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Do you need commercial auto insurance for your business?

If you own a car in Minnesota, you know that the state requires you to carry a certain amount of auto insurance in a number of categories. For example, each licensed vehicle must have liability insurance with at least a $30,000 limit for injuries to one person and a $60,000 limit for each incident. That policy must also include personal injury protection coverage, as well as underinsured and uninsured coverage; collision coverage and comprehensive coverage are both optional.

But what about the vehicles your company owns, like the delivery truck or the cars that your sales representatives drive? The state requires every licensed vehicle to be covered, but are the limits or types of coverage different in a commercial policy?

A lot depends on whether your business is engaged in interstate commerce. If you only do business in Minnesota, state laws apply. If you do business in Minnesota and another state, you are subject to federal regulations. If you expand to another state during the term of your policy, you will need to update your coverage.

There are so many types of commercial vehicles that insurance companies have written coverage for each category. It makes sense when you remember that the insurance company is focused on risk, and different types of vehicles carry different types and different levels of risk.

Be prepared, then, to look at separate coverages for your company cars, your delivery trucks and any other vehicles the business owns. It's important here to understand what you will be doing, what vehicles your business will own and operate, before you purchase the insurance policy.

Talk to your attorney, too, about whether your drivers will need to have proof of insurance or a certificate of insurance with them. And, finally, if you are relying on your employees' personal insurance to cover claims, compare the personal with the commercial policy and think carefully about the policy limits.

Sources:

Minnesota Department of Commerce, "Insurance - Commercial Auto," accessed Feb. 27, 2016

DMV.org, "Commercial Auto Insurance Minimum Requirements," accessed Feb. 27, 2016

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