When a business owner starts looking at having insurance on a vehicle that is used to deliver a product either to a warehouse or an end user, it is important to understand the coverages that are not typically offered in a traditional commercial policy.
Liability Insurance is the primary coverage that we all think about needing. This is the coverage that pays for damages in the event we are liable for damages to another party. This could include hitting another vehicle or stationary property, like backing into a building when unloading. Liability insurance pays for the other parties’ damages and is your defense in event you get sued.
Next, you will need to think about Physical damage coverage. If the damage is extensive enough, this will restore the vehicle to its original condition or replace it. Physical damage is offered for Collision and comprehensive claims. Collision is defined as hitting a car, striking a stationary object, or rolling the vehicle. Comprehensive is everything else: animal strike, Theft, and Glass damage.
You can also choose medical payments or personal injury protection depending on the state. This coverage pays a small amount of medical coverage regardless of fault in the event of an accident. If you have workers' compensation insurance, you can waive this coverage on a commercial policy, as the injuries would be covered under your worker's compensation policy.
Now, let's talk about the coverage that can be overlooked for delivery vehicles. Cargo/ Property in transit. This is the coverage you should have in place in the event you are in an accident and what is being transported is damaged or destroyed. Oftentimes, manufacturers overlook this important coverage, believing it would be covered under their business property coverage. However, this is not true. Once the property leaves the owner's location, the coverage ends.
Cargo coverage can be purchased for the replacement cost or the full retail value of the products in the vehicle. This is a very important consideration for a manufacturer if the finished product is worth significantly more than the raw materials required to make it or the lead time to build the product is long.
If you have more questions about insurance, our team is here to help.