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Commercial Auto Liability: What Is Auto Liability & Do My Vendors Need It?


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Have you ever wondered if you should require auto liability coverage from your vendors and any other third-party companies that you do business with? In this video we will be covering what auto liability is and if you should require it from your vendors.

Auto liability insurance protects you, the policyholder, (which is the same as the “insured”) against claims from third parties who have due to an accident that happened with a vehicle.

In this case we are talking about vehicles that your vendors or third-parties are driving on your work sites or your company’s property. When your vendors come onto any of your company’s sites or properties with a vehicle they are adding that exposure so this is why Auto Liability is important. If you hire a vendor and they are using a vehicle to drive onto your company property or site, you should require auto liability. Even if the vehicle is not involved in the work or service they are providing you with, the presence of their vehicle on your work site or property increases your exposure to risk.

If you own and/or operate a vehicle, you are required by state law to maintain automobile liability insurance.So almost all companies choose to purchase commercial automobile insurance.

Similar to the CGL policy, the key coverage that an automobile liability policy provides is protection from a third-party suit where the third party has suffered bodily injury or property damage due to a vehicle related incident.

Most commercial automobile policies provide a separate limit for bodily injury and a separate limit for property damage, but you will find on some commercial and many personal automobile policies that these two coverages are purchased on a combined single limit.

Automobile policies also can provide physical damage coverage for the vehicles themselves in case they are stolen or vandalized or in an accident and the vehicle is damaged.

Auto Liability should be required of most, if not all, of your vendors. It is a necessary policy to make sure your interactions with your day to day vendors run efficiently and free of risk.

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