Final answer:
In commercial auto coverage, usage and ownership influence insurance rates and policy types, with premiums calculated to cover expected damages.
Step-by-step explanation:
In commercial auto coverage, how an auto is used and who owns the auto can affect various aspects of the coverage. The type of coverage required can depend on whether the vehicle is used for personal, business, or mixed purposes, and different policies accommodate these different uses.
Ownership impacts insurance rates and options; for instance, a company-owned vehicle might be insured under a commercial policy while a personally-owned car might be under a personal policy. Rates can be affected by the vehicle's safety rating, driver's history, and whether the car is new or used.
For example, insurance premiums are calculated to cover the total damage within a group, as illustrated by an example where if each of 100 drivers pays a $1,860 premium, the insurance company collects enough to cover the $186,000 required for the damages incurred. This shows how risk is pooled and premiums are determined based on anticipated costs.