A business auto policy (BAP) is a type of auto insurance and liability policy that covers all vehicles used by a business, whether they’re owned by the business, leased, or owned by employees. It’s more extensive than standard commercial auto coverage.
Most states require commercial auto insurance for businesses that own vehicles. Commercial auto insurance covers business vehicles, but it doesn’t cover personal vehicles owned by yourself or your employees.
Some business owners buy hired and non-owned auto insurance (HNOA), which covers rented, leased, and personal vehicles during business use (which personal auto insurance is unlikely to cover in a work-related accident).
A business auto policy covers all these bases. BAP coverage includes auto liability insurance and auto physical damage, with the option to include additional coverage. It can cover commercial vehicles that the business owns or leases, as well as employee-owned vehicles used for business purposes.
If there’s an accident involving an employee-owned vehicle, the employee’s personal auto insurance might not have enough liability coverage or the insurance company could reject the claim for being work-related.
A BAP gives you and your employees financial protection by making sure you’re fully covered, no matter which types of vehicles your business uses.
As with other types of auto insurance, you can customize a business auto policy to fit your business's needs. BAP coverage options include:
When buying a BAP, coverage must be purchased individually for each vehicle. This allows you to cover vehicles with different types of auto insurance coverage, different coverage limits, and different deductibles for each vehicle, depending on their level of risk and replacement cost.
Business auto policies will typically distinguish coverage between vehicles that are considered "autos" and those that are considered "mobile equipment". Vehicles that have been designed for regular use on public roads are typically considered "mobile equipment" if they are "maintained for use solely on the premises that you own or rent," such as a truck used on your business property.
Vans, dump trucks, and tow trucks may all fall under the category of "mobile equipment" and could be added to a liability policy with a mobile equipment endorsement.