One point of insurance that gets confusing for some business owners is mobile equipment insurance vs. commercial auto insurance. It’s important to note that there isn’t a specific mobile equipment insurance coverage, rather that mobile equipment is typically covered by the commercial general liability (CGL) insurance instead. Keep these important terms in mind when purchasing insurance in order to make sure you have all your bases covered.
Commercial Automobiles
For the purpose of insurance, automobiles are considered to be motor vehicles, trailers, semitrailers, etc. designed to travel on public roads. It can also refer to any other vehicle for which the location it is principally kept is subject to compulsory insurance laws or legal responsibilities.
In other words, there are instances where vehicles that would otherwise be considered motor vehicles qualify as commercial automobiles and require commercial auto insurance rather than commercial general liability coverage.
Mobile Equipment
The defining line, for the most part, between automobiles and mobile equipment is the purpose of the machine. Mobile equipment has a specific task it’s designed to perform. The fact that it is mobile is either secondary to the task, or necessary in order to complete the task. The following are all examples of mobile equipment.
- Tractors
- Graders
- Backhoes
- Mowers
- Forklifts
- Grapplers
- Cranes
- Excavators
- Slashers
- Skidders
- Drilling rigs
- Borers
The list is far from exhaustive however. The key is to determine which equipment your business uses is considered mobile equipment and what is considered automobiles.
The Ambiguity Between the Two
Once upon a time, trucks that were kept on the property and never used on public roads were not required to carry auto insurance to cover liability issues. Recent changes from the Insurance Services Offices (ISO) requiring thatvehicles subject to financial responsibility laws must carry auto insurance for liability coverage are creating confusion among many business owners. Since these trucks, though not used on open roads, are subject to compulsory insurance requirements mandated state by state, whether you need auto insurance or not, will depend on laws in your own state.
A New Term for the Mix
None of these should be mistaken for contractor’s equipment insurance which covers the replacement or repair of mobile equipment for your business. These are often high ticket items and some may require underwriting approval because of the costs associated with replacing or repairing the equipment. However, this insurance does not typically cover liability – only the costs associated with the equipment itself and damage to the equipment.
Insurance can be confusing, but it remains a necessary part of the business building process.
It’s important to have the proper coverage to protect your business, its equipment, and its assets. Consult with BOLT insurance agency, your small business insurance agency, today to learn more about the types of insurance you need to adequately protect your interests. In addition, make sure you ask us about equipment floater insurance coverage as well.
