As a commercial lines manager, I speak with contractors all the time about their insurance and how they can manage their everyday risks. Typically, whenever the conversation leads to ways to save money on insurance premiums, I’m usually asked if uninsured motorist coverage is important on a commercial auto policy.
I certainly don’t think the person who’s asking the question is crazy, only if they forego such an important coverage to save a few bucks each month on their insurance. That, in my opinion, is crazy and here’s why: PAIN AND SUFFERING!
What does Uninsured/underinsured Motorist Cover?
Uninsured/underinsured motorist coverage is designed to protect the insured drivers and passengers who are injured by an at-fault driver who either is uninsured or underinsured at the time of the accident.
For example, one of your employees is using a company-owned vehicle to pick up some lumber for a construction job your company is working on. While returning to the job site, another vehicle rams your company vehicle in an intersection and your employee (insured driver) suffers serious injuries.
You soon find out from law enforcement that the at-fault driver was not carrying bodily injury liability coverage and does not have the resources to pay for your employee’s injuries and lost wages as a result of the accident.
You are then told by your insurance broker that it’s not a big deal because since the accident was work-related, your workers’ compensation policy will respond and take care of your employee’s medical expenses and lost wages.
What about Pain and Suffering?
Although workers’ compensation insurance does cover your employees for work-related injuries and illnesses, it does not cover pain and suffering that can result from the injury or illness.
You now have two choices, your employee can sue the at-fault driver for a pain and suffering reward OR you can file a claim against your commercial auto insurance company under your uninsured/underinsured motorist coverage. You will discover that any injury claim payment from your auto insurance company will likely be offset by your workers’ compensation coverage except for pain and suffering.
According to AllLaw.com, injured employees will not receive benefits for pain and suffering due to a work-related injury.
Workers’ compensation laws do not provide for additional benefits for pain and suffering. They are basically income protection laws. An injured employee receives benefits due to an inability to work. If pain prevents the employee from returning to work, then he/she will receive weekly compensation, but will not receive additional compensation for pain and suffering like in a personal injury case.”
And, your employee cannot legally sue you for their pain and suffering because you were carrying workers’ compensation at the time of the job-related accident.
Why take that Chance?
So then, knowing that an ACCIDENT caused by an uninsured or underinsured driver could leave you and your employee with a financial nightmare, it makes much more sense to cough up some extra money each month for Uninsured Motorist coverage. You’re crazy to take that chance.
Other Coverages to Consider
Commercial auto insurance is critical when you are using vehicles for business, but all other risks need to be mitigated as well.
Here is What We Recommend
General Liability: Contractors General Liability will be the foundation of protection for your business. The coverage will respond if you or your employees are found liable for bodily injury, property damage, or have a products/completed operations complaint. The coverage also covers defense costs for your business to respond to any lawsuits brought by a third party.
Workers’ Comp: Many states will require contractors to provide workers’ compensation coverage for their workers before they can begin a project. Accidents will happen at the job site that can result in an employee becoming injured and missing work. Your workers’ compensation coverage will provide financial assistance for medical expenses and lost wages.
Surety Bonds: It’s very likely that your state will require you to be licensed before you can begin operations. Most states and customers will require contractors to offer a license or surety bond before you are allowed to bid on a job or begin working.
Commercial Auto: Typically, most contractors will have light and heavy vehicles that require commercial auto insurance to make certain their vehicles can be repaired or replaced in the event of an accident, vandalism, or theft.
Tool Coverage: Also known as Inland Marine Insurance, this policy will provide for reimbursement for expenses to repair or replace tools and equipment. Your tools represent an important part of your livelihood, so we always encourage carpentry contractors to consider this valuable coverage.
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