Commercial Auto Insurance: FAQs for California plumbers

Yes, in practice: if a van or truck carries your tools, your people or your company name to jobs, it should be on a commercial auto policy. Nothing in the CSLB license rules tells you which kind of auto policy to buy, and the customers who hire you rarely check. The reason is the carrier. Personal auto policies are underwritten for commuting and errands, and most of them exclude or limit coverage for a vehicle used in a business, especially one with a ladder rack, a built-out interior and a crew behind the wheel. A personal carrier that learns at claim time that the van is a plumbing truck may deny the claim, pay a reduced amount or decline to renew.

A commercial auto policy, subject to its terms, exclusions and endorsements, does three things a plumbing company needs. It covers your company's liability to other people when a vehicle is driven for work. It can cover physical damage to the van itself at a value that reflects the build-out. And it can be endorsed for hired and non-owned autos, employee drivers and the trailers you tow. It does not cover the tools inside the van (that is inland marine coverage) or injuries to your own employees (that is workers' compensation).

If the van is titled in your personal name but used for the business, that does not change the answer. Tell your producer how each vehicle is titled and used so the policy is written to match.

Sometimes, but it is the carrier's decision, and when a personal carrier does agree the coverage is usually narrower than a plumbing company needs. No California law tells you which type of policy to buy for a work vehicle; the question is what your personal auto carrier agreed to insure and what its business-use exclusion says.

Some personal carriers will write a pickup that a sole proprietor drives to jobs and charge a business-use surcharge. Most will not knowingly write a vehicle titled to a corporation or LLC, a van with permanent racks and shelving, a vehicle driven by employees, or a vehicle that tows a trailer for the business. If the carrier did not know about the business use when it issued the policy, it may decline the claim or rescind the policy when it finds out, and it usually finds out when a serious accident is investigated.

Even when a personal policy applies, it generally leaves gaps a commercial policy fills: the business entity is not an insured, so a lawsuit naming your company is not defended under it; there is no hired and non-owned coverage; and nothing covers the tools in the truck. If you want to stay on a personal policy, ask the carrier in writing whether the business use is covered and keep the answer. If the answer is vague, treat it as no.

Generally no. A commercial auto policy insures the vehicle, not the contents. Comprehensive coverage, if you bought it, pays for theft of or damage to the van itself and, depending on the form and endorsements, equipment permanently installed in it. Loose property inside the van — press tools, cameras, locators, drain machines, hand tools, parts — is not covered by a standard business auto form, subject to the exact wording of the policy you hold.

Tools and equipment are insured under a separate contractor's equipment or inland marine policy. That coverage follows the tools wherever they are: in the van, at the jobsite, in the shop or at a rental yard. Smaller items are usually covered on a blanket basis up to a per-item limit; higher-value items such as a sewer camera or a trailer-mounted jetter are scheduled individually with a stated value.

Read the theft conditions before you need them. Many equipment forms require the vehicle to have been locked and show visible signs of forced entry before they pay for theft from an unattended vehicle, and some limit or exclude overnight theft from a vehicle parked on the street. Keep a current inventory with serial numbers and purchase records; the adjuster will ask for it, and without it a blanket limit is hard to collect in full.

Hired and non-owned auto (often written HNOA) extends your company's auto liability coverage to vehicles the company does not own: hired autos are vehicles you rent, lease or borrow, and non-owned autos are vehicles owned by someone else, typically an employee's personal car, that are driven on company business. Most plumbing companies with more than one person need it.

The exposure is ordinary. An apprentice takes his own car to the supply house for a fitting and rear-ends someone. An estimator drives her car to a bid. You rent a flatbed for a week to move a water heater and a boiler. In each case a plaintiff's attorney will name the company as well as the driver, because the trip was for the company's benefit. The employee's personal auto policy generally responds first for the employee, but it does not defend or pay on behalf of your company, and its limits may be low. HNOA, subject to the policy's terms, covers the company's liability in those situations.

Two limits to understand. HNOA is liability only: it does not pay for damage to the employee's car or to the rental truck unless you also buy hired physical damage coverage. And it does not make the employee's own driving record irrelevant; carriers will still ask who is driving on company business. If the company has no owned vehicles at all, HNOA can often be added to the general liability policy instead.

Generally yes. A standard business auto policy covers anyone driving a covered vehicle with your permission, so an employee who takes the van to a job is usually an insured for liability purposes, subject to the policy's terms and any driver exclusions or endorsements attached to it. That is the general rule; the details are where companies get into trouble.

Carriers underwrite the drivers, not just the vehicles. The application asks for a list of every regular driver with license numbers and dates of birth, and the carrier orders motor vehicle records (MVRs) on them. An employee you did not disclose, or one with a record the carrier would not have accepted, can lead to a surcharge, a specific driver exclusion, non-renewal or, where the policy includes one, a named-driver restriction that leaves a claim uncovered. Some policies are written on a scheduled-driver basis rather than a permissive-user basis; ask which you have.

Two related points. If an employee is injured while driving for work, that injury is a workers' compensation claim, not an auto claim. And an employee's personal use of the van after hours is a question of what you allowed and what the policy says about it, so put a written vehicle policy in place: who may drive, when, and what happens after a ticket or accident. Pull MVRs at hire and at least annually, and tell your producer when drivers change.

Partly. A standard business auto form generally extends liability coverage to a trailer while it is attached to a covered vehicle, so if your jetter trailer swings into another car on the freeway, the liability claim is usually handled under the van's coverage, subject to the policy's terms. Physical damage to the trailer itself is a different matter: the trailer is normally covered for collision or comprehensive only if it is listed on the policy with a stated value and those coverages are selected for it.

Then there is the equipment mounted on the trailer. A trailer-mounted jetter, a vac unit or a compressor is usually treated as equipment, not as part of the auto, and belongs on a contractor's equipment (inland marine) schedule rather than the auto policy. Carriers differ on where the line falls between the trailer, permanently attached equipment and loose tools, so ask your producer to confirm in writing which policy covers each item and at what value.

Two situations to check specifically: a trailer unhitched at a jobsite or in your yard overnight (theft of the whole rig is an equipment or trailer physical damage question, not a liability one), and a trailer borrowed or rented for a job (hired auto coverage may be needed). List every trailer, its VIN and its value on the application. A trailer the carrier never heard of is the one that produces the argument.

Liability pays other people; collision and comprehensive pay you for damage to your own vehicles. All three are subject to the policy's terms, limits, deductibles and exclusions.

Liability covers bodily injury and property damage your company is legally responsible for because of an accident involving a covered vehicle, plus the cost of defending the claim. It is the coverage contracts ask about and the one that protects the company from a large judgment. It pays nothing toward your own van.

Collision pays to repair or replace a covered vehicle after it hits, or is hit by, another vehicle or object, or rolls over, regardless of who was at fault. You pay the deductible you selected.

Comprehensive (sometimes called "other than collision") pays for damage from causes other than a collision: theft of the vehicle, fire, vandalism, falling objects, flood, hail, hitting an animal and glass breakage, again after a deductible.

Collision and comprehensive together are called physical damage coverage. You choose it vehicle by vehicle, so it is common to carry both on a newer built-out van and skip them on an older spare truck. When you set physical damage values, remember that a service van with shelving, a rack and a wrapped exterior costs more to replace than the bare chassis; tell the carrier about the build-out. None of these coverages pays for the tools inside the vehicle; that is equipment coverage.

Commercial auto premium is built from the vehicles, the drivers, where and how they are used, the coverage you select and your loss history. The weight each carrier gives these factors differs, but the list is consistent.

Vehicles. The number of units; each one's type, gross vehicle weight and body style (a one-ton van with a utility body rates differently from a half-ton pickup); its age and value, which drive the physical damage charge; and whether it tows a trailer.

Use and territory. The garaging ZIP code of each vehicle, the radius you normally travel, and the kind of use (service calls across a metro area versus a fixed commute to one project).

Drivers. How many, their ages and years licensed, and their motor vehicle records. Moving violations and at-fault accidents in the past few years are the factors you can most directly manage, through hiring decisions and a written driving policy.

Coverage choices. Liability limits, whether you carry collision and comprehensive on each unit, the deductibles, and endorsements such as hired and non-owned auto.

Loss history and tenure. Your claims over the past several years and how long the company has been in business and insured.

The practical levers are the drivers you put behind the wheel, the deductibles you are willing to carry, and keeping the vehicle schedule accurate so you are not paying for a unit you sold or uninsured on one you bought.

From an insurance standpoint, the goal is simple: the name on the title and registration should match the named insured on the policy that covers the vehicle. Which name that should be is a business, tax and liability decision for you, your accountant and, if you have one, your attorney; this answer covers only the insurance side.

The problem a mismatch creates is a coverage argument. If the van is titled to you personally but the commercial auto policy names only your corporation or LLC, a carrier can question whether the vehicle is a "covered auto" the company owns. If it is titled to the company but sits on your personal policy, the personal carrier may say the vehicle belongs to a business it never agreed to insure. Either way the dispute arrives after the accident.

Carriers have ways to bridge the gap when the title cannot change quickly. A commercial policy can usually name you individually as an additional named insured alongside the entity, and an endorsement sometimes called "drive other car" or "individual named insured" coverage can extend the commercial policy to personal use by the owner and family members. Those are endorsements, not automatic, and they vary by carrier.

Whatever you decide, give your producer the registration for every vehicle so the policy is written to match the paperwork, and update it when you add, sell or retitle a unit.