8 Benefits Of Commercial Vehicle Insurance And 4 Things It Won’t Pay For

Commercial vehicle insurance pays for the injuries and damage your work vehicles cause to other people, protects the people you let drive them, and, if you carry collision and comprehensive, pays to repair or replace those vehicles after a crash, theft, flood or hailstorm. It does not pay for maintenance, for your employees’ injury claims against your business or for your loan payments. Below are the 8 benefits a business auto policy gives you in Texas, the 4 gaps it leaves, and how to check your own policy for each one.

I have written personal and commercial policies in Houston for 15 years, in English and Spanish. The business owners who come to our office paint, hang sheetrock, install insulation, build, clean and run taco trucks. For a first-time owner, the policy is the hardest document in the business to read, so this guide walks through it in plain words.

The 8 benefits at a glance

Benefit	Example	Part of the policy that pays
1. Pays for injuries and damage your driver causes	Your painter rear-ends a car on I-45	Liability
2. Covers the people you let drive	Your foreman takes the company pickup to a job	Who Is An Insured
3. Pays to fix your vehicle after a crash	Your cleaning van backs into a pole	Collision
4. Pays for theft, flood, hail and fire	A storm floods your van in the parking lot	Comprehensive
5. Pays when the other driver has little or no insurance	An uninsured driver hits your taco truck	Uninsured/underinsured motorist and PIP
6. Covers your liability in rented vehicles and employees’ cars	An employee picks up materials in their own car	Hired and non-owned auto
7. Gives you the proof of insurance contracts ask for	A property manager asks for a certificate before you start	Certificate of insurance
8. Lets you add rental, towing and gap coverage	Your van spends 2 weeks in the body shop	Add-ons (endorsements)

What each benefit pays for

1. It pays for injuries and damage your driver causes

Liability coverage pays the other side when your driver is at fault: medical bills, lost wages and pain and suffering for the people hurt, and repairs to their car, fence, storefront or mailbox. It also pays a lawyer to defend your business if you are sued over a covered accident.

On the standard business auto policy form, defense costs are paid in addition to your limit until the limit is used up paying settlements or judgments, so the full limit stays available for the people you hurt.

Texas law sets the floor at 30/60/25: $30,000 per injured person, $60,000 for all injuries in a crash and $25,000 for property damage (Texas Transportation Code, section 601.072). That floor applies to work vehicles too. Heavier trucks follow separate rules: in Texas, a truck or truck-and-trailer combination over 26,000 pounds needs TxDMV motor carrier registration and at least $500,000 in liability coverage. A crash that totals a new pickup or injures 2 people can cost more than those limits, and the business owes everything above them.

Before you pick a limit, read the insurance section of every contract you sign. General contractors and property managers often require higher auto liability limits than the state minimum.

2. It covers the people you let drive

A business auto policy protects more than the business. Under the “Who Is An Insured” section of the standard form, these people are covered for liability:

• Your business, for any vehicle covered on the policy.
• Anyone driving a covered vehicle you own, rent or borrow with your permission, such as an employee, a partner or a family member helping on a job.
• Anyone held legally responsible for what one of those drivers did, but only up to that responsibility.

The exception that surprises owners is the employee’s own car. An employee driving their own car is not an insured under your policy for that car, even on a work errand. The employee’s own auto policy is the one that responds for them. Your policy can still protect the business through non-owned auto coverage (benefit 6), and an “employees as insureds” add-on can extend your coverage to the employee.

3. It pays to fix your vehicle after a crash

Collision coverage pays to repair your vehicle, or pays its actual cash value if it is totaled, after it hits another vehicle or object or rolls over, no matter who caused it. You pay your deductible first.

If the other driver caused the crash, you can file with that driver’s insurance company, or use your collision coverage and let your insurer collect from them. If you financed or leased the vehicle, the lender will usually require collision and comprehensive. More on how it works in our guide to collision coverage in Texas.

4. It pays for theft, flood, hail and fire

Comprehensive coverage pays for damage from almost anything other than a crash: theft, fire, flood, hail, vandalism or hitting an animal. In Houston, this is the coverage that pays when a work van floods in a storm or hail dents every vehicle in your lot.

A cheaper option, specified causes of loss coverage, pays only for a listed set of causes: fire, lightning or explosion, theft, windstorm, hail or earthquake, flood, mischief or vandalism, and some losses while the vehicle is being shipped. Hitting a deer is not on that list.

5. It pays when the other driver has little or no insurance

Uninsured/underinsured motorist coverage (UM/UIM) pays for injuries to your driver and passengers and for damage to your vehicle when the at-fault driver has no insurance or not enough insurance. Personal injury protection (PIP) pays medical bills and lost income for the driver and passengers of your vehicle, no matter who caused the crash, up to the PIP limit.

Texas law requires every auto liability policy, business policies included, to carry UM/UIM and PIP unless a named insured rejects them in writing (Texas Insurance Code, sections 1952.101 and 1952.152). Look for a signed rejection form in your paperwork. With the same insurance company, a rejection you signed before carries over to your renewals until you ask in writing to add the coverage back. More in our guide to uninsured driver insurance.

6. It covers your liability in rented vehicles and employees’ cars

Your business is also protected when the vehicle in the crash is not yours, through 2 coverages:

• Hired auto coverage pays your liability when you or an employee drives a vehicle the business rents, leases or borrows, such as a box truck for a move-out cleaning job. Damage to the rented truck itself is covered only if your policy also has physical damage coverage for hired autos. Without it, you may end up buying the rental company’s damage waiver at the counter.
• Non-owned auto coverage pays your business’s liability when an employee crashes their own car while running an errand for the business, like picking up paint or supplies. The employee’s own policy pays first, and yours pays after it. It does not pay to fix the employee’s car, and personal errands and commuting usually don’t count.

If you use your own pickup for both work and personal driving, see how commercial auto insurance handles personal use.

7. It gives you the proof of insurance contracts ask for

Property managers, general contractors and large companies usually ask for a certificate of insurance before you start work. The contract will often list a minimum auto liability limit, which vehicles must be covered (any vehicle, or owned, hired and non-owned vehicles), and whether the client must be named as an additional insured.

Most of the time we can issue a certificate of insurance for business coverage the same day, and auto insurance cards always go out the same day. One of our clients wanted a contract to clean a large company’s apartment complexes and did not know where to start. We got them insured the same day. Today they clean properties in Houston, Austin and Dallas.

8. It lets you add the coverage your work needs

The base policy leaves out costs that can stop your work for days. Each of these can be added:

• Rental reimbursement pays a set daily amount, up to a maximum, for a replacement vehicle while yours is repaired after a covered loss. Without it, the base policy pays nothing toward a rental while your van is in the body shop after a crash, because its transportation coverage applies only to theft.
• Towing and labor pays for a tow or roadside labor when a vehicle breaks down, with labor only at the place of the breakdown. The standard form covers towing only for certain vehicle types: private passenger vehicles on the 2013 edition, plus light and medium trucks up to 20,000 pounds on the 2020 edition. Ask which edition your policy uses and whether your vans and pickups have towing.
• Auto loan/lease gap coverage pays the difference between what you owe on a financed or leased vehicle and its actual cash value if it is totaled. It does not cover overdue payments, lease penalties for extra mileage or wear, or balances rolled over from an older loan.
• Employees as insureds makes your employees insureds while they drive their own cars for your business.
• Additional insured and waiver of subrogation endorsements meet the contract requirements a general contractor or property owner may give you.

4 things commercial vehicle insurance won’t pay for

Each of these needs a different coverage or money set aside in your budget.

1. Maintenance, wear and tear, and breakdowns

Physical damage coverage pays for sudden losses like a crash, theft or flood. The standard form excludes damage due and confined to wear and tear, freezing, and mechanical or electrical breakdown, unless it results from the total theft of the vehicle. If a breakdown causes a crash, collision coverage still pays for the crash damage. Oil changes, tires, brakes and a blown transmission come out of your budget.

2. Injury claims from your own employees

The liability part of a business auto policy excludes injuries to your employees on the job, and it also excludes an employee’s claim against a coworker who was driving. Workers’ compensation is the coverage built for on-the-job injuries, including crashes in a company vehicle. PIP on your auto policy, unless you rejected it, can still pay part of an injured employee’s medical bills and lost income up to its limit, but it does not protect your business from a lawsuit.

Texas is different from most states here. Most private employers can choose not to carry workers’ compensation, and those employers are called non-subscribers. If a non-subscriber’s employee is hurt in a work crash, the employee can sue the business for negligence, and the business cannot defend itself by arguing that the employee was partly at fault, accepted the risk or was hurt by a coworker’s mistake (Texas Labor Code, section 406.033). The auto policy will not respond to that lawsuit. Read more about workers’ compensation for Texas businesses.

3. Your loan payments

No auto policy makes your monthly vehicle payments. If the vehicle is totaled, physical damage coverage pays its actual cash value, usually to you and your lender together. If you owe more than that, the gap add-on pays the difference. If the vehicle is in the shop, the payments keep coming due. Rental reimbursement keeps you working, but it does not pay the loan.

4. Tools, portable equipment and job materials

Physical damage coverage pays for the vehicle and the equipment that is part of it. Ladders, sprayers, power tools and the materials in the bed are not part of the vehicle, so a break-in at a job site can leave you with a repaired window and no tools. Contractor’s tools and equipment coverage, a type of inland marine insurance, is built for tools and portable equipment, and an installation floater covers materials on their way into a job.

Read your policy: the symbols that decide which vehicles are covered

The schedule of coverages on your declarations page shows a number, called a symbol, next to each coverage. That number decides which vehicles the coverage applies to. These are the 5 that matter most for a small business:

Symbol	What it covers	What to check
1	Any vehicle: owned, rented, borrowed, or employees’ cars used for your business	The broadest option. A contract that asks for “any auto” coverage means this symbol.
2	Only vehicles you own	A vehicle you buy during the policy term is covered automatically for the rest of the term.
7	Only the vehicles listed on the policy	A vehicle you buy is covered only if it replaces a covered vehicle or you already cover all your vehicles, and you tell the insurer within 30 days.
8	Vehicles you lease, hire, rent or borrow, except from your employees, partners or members of their households	Covers your liability in rentals. Damage to the rental is covered only if symbol 8 also appears next to physical damage.
9	Vehicles you don’t own, lease, hire, rent or borrow that are used for your business	Covers your business when employees use their own cars. Pays after the employee’s own policy.

If your declarations show symbol 7 and you add a van mid-year, call us the day you buy it.

FAQs

Can I insure my work vehicles if I don’t have a driver’s license?

Yes. It is the question I hear most. In Texas you can buy the policy without a driver’s license. The policy is set up with you or your company as the named insured, and each driver is listed or excluded case by case. Not every insurance company handles it the same way, which is why it helps to work with an independent agency.

How do I get the cheapest commercial vehicle insurance?

Start with the limits your contracts and your lender require, then work on price: raise your physical damage deductibles, drop collision on older vehicles worth little, and list only the people who drive. Rejecting UM/UIM or PIP also lowers the premium, but rejecting UM/UIM removes your protection against uninsured drivers and rejecting PIP removes medical and lost-income coverage that pays no matter who caused the crash, so decide after you see the price difference. As an independent agency, we quote the same vehicles with different insurance companies, and you can pay in monthly installments with autopay or ACH.

How fast can I get proof of insurance?

Auto insurance cards go out the same day, always. Certificates of insurance for business coverage usually go out the same day too.

Does my business auto policy cover an employee who gets hurt in the company van?

Not for the employee’s injury claim against your business. PIP, unless you rejected it, can pay part of their medical bills and lost income up to its limit. Workers’ compensation is the coverage built for on-the-job injuries. If you are a non-subscriber, ask us about workers’ compensation before an employee gets hurt.

Get a commercial vehicle insurance quote from Paga-Menos Insurance

I opened this agency to explain coverage to business owners in Spanish and English, especially Latino owners starting their first business. The right coverage can lead to new business, and being insured correctly means less liability for you.

Ingrid López, Lizabe Moreno and I write personal and commercial policies, and our office works in Spanish and English for clients anywhere in Texas. Get a quote by phone at (832) 804-9286, by WhatsApp, or in person at 5901 Bellaire Blvd, Suite C, Houston, TX 77081. We are open Monday to Friday from 9:00 am to 6:00 pm and Saturday from 10:00 am to 4:00 pm.

Bring your vehicle information, your drivers’ information and any contract that lists insurance requirements. Read more about our commercial auto insurance in Houston or request a quote online.

Other coverage for your business:

• General Liability
• Business Insurance
• Contractor Bonds

Related articles

• What to Do After a Car Accident in Texas
• Janitorial Insurance for Cleaning Businesses
• Insurance for Contractors

Sources: Texas Department of Insurance auto insurance guide, Texas Transportation Code, Chapter 601, Texas Insurance Code, section 1952.101, Texas Insurance Code, section 1952.152, Texas Labor Code, Chapter 406, TDI workers’ compensation resources for employers, TxDMV intrastate motor carrier requirements, ISO Business Auto Coverage Form CA 00 01 10 13 and changes in the 2020 edition of the business auto form.