Auto physical damage insurance protects businesses from financial losses resulting from damage to autos they own or hire. It is usually provided as part of a business auto policy. Unlike auto liability coverage, which is mandated by state laws, auto physical damage insurance is purchased voluntarily. Show Do You Need It?Should your company insure its vehicles for physical damage? The answer depends on a number of factors. First, if you lease or finance any autos, the leasing firm or lender will likely require physical damage insurance for those vehicles. Other relevant factors include the age and condition of your vehicles and the features they contain. These affect the value of your autos. Any insurance payment you receive for a physical damage claim will be based on the actual cash value of the vehicle prior to the loss. Autos lose value as they age, and older autos may be worth too little to insure. Two other considerations are the cost of physical damage insurance and your company's financial condition. If you decide to forgo insurance, be sure your business can afford to replace a "totaled" vehicle out of pocket. Covered Causes of LossA commercial auto policy provides three options for physical damage coverage: Comprehensive, Specified Causes of Loss, and Collision. Comprehensive Comprehensive coverage applies to loss to a covered auto from any cause other than the vehicle's overturn or its collision with another object. Comprehensive coverage is designed to dovetail with Collision coverage. Most losses not covered under Collision are covered under Comprehensive. Examples are losses caused by windstorms, hail, fire, vandalism, or theft. Also covered by Comprehensive insurance are glass breakage and losses caused by flying missiles, falling objects or collision with a bird or animal. Here are some examples:
Specified Causes of Loss Specified Causes of Loss coverage is available for commercial autos (trucks and trailers) only, not private passenger type autos. It covers loss due to fire, lightning, explosion, flood, theft, and a few other named perils. It is a cheaper alternative to Comprehensive Coverage. Collision Collision coverage applies to loss to a covered auto caused by its collision with another object or the vehicle's overturn. The "object" with which an auto collides may be another vehicle or a stationary object such as a tree. If a covered auto sustains glass breakage in a collision accident, the glass breakage may be covered as a Collision loss rather than a Comprehensive loss. For example, suppose an employee of yours is driving a company truck during a heavy rainstorm. The vehicle skids on wet pavement and runs into a tree. The truck's windshield is smashed and its right front fender is damaged. Because a collision loss has occurred, you choose to cover the broken windshield under Collision coverage. This will ensure that both the windshield and the fender damage will be subject to one (Collision) deductible. If you elected to cover the glass breakage under Comprehensive Coverage, two deductibles would apply. The glass breakage would be subject to your Comprehensive deductible while the fender damage would be subject to your Collision deductible. Covered AutosWhen you buy physical damage coverage you can elect to cover all vehicles you own or a subset of those vehicles, such as private passenger autos only. You can also elect physical damage coverage for hired autos. The covered auto designation symbols shown in the declarations indicate the types of autos that are covered for physical damage. ExclusionsPhysical damage coverage does not apply to a loss caused by any of the following:
The last two groups of perils (wear and tear, blowouts, etc.) are excluded because they are considered maintenance issues. These exclusions do not apply to a covered auto that has been stolen. Limits and DeductiblesWith a few exceptions, physical damage coverage is not subject to a limit. Instead, your insurer will pay the lesser of:
If the cost to repair your vehicle exceeds its actual cash value, your insurer will likely declare the vehicle a total loss. Each physical damage coverage is subject to a separate deductible. For instance, you may choose Comprehensive coverage with a $500 deductible and Collision coverage with a $1,000 deductible. You can reduce your physical damage premiums by increasing your deductibles. A loss payment you receive for a physical damage claim may be net of your deductible (meaning your deductible has already have been subtracted). Alternatively, the insurer may calculate your loss payment without the deductible and then bill you for the deductible amount. What are the 3 causes of loss forms?There are three causes of loss forms: the basic, broad, and special causes of loss forms. The basic and broad causes of loss forms are named perils forms; they provide coverage for loss from only the particular causes that are listed in the policy as covered.
What is covered causes of loss?The basic causes of loss form (CP 10 10) provides coverage for the following named perils: fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.
Which cause of loss form provides the most coverage?The most expansive form of insurance coverage is Special Form. In policies that use the special form type of coverage, instead of the perils covered being listed, the EXCLUSIONS are listed. In other words, unless the policy states a peril isn't included, it's included and your potential loss is covered.
Which situation would not be covered by the basic causes of loss form?The Basic Cause of Loss Form does not cover collapse. The Broad and Special Forms for all property policies covers collapse as an additional coverage.
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