If you run a business in New York, chances are you need commercial auto insurance in New York. Find out about commercial auto insurance requirements and the factors that will affect your premiums.
New York commercial auto insurance claims
In New York State, you must meet the following minimum insurance requirements to register your vehicle and obtain license plates:
- No-Fault Personal Injury Protection (PIP) Insurance – This pays medical expenses, lost earnings and other reasonable and necessary expenses related to an injury suffered by the driver or passenger. Basic no-fault coverage provides up to $50,000 per person.
- Liability insurance – This covers bodily injury and property damage the insured (or the person driving the insured’s car with permission) causes to another person. New York drivers must have a policy with a minimum limit of $25,000 for bodily injury that does not result in death and $50,000 for injury that results in the death of a person; $50,000 for bodily injury that does not result in the death of two or more persons and $100,000 for bodily injury that results in the death of two or more persons; and $10,000 for property damage.
- Uninsured Motorist Insurance – This pays for costs related to injuries you or your passengers experience due to a hit-and-run accident or caused by an uninsured motorist.
These requirements apply to both commercial and personal vehicles. However, some types of vehicles (such as large trucks) may need more coverage.
In addition to the coverage required by state law, companies may decide to purchase additional coverage.
- To protect your own vehicles, you need collision and comprehensive coverage. Lenders may require this.
- If your company’s vehicle is involved in a crash, the other party may seek to secure a large reward. For this reason, your commercial liability limits should be much higher than the minimum limits required by state law.
If your business uses but does not own vehicles, you need leased and non-owned coverage. Sole proprietors must also maintain personal coverage. For example, if an employee uses his personal vehicle to make deliveries, he must have personal auto insurance and the company must carry leased and non-owned auto insurance.
Commercial auto insurance rates
Commercial auto insurance rates depend on many factors, such as type of vehicle, type of use, amount of coverage, fleet size, drivers’ driving history, and company’s claim history.
Commercial car premiums have risen. According to MarketScout, rates rose 7% in the fourth quarter of 2022. The severity of crashes, rising claims costs and social inflation have all contributed to rising rates.
Commercial vehicle crash trends
After years of declines, the number of road deaths increased during the covid-19 pandemic.
NHTSA says 42,915 people died in motor vehicle crashes in 2021—a 10.5% increase over 2020. Traffic fatalities involving at least one large truck increased 13% during this time.
Commercial car claim costs
Claims costs have also increased due to inflation, supply chain issues and labor shortages. Vehicles can also become more expensive to repair due to high-tech features, such as cameras and sensors.
According to Cars.com, production of new cars slowed during the pandemic, increasing demand for used cars and causing people to keep their cars longer. As the average age of vehicles increased, so did the need for repairs and maintenance. At the same time, inventory and labor shortages have caused delays in workshops.
All of these factors have driven up claims costs. According to Property Casualty 360, the cost of auto repairs increased by 4.9% in March 2022.
The impact of social inflation on commercial automobile
Social inflation refers to rising legal costs, often linked to jumbo jury awards known as nuclear verdicts. For example, Freight Waves says an Illinois trucking company filed for bankruptcy after being hit with a $10 million judgment. It’s not even the biggest verdict ever — according to Lexology, the record was set in 2021 with a $1 billion verdict against a trucking company.
According to the Insurance Information Institute, social inflation contributed to a $30 billion increase in commercial auto claims between 2012 and 2021. Over the 10-year period, social inflation may have driven up claims by 18% to 20%.
Check your rates for commercial auto insurance in New York
Commercial auto insurance rates are rising, but you still need robust coverage to protect your business. You can control your rates by implementing good risk control measures and safe driving practices.
The brokers at BNC Insurance can help you navigate the commercial auto insurance market. Read more.
