Insurance Options
1. Purchase Insurance: When you register your vehicles, if you certify that they are covered by an insurance policy, the policy must have the following minimum limits of liability:
- $ 25,000 for injury or death of one person;
- $ 50,000 for injury or death of two or more people; and
- $ 20,000 for property damage.
2. Pay the Uninsured Motorist Fee: This fee, which is paid to the Department of Motor Vehicles (DMV), does not provide any insurance; it only Allows you to drive an uninsured vehicle at your own risk.
3. Self insured insurance or Surety Bonds: These are special options for owners of business vehicles. Details are available at any DMV office.
If you buy insurance, your policy must contain the following coverages:
- Bodily Injury Liability and Property Damage. This coverage provides protection in case you or drivers of your car are responsible for causing injury or death to other people or damage to property of others.
- Uninsured Motorist and Underinsured Motorists Coverage. The Uninsured Motorist Coverage (UM) provides bodily injury and property damage protection to you if you are in an accident caused by an uninsured motorist or a "hit-and-run" driver. If your vehicle is damaged in hit and run accidents which driver can not be identified, the property damage coverage does not pay the first $ 200. Underinsured Motorist (UIM) coverage directly protects you in the event that you or your employees are injured by a driver whose liability limits are not high enough to cover the damages and not as high as the UM / UIM liability limits on your insurance policy.
Virginia law requires you to carry the following UM/UIM minimum limits of automobile liability applicable to each occurrence:
- $25,000for injury or death of one person;
- $50,000for injury or death of two or more people; and
- $20,000for property damage.
Most insurance companies sell an auto policy that contains a single limit of Bodily Injury Liability and property damage liability instead of separate limits.
This means that the maximum an insurance company will pay per person or per accident is contained in a single limit. This single limit must be at least $70,000 to satisfy Virginia’s financial responsibility law.
As a business owner, you should consider purchasing bodily injury and property damage liability limits higher than the minimum limits required by law. Generally, if you are required to register with the U.S. Department of Transportation Federal Motor Carrier Safety Division or the Virginia Motor Carrier Division of DMV, you will be required to carry more than the minimum limits of liability. When you register with the Federal Motor Carrier Safety Division or the Virginia Motor Carrier Division of DMV, always ask what liability limits you are required to carry before you purchase insurance or shop for insurance. Your insurance agent or insurer can help you determine what types of coverage you need to operate commercial vehicles. You should also contact your city, county, and other state government agencies for any other insurance requirements.
If you cannot obtain auto insurance from any insurance company, you can apply through your insurance agent for coverage through the Virginia Auto Insurance Plan (VAIP), which is Virginia’s assigned risk plan for car insurance. Your insurance agent can give you more information on the VAIP.
What Type of car policy Should I Buy?
Most businesses are eligible for the Business Auto Policy. However, certain auto-related businesses such as auto dealers, service stations, and trucking firms are not eligible for this policy. Garage policiesand truckers policies are available to meet the insurance needs of these types of businesses. Ask your insurance agent which policy is best suited for
your business.
How Do Insurance Companies Determine My Rates and My Eligibility?
Insurance companies use their own underwriting standards to determine if your business is eligible for insurance and, if so, what price you should pay for the coverage. Depending on the type of business you own or operate, you may be placed in a classification with other similar businesses. You are then charged a premium based on the rate prevailing in the classification in which you are placed. If your business operation is very unique or specialized, the insurance company may have to develop an individual rate that relates specifically to your business.
Many factors go into developing the premium:
- Commercial auto insurance premiums are based on factors such as the type of vehicles driven, territory, expected mileage, usage, and loss experience.
- Commercial property insurance premiums are based on such things as location, type of construction, sprinklered or not sprinklered, occupancy, square footage, loss prevention efforts, and fire protection.
- Commercial liability insurance premiums are based on a number of factors including territory, type of business, type of products manufactured or operations performed, square footage, payroll, or gross sales depending on the general liability class codes used, loss history, and business experience.
- Workers’ compensation premiums are based on the employer’s total payroll for employees eligible to receive workers’ compensation benefits. Although payroll includes holiday pay, vacations, and periods of sickness, payroll does not include payments for active military duty, tips, or payments by an employer to qualified group insurance or group pension plans.
- If your business uses subcontractors, it may be beneficial to require all subcontractors to provide you with evidence of workers’ compensation insurance. If you are unable to provide your insurance company evidence of coverage, the insurer can include the amount you paid the uninsured subcontractor as payroll when calculating your workers’ compensation insurance premium.
In some lines of insurance (typically workers’ compensation insurance, general liability insurance, and commercial car insurance), companies will determine whether you are paying the proper amount of premium by conducting an audit. Company auditors may ask to examine your records in order to verify your company’s payroll, sales, or gross receipts.
