What Happens if a Car Hits Your Business or Entity?

It occurs more often than you may think. Whether it is due to mechanical failure or simply driver error, vehicles frequently collide with storefronts and company buildings.

But once all the dust settles, how should you respond to a vehicle crashing into your building, and how is it covered by insurance?

At Berry Insurance, our team has helped our commercial clients through all types of surprise claims - big and small. In this guide we’ll walk you through the entire process, including what policy pays in this situation and what you should know if this happens to your business.

Table of contents: 

• If a car hits my business/entity, how is it covered by insurance?

• What if someone is injured in the building after a vehicle crash?
• Can my business/entity be found liable after a car crashes into the building?
• Is my business/entity insured while closed for repairs?
• What if a company car hits my business/entity, how is it covered by insurance?

If a car hits my business/entity, how is it covered by insurance?

If a driver is found legally responsible after hitting or crashing through your business building, then their auto insurance policy will cover the damages up to the policy limits. If the driver has an umbrella policy, it would kick in over the exhausted auto limits.

If repairs for the damages exceed the driver’s policy limits, then your own commercial property insurance may cover the remaining costs, subject to your deductible.

Are repairs covered under actual cash value or replacement cost?

When your insurance provider files a claim through the driver’s auto insurance, whether they provide actual cash value for the damages or replacement cost will be up to the insurance adjusters.

Actual cash value, otherwise known as market value, is the value of your property if it were sold today. This means it takes multiple factors into account, such as depreciation, land value, location, and current estate on the real estate market. Replacement cost on the other hand is the cost to replace the property damage in new or equal value, reimbursing you based on how the value was deemed by the insurance provider or what was given on the insurance policy.

Under both the Massachusetts Auto Policy and Business Auto Policy, the property damage coverage is liability based, not first-party property coverage. Neither of these forms (MAP or BAP) promise replacement cost for damages to a third party’s building (the damaged business). Instead, the insurance carrier’s obligation is to pay the damages the insured is legally obligated to. So whether the damaged entity receives actual cash value or replacement cost becomes a valuation issue primarily a question of Massachusetts damages law - which is out of the hands of insurers.

What if someone is injured in the building after a vehicle crash?

If a customer or pedestrian is injured as a result of a driver crashing through the building, then the driver’s insurance coverage would be the one primarily responsible to cover that pedestrian's injuries.

However, businesses and their owners could be deemed partly or fully responsible for injuries if the pedestrian was injured as a result of negligence on the part of the business - such as crowded aisles or known hazards.

Can my business/entity be found liable after a car crashes into the building?

Unfortunately, yes. Businesses and their owners could potentially be found liable if unsafe conditions surrounding their business caused the accident or if they did not do enough to prevent it.

For example, if there is an icy parking lot outside of a business and a driver loses control and crashes, the owner could be found liable for not properly removing the ice. Similarly, if the owner or property manager failed to install protective barriers around the business, it could be determined the business could have reasonably prevented the crash.

Is my business/entity insured while closed for repairs?

If your business is deemed unsafe after a vehicle crashes into it, then you will likely lose out on revenue while you are forced to close for renovations.

Business interruption insurance, sometimes called business income coverage, on commercial insurance policies would cover lost income due to a covered peril. These include most weather-related damages, burst pipes, fires, explosions, as well as theft and vandalism.

What if a company car hits my business/entity, how is it covered by insurance?

If one of your own company vehicles hits your building, then the situation will be a little different.

The auto insurance policy is designed to pay for damages caused to others, it does not cover damages to property owned by the insured. So if the business entity owns the vehicle and the building, the auto policy would not respond. Instead they'd have to file with the property policy.

For example, if an insured strikes their own vehicle, both vehicle damages are handled through collision coverage since there is no legal obligation on behalf of the insured for the fault-free vehicle damages.

Since the entity has no legal liability for damages made to their own building, the coverage for the building damages would have to come from the first-party coverage present on the property policy.

Moving forward

While it is difficult to ever fully prepare for freak accidents such as this, you now know how you can respond to and safeguard your business against vehicle crashes.

Want to know what your next steps should be? Filing a claim for any situation can be stressful, which is why our team is here to walk you through everything! Check out this guide on what you can expect when filing a business insurance claim.