A review, at least annually, of your commercial auto insurance can protect against loss related to the commercial use of your company's vehicles. Do you know what your coverage protects and what liabilities remain?

It is important, as a business owner, to mitigate risks and manage liabilities. This includes understanding the risks associated with your employees use of any automobiles owned or leased by the business. A checkup performed on your commercial auto insurance will help you understand how best to manage loss and maintain the proper reserves necessary to meet any unfunded liabilities.

What Does Typical Commercial Auto Insurance Provide? 

When you first chose coverage for your company’s commercial autos, it was explained to you what coverages were provided in the form of five sections, according to the International Risk Management Institute: 

How Do I Know If A Gap In Coverage Exists? 

Coverage gaps can occur when the valuation method used for total loss is for the book value and not the actual replacement value of the vehicle. This can become a huge liability for your business if, for example, the remaining liability for a covered auto is more than the amount of reimbursement (claim amount) provided by the insurance company. Say, as an example, your business purchases a commercial vehicle for $40,000 subject to loss (theft or damage). The claim amount paid by the insurer is 80 percent of the purchase amount or $32,000 — leaving a gap of $8,000. The existence of gap coverage could help meet this unmet liability; a review of your commercial auto insurance could determine if this is an additional level of need for your business.

It is important to meet with an insurance agent who understands commercial auto insurance and can provide you with the information you need to assess your current coverage. If gaps exist between the amount of coverage provided and any out-of-pocket you may be expected to pay (should a loss occur), now is the time to shore up your coverage and protect your business from any potential liability, which may become costly.