Average commercial insurance claims costs are more than 400% higher than personal insurance
SHEBOYGAN, Wis., Sept. 29, 2022 /PRNewswire/ -- This year to date, Acuity Insurance — the sole regional insurance provider rated A+ by both AM Best and Standard & Poor's, with over $6 billion in assets — has reported a more than 40% increase in severity for its commercial auto insurance liability claims.
Driven up by the increased cost of repairing and replacing vehicles and the impact of social inflation, accidents are getting more expensive. This comes just as people are back on the road after a significant drop during the early years of the pandemic and traffic accidents continue to rise.
"The data we're seeing reflects challenges facing not only insurance carriers but also business owners who could face large expenses in the event of an accident," said Paige Nelson, director of commercial lines product development, Acuity Insurance. "Taking caution on the road and ensuring your business has the proper coverage are two of the easiest steps a business owner can take to protect their livelihood."
According to the National Highway Traffic Safety Administration (NHTSA), the number of miles traveled in 2021 increased by about 325 billion, and roads in the United States are more dangerous than ever. NHTSA estimates road fatalities in 2021 rose 10.5% from 2020, the largest annual increase since 2005.
With the increase in accident severity and claims costs, it's imperative that businesses have the correct coverage for their business vehicles and the right coverage limits. Here are five reasons your business needs commercial auto insurance:
- Improve business protection. According to Acuity Insurance, the average commercial auto insurance claim is about 400% higher than an average personal auto insurance claim.
As repair costs continue to increase due to rising inflation and supply shortages, the higher limits offered by commercial auto insurance help ensure a business's vehicle or fleet will be covered and unexpected out-of-pocket costs will be minimized. Additionally, the increase in social inflation — societal, legal and regulatory trends increasing insurance claims costs beyond the rate of inflation — means businesses need to ensure they have the right coverage in place to protect themselves in the event of an accident.
Without commercial auto insurance coverage, a business owner could be forced to pay out of pocket for these expenses, putting a serious strain on operations.
- Comply with local laws. Having commercial auto insurance is mandatory in some locations.
Many states require business owners to have a commercial auto policy if they use a vehicle for purposes related to their business. Not following these regulations can result in legal fees and costly penalties, so understanding state regulations and ensuring compliance are essential.
- Boost policy protection limits. According to Acuity Insurance, the average maximum limit per accident for bodily injury on a personal auto policy is $500,000, whereas the average maximum limit for bodily injury on a commercial auto policy is $1 million.
Compared with personal auto insurance, commercial auto insurance can offer business owners higher insurance limits, helping protect them from costly medical bills or damages and giving them peace of mind their business is well-protected.
- Keep your business running. Commercial auto insurance often allows policyholders to add rental reimbursement coverage to their policy to ensure their business is still able to operate in the event of an accident.
This endorsement provides business owners with coverage for a rental vehicle while their vehicle is being repaired, which will help keep their business running instead of a source of income being lost following an accident.
- Protect your business from legal action. Commercial auto insurance liability coverage can protect businesses from costly legal expenses if they're found to be at fault for an accident or damage and are sued.
These expenses can be disastrous to a small business, so having the proper coverage can help protect against the financial impact of a lawsuit after an accident. Additionally, many insurance companies offer umbrella policies that give business owners an added layer of protection by extending coverage limits on commercial auto and other business insurance policies to give broader protection to the policyholder.
For example: If an employee gets in a serious accident with another vehicle while on a job, the cost of repairing the damage and dealing with legal issues may be more than a policy's liability limits. An umbrella policy provides an additional coverage limit on top of the commercial auto limit for greater protection from the costly financial impacts of the accident.
Working with a trusted and qualified insurance agent can help business owners determine their risks and whether they would benefit from a commercial auto insurance policy — or if they are required by law to carry one. Commercial auto insurance is comprehensive and typically customizable. With a single policy, business owners can receive a wide range of protection against potential risks.
To learn more about Acuity Insurance and its commercial insurance offering, click here.
Acuity Insurance, headquartered in Sheboygan, Wisconsin, insures over 125,000 businesses, including 300,000 commercial vehicles, and nearly a half million homes and private passenger autos across 30 states. Rated A+ by AM Best and S&P, Acuity employs over 1,500 people.
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SOURCE Acuity Insurance