Aaron (00:00)
Hello everybody, welcome to the Speaking of Insurance Podcast. My name is Aaron Bollinger. Today we're going to be talking about something other than insurance. Joking. We're going to be talking about auto insurance, business insurance, and if you're driving for work, how the auto insurance gaps could put you, your business, and your employees at risk. And so today we're going to be talking to the California drivers, the contractors, the small business owners, employees, and gig workers. But I'll start off with an example of if you're a contractor and you own a pickup truck.

Aaron (00:29)
And you use it for everyday driving, but also take it to job sites carrying tools and visiting customers. You've got standard auto insurance, you've paid your premiums, everything seems fine. But then if one afternoon you drive to a job site and you get into an accident, then you call up your insurance company, you report the claim, and the adjuster starts asking some questions. Where were you going? Were you working? How often do you use your truck for business? Were you transporting materials?

Aaron (00:55)
And then you realize something, and I think that your claim adjuster would also realize that just because you have auto insurance, it doesn't mean that you're insured for everything that goes on with that vehicle. So that doesn't mean that the claim will get automatically denied because you're working. Some personal auto policies absolutely permit some certain business uses so long as they are disclosed before and during the underwriting process. But what matters is that your actual policy covers what you disclose to your insurer.

Aaron (01:24)
And whether the vehicle is being used in a way that the insurance company has agreed. And so this is what we're gonna be talking about today. Hosted by Bollinsure, yours truly. But today we're talking about something that I think deserves a lot of attention, especially in California.

Aaron (01:38)
And it's it's the big difference between the personal auto exposure and the commercial auto exposure. We're going to be covering the people who we mentioned, the gig workers, the contractors, employee-owned vehicles, and the growing cost of auto liability claims and what business owners can avoid intentionally before during the underwriting process to make sure that there are not any gaps that they are not aware of. And so towards the end, I'll walk through a couple practical ways to evaluate whether you're spending your auto insurance premiums.

Aaron (02:07)
effectively your auto insurance premium dollars. But firstly, let's answer the question that starts this whole conversation. What actually qualifies as business driving? And so a quick example might help with this. If you're working at an office in LA, every morning you drive from your house to that office and every evening you drive home, that's called commuting. And so if you change that and you say that you're going to your normal workspace, you're visiting three clients though. And that's your normal job is to go to three clients across LA

Aaron (02:36)
And you transport some company products, maybe you hand out some things, and throughout the day you stop at a few different locations. That is a completely different type of vehicle use. They would call that business use. You're going to different job sites, you are carrying company goods. You are doing the responsibility of the business work that a business driver would be doing. And so again, business use does not automatically mean that commercial auto insurance is required because a real estate agent, for example, might be able to ensure their certain work-related activities.

Aaron (03:05)
Through that personal auto insurance policy that's classified for business use, so long as it is disclosed. And so the same thing with like an insurance producer driving to occasional client meetings, it could be a similar sort of situation. Just a little insurance producer plug. If you're an insurance producer, you don't have to go get that business auto policy necessarily. But somebody who's operating a delivery vehicle throughout the day 100% should, somebody who's transporting, you know, potentially paying passengers 100% should,

Aaron (03:32)
something that's owned by the business, could definitely require that different type of commercial auto insurance arrangement and exposure for it to be properly covered. But a few features that actually go into this calculus are the frequency, purpose, and ownership and the nature as well of the vehicle's use, how often it's getting used for it, what it's being used for, who owns the vehicle, and then the nature of all of those things and the way that they kind of

Aaron (03:58)
are interpreted by each independent insurance company. And so of course, because of this, different insurance companies are gonna have different guidelines that they're gonna adhere to. But that's because one insurer might accept a particular business use like that real estate agent. Maybe if they commute maybe it's like, you know, three different places a day, they're going to the different open houses, they're networking, you know, maybe one insurance company will treat that differently from the other, while another would, you know, obviously require that commercial auto insurance coverage and dec or decline it outright decline writing it, which is a

Aaron (04:27)
A big concern is eligibility for different commercial auto and personal auto insurance programs. The number one thing is that I would rather you be not eligible for a program than think you're eligible for it because you didn't properly disclose some sort of business use. And so making sure that your personal auto insurance company is aware with a quick email or a quick little note to your underwriter or your broker saying, Hey, wanted to make sure you guys knew that I'm commuting or that I'm doing X, Y, and Z. And so this is the biggest thing I want you guys to understand.

Aaron (04:55)
It's not just about whether or not you drive to work. I think everybody drives to work unless you're a remote worker. it's about how you're using that car while you're working or when you're not working on off hours, the business use potential exposures that happen to your and to your company, the business that you're working for and commuting for. So regular commuting is generally a normal personal auto exposure. Occasional business appointments may be acceptable, again, depending on the personal insurer and the insurance company.

Aaron (05:25)
But delivery, passenger transport, and the more extensive business operations will have a completely different lens, 99.999% of the time, if not all of the time, within the insurance company's underwriting guidelines. So you can get potentially a bunch of claims denied if you ever get into an accident on the freeway driving for business use and it wasn't particularly disclosed to the insurance company before. And the way that the vehicle is titled is also very important.

Aaron (05:52)
If you're the sole owner of a business, let's say, and you're driving that company vehicle to and from job sites, just because you're the sole owner of that vehicle and you maybe have 100% ownership in the company doesn't necessarily mean that the auto insurance company is gonna like the exposure of being driven for business risk. And this is where a little wrinkle gets thrown in, is that people assume, I'm driving a business vehicle, I'm driving a car that's my own personal use. There's no real difference in the way that claims will get handled. That's so far from the truth.

Aaron (06:22)
The truth of the matter is that when lawyers see that a company vehicle gets into an accident with the person who they are operating for and trying to get money for for the claim settlement, they know that commercial auto insurance coverages are higher. They tend to be 100% higher. And if they aren't higher, if your commercial and business auto policies limits are not higher than your personal, please get that looked at because we generally recommend at least a million dollars of combined single limit coverage.

Aaron (06:51)
Whereas on the personal auto side, it's very rare to find an insurance company that'll write that. But anyways, they know that they'll be able to get more money from that company vehicle. People some of the times see, I mean, at least I've heard some stories and rumors that, if you see a company vehicle on the freeway or on the road, you know, you'll you might drive a little bit closer to them and and you know, you you know that you could be entitled to some potential payout higher than if it was into an accident with let's say another person driving a regular car.

Aaron (07:16)
Their normal commuting vehicle. So why should we care so much about getting the distinction right? We can look at some of the recent numbers and the statistics that show the real cost of driving, the news, safety, and claim severity. So here's a statistic that personally surprised me. So according to the Bureau of Labor Statistics, transportation incidents accounted for 38.2% of all occupational for fatalities in the United States in 2024. So yes, this is two years ago.

Aaron (07:45)
Yes, this number may have changed between now and then. Of course it of course it's changed. But the fact that in a year that transportation incidents for fatalities, occupational fatalities, so when you're working at your job, it's not the people are getting heart attacks. It's not the people are, you know, getting things dropped on them and and or falling it's thirty-eight point two percent is is almost forty percent. Almost four out of every ten people who died in twenty twenty-four based off of

Aaron (08:11)
Occupational fatality events were driving a vehicle. They they they were in the process of of doing some sort of transportation. And so that number total is about, I think it's about, or exactly, 1,937 workspace deaths associated with transportation incidents. So of course, transportation incidents are broader than just ordinary passenger car accidents. They include thing things like the work-related transportation events we discussed.

Aaron (08:41)
But the bigger point is that transportation remains one of the most significant causes of workspace fatalities. So, how a business traditionally manages risk. They buy the general liability insurance, they protect our buildings, their equipment, they worry about the cyber attacks and the leaking of information, they worry about employee injuries and they're proactive and the property damage. Yes, please do all those things. They all 100% matter. But something as ordinary as an employee driving to a customer appointment.

Aaron (09:10)
Can also create a very serious liability exposure. And and here's another number that I I think really emphasizes that. The National Highway Traffic Safety Administration, NHTSA, estimated that 36,640 people died in US traffic crashes in twenty twenty five. So that's a little bit of a more recent number. That was six point seven percent fewer than what it was in twenty twenty four. So it's horrifying the level of exposure that comes from driving.

Aaron (09:40)
And the fact that as an employer, you can be responsible for the death of your employees if they're driving for company purposes. That's where insurance comes in, guys. That's the whole point of insurance is to prevent these numbers or these events, these freak accidents from derailing your entire company and your entire financial security. And it's encouraging news that it is down from 2024, but fewer fatality accidents or fatal accidents.

Aaron (10:07)
Nationally doesn't automatically mean that the there's gonna be cheaper auto insurance, right? So it's not like you know, fatalities are down, cheaper auto insurance. Insurance companies care about the claim frequency and severity. And the expensive nature of those claims is really the cost driver. So you think about it, less deaths. Let's say that there are less accidents in total as well. Between 2024 and 2025, there were less accidents. I I'm not sure on that number, but if there were, and there were less deaths.

Aaron (10:37)
And that number maybe came to a 10% overall decrease in the fatalities, which was 6.7%, and then the 10% decrease in frequency of accidents. If the claim severity went up 20 to 25%, which wouldn't be surprised me based off of the recent newfound litigation strategies that lawyers are able to use to get the money from the insurance companies, then auto insurance prices are gonna go up. That's why they've been going up.

Aaron (11:06)
That's why these insurance companies have filed for these rate increases. We got a rate sheet that shows that I think it was like the average of most of the carriers that everybody works with, were increasing their prices double. It was like 110% for some of them. Some of them it was 40%, just like year over year rate filed increases. And so think about the cost of also repairing a newer vehicle.

Aaron (11:29)
These ca these vehicles have cameras, the radar sensors, advanced lighting systems, driver assistance technology in a lot of cases. A collision cannot just be just the injury and the medical expenses that are getting paid out. It's not just replacing a bumper either. It's repairing and calibrating the entire electronic system of these vehicles that were expensive to produce and manufacture in the first place, and then to buy.

Aaron (11:58)
Potentially greater cost of injuries, medical care, legal representation, and liability segments or settlements, and then the added cost of the repairs that are being made to these vehicles. And there's a recent report that this kind of funnels into. In May of 2026, the American Transportation Research Institute, ATRI, Published research on commercial trucking insurance.

Aaron (12:24)
And they said that between 2021 and 2024, the average liability insurance premium costs in the study increased 18.6%. But during that same period, the heavy-duty truck involved crash rate actually declined 2.6%. So the decrease in the actual crash rate was followed subsequentially or sequentially by an increase in the premium costs of the average liability insurance. So

Aaron (12:53)
Why were these premiums increasing? the study found that per mile liability losses among surveyed carriers rose approximately 33.1%. In other words, the severity and expense of claims were creating substantial pressure even as the reported crash rate declined. So crashing lower amounts doesn't again mean that the auto insurance prices are gonna be going down.

Aaron (13:16)
And so that's the trucking industry research. It's not something that can be generalized across personal auto or small commercial auto or big commercial auto, but it does illustrate something very relevant to the larger insurance market. The cost of insurance is not determined by how often these accidents happen alone or in specific industries. It is determined by what those accidents ultimately cost the insurance companies to pay out. The insurance company has a margin to fulfill. They have to make profit, they've got employees to pay, they do have.

Aaron (13:46)
underwriters that are tasked to make a profit, and turn a profit. So one of the most important things that we as consumers have to do is look beyond the price and understand the actual financial protection that you're buying. If these crash rates are going down, but the litigation costs are going up and the settlement costs are going up and the medical expenses are going up and the cost to rebuild these vehicles that you're getting into accidents to are going up, you're getting one heck of a deal if they're increasing the premium by you on 10%.

Aaron (14:14)
But the cost of actually the insurance company insuring you is up 25%.

Aaron (14:19)
So food for thought, I know that was a lot, but let's talk now about some people who face these types of questions every day. I I really think that it's the contractor and the small business owners that really have to understand this. And so let's say that you're a licensed contractor in California. You use a pickup truck to visit job sites.

Aaron (14:39)
Transport equipment and occasionally pick up supplies. Let's say you've got a company logo on the side. Does that automatically require commercial auto insurance? I would not say that it's just the logo alone that distinguishes that need, no. So not necessarily. But the type of work that you're performing, the ownership of the vehicle, and the extent of business use are what I would say really determine and affect what type of coverage you need. But if you're running a landscaping business,

Aaron (15:06)
And you use your truck every day, you pull a trailer, you transport equipment, maybe you have an employee who occasionally drives as well. That's a very different risk from someone who works in an office and drives to an occasional meeting. There is another issue that contractors don't always consider. Even if your truck is properly insured, that doesn't automatically mean everything inside it is insured either. If you're transporting $15,000 worth of equipment, and let's say that you have $5,000 of permanently attached equipment, so $15,000 sort of free-floating and $5,000 of like

Aaron (15:35)
permanently attached racks or things like that. you've got power tools, specialized machinery, or other valuable business property in the vehicle. If that vehicle gets stolen, along with all the tools, your commercial auto policy might provide physical damage protection for the truck if you've purchased that appropriate coverage, but that doesn't mean that the tools are automatically covered under that same policy.

Aaron (15:57)
You might have needed to have added contractor's equipment or in the marine insurance to address those exposures on the non-permanently attached equipment. Usually, insurance companies do allow for a specific amount to be added of permanently attached equipment coverage, in the case of this sort of event happening where it gets stolen or the equipment gets damaged, in which case the insurance company would compensate you for that. But that free-floating equipment usually needs.

Aaron (16:25)
That extra contractor's equipment or inland marine insurance coverage. And so I think this is why I always come back to the same philosophy of insurance needs to be built around the exact way that your business operates, not the way that you think that the insurance should operate around your business. So a contractor shouldn't just ask, Is my truck insured? They should be asking, what happens if I get into an accident? What happens if somebody else drives a truck? What happens if my tools are stolen? What happens if I'm towing equipment?

Aaron (16:54)
What happens if the vehicle is temporary, temporarily out of service? Those are the different types of risks. And they may require different types of protection and insurance policies and are not automatically included on the standard commercial auto insurance or personal auto insurance all the time. So I want to talk about somebody who doesn't own a contracting company because I bet a large percentage of you don't. But maybe somebody who uses their personal car to drive Uber or to make some extra money, rideshare and delivery drivers. So

Aaron (17:22)
This is another area where people can make some pretty expensive assumptions. Imagine you're driving for a rideshare company, you open the app and you're waiting for somebody to request a ride. You accept the ride, drive to pick up the passenger, and eventually complete the trip. Those are different stages of activity. In California, the required insurance arrangements for rideshare companies depend in part on which stage you're in. When the app is on and you're waiting for a match, there is a particular set of required liability coverages.

Aaron (17:50)
Just for that waiting for a match. Once you've accepted a ride and you're traveling to pick up the passenger, different requirements apply. And then during the accepted trip stages, the transportation network companies are generally required to provide minimum a million dollars in primary commercial liability insurance. Here's the important distinguishment though: liability coverage for an accident is not automatically the same thing as coverage for damage to your own vehicle.

Aaron (18:19)
A driver needs to understand whether their vehicle has applicable, comprehensive, and collision coverages, whether the platform that they're currently driving on offers contingent physical damage coverage, and what deductibles or other conditions apply. Please do not assume the same insurance rules automatically apply to food delivery, package delivery, and passenger transport, because that's so far from the truth.

Aaron (18:42)
Each of them has a different set of phases and legal requirements independently. And different platforms and business activities do oftentimes have completely different insurance arrangements. And so this is especially important for people who start using their vehicle for a side business without reviewing their current insurance policies. You might have originally insured the car for commuting and personal errands, but your actual driving exposure has changed. Maybe you're delivering meals several evenings a week. Maybe you're transporting products for your online business. Maybe you're providing paid transportation.

Aaron (19:11)
Those are the exact kind of changes worth discussing with your insurer or an independent insurance broker. You don't want to have the event come up where obviously the worst case scenario is that you have to file a claim or an event happens and you had wished that you had talked to an insurance broker about your coverage beforehand. But here's a risk that's even more surprising, separate from the ride to delivery. Sometimes a business can face auto liability even if it doesn't own a single truck. I know.

Aaron (19:41)
So this is a hidden exposure. Let's say that you own a small business, but you don't own any company vehicles. You don't have a fleet. You don't have delivery vans. Nobody has a company-owned car. The company doesn't own any cars. So you assume that you don't have to think about your commercial auto liability insurance. But one afternoon, your employee needs to drop something off at a client's office. They take their personal vehicle. On the way, they get into and cause a serious accident. Now, of course, depending on the circumstances,

Aaron (20:07)
An injured party could 100% potentially pursue a liability claim against both the employee and you, the employer in the business. So suddenly, a company that doesn't own a single vehicle has an automobile liability exposure. This is where a coverage called hired and non-owned auto liability insurance becomes super important. You'll be hearing it called not just by me, the abbreviation king, H-N-O-A. Here's the simple explanation of what it is.

Aaron (20:35)
Hired auto liability can address certain liability exposures arising from vehicles a business rents, hires, or leases. Non-owned auto liability can address certain business liability exposures arising from vehicles the business doesn't own, including eligible employee-owned vehicles used for company business. This coverage does have limitations. It's generally liability protection for the business. It doesn't automatically replace the employee's personal auto policy.

Aaron (21:04)
It doesn't necessarily pay to repair the employee's own vehicle. Of course, it depends on the policy and circumstances, but non-owned auto liability coverage may apply on an excess basis after the employee's personal auto insurance. So it's sort of like an umbrella. It adds that additional coverage that potentially your business would have been required to pay out out of pocket. Just with having that supplemental coverage added to your commercial auto insurance, it can prevent that from happening in the first place. This is what makes this conversation so important right here is that.

Aaron (21:34)
A business can have a potential exposure that isn't appropriately addressed by its general liability policy. CGL, commercial general liability. It usually excludes almost all automobile related liability claims. So a business owner might think I have a million dollar GL policy, I'm protected. But that doesn't necessarily mean they're protected from auto-related liability. Here are some

Aaron (21:57)
Practical examples of events that could be something that you guys have for food for thought. An employee drives to the post office to mail documents for the business. Let's say a salesperson drives their own vehicle to an off-site client appointment. And maybe example three is an employee rents a vehicle while traveling on company business. The proper coverage arrangement should be discussed with an, in my opinion, independent insurance broker. We as a family, Bollinsure, B-O L-L-I-N-S-U-R-E, work with a lot of

Aaron (22:27)
Companies in specific circumstances, niche circumstances like these, where it's very important to have that same-day response time from your broker to understand and distinguish and determine that you are properly covered. And so the truth is that the right coverage arrangement differs on every situation in insurance company, but all of those examples are reasons to review your business auto liability coverage. So you don't have to own a commercial vehicle to have a commercial auto liability exposure.

Aaron (22:56)
I hope that you guys got all of that. I hope that you guys have a great rest of your day. If you guys are driving in California, please stay safe. Practice defensive driving. We don't recommend people to go above the speed limit, of course, especially on business work. Make sure that you have clear expectations with your employees. If you are an employee, make sure that you are driving safe in your company vehicle, your personal vehicle.

Aaron (23:17)
Just everywhere that you go. If you have any questions about your specific insurance or need a consult, we have an excellent commercial risk assessment team that I can get you in contact with. I hope you guys have a wonderful again rest of your day. Stay safe out there. Continue to drive safe. Ensure that you have HNOA and that you've got an internalized all of the statistics, or if you haven't.

Aaron (23:40)
That hopefully something rang home and there's some level of actionability for making sure that your setup is proper and that your risk is understood.

Aaron (23:50)
Thank you for listening. With that, I'm out.