Commercial auto insurance is very much different from conventional auto insurance. Firstly, it is the cost of the insurance that differs. It is much more expensive to insure commercial vehicles. But apart from this fact, there are a lot more things to keep in mind.
Commercial vehicles are obviously going to be used a lot more than a private vehicle. The owner is going to try and get the most out of his investment. No one would want a costly vehicle to just lie around in the garage. The more it is put to work, the more profits the owner rakes in. the insurance company is obviously worried about the risk associated with extensive usage. It is apparent that the more you drive around in a vehicle, your chances of meeting with an accident increase. It is simple probability and statistics at play here.
The only way to avoid such high insurance costs associated with extensive usage is to provide proof that the driver is competent and reliable. The driver needs to have a very good driving record. A driving record is something that is maintained by the department of motor vehicles. It shows every major and minor traffic infraction that the driver has committed ever since he started driving. Everything from a minor parking ticket to a driving under the influence (DUI) charge will show up on the record. The driver also needs to have a proper commercial or heavy vehicle certification.
Another problem with commercial auto insurance is the sort of freight that you carry. If your company is into incendiary chemicals, explosives, petroleum etc, it is going to be much more expensive to insure the vehicle. Such freight is considered to be dangerous not only to the vehicle and driver, but also to the general public at large. In such cases, you need to take out proper insurance for your cargo separately. You will also have to ensure safety precautions are taken for your cargo.
Vehicle downtime is another issue with commercial vehicles. It is common for trucks or other construction equipment to be used seasonally. At times your company might not have as much business as during peak seasons. You will need to take out seasonal insurance to ensure that you do not end up paying for your insurance when your vehicle is sitting in the garage. Snow mowers, lawn mowers, agricultural equipment etc come under this category. It is obvious that snow mowers are not going to be used during the hot summer months. And lawn mowers are not going to be used during the harsh winter months. Even buses will not be plying as much as they would be during the peak festival seasons of Christmas and thanksgiving.
You also need to ensure that your vehicle is in peak performing condition. Frequent maintenance reports will guarantee you a cheaper insurance policy. Because the insurance companies want to know that your vehicle is reliable enough to perform on the highway. They do not want you to have a breakdown on the highway because they will have to pay for the towing charges and repairs. They will also have to bear the cost for getting your freight to the customer. Hence they are particular about periodic maintenance.