Business Auto Insurance
Determining if you need commercial auto insurance for your business can be difficult. That's especially true if you run a small company or sole proprietorship without any commercial drivers.
But, it's an important question to ask―and obtain qualified answers to―as your personal car insurance may not protect you or your employees in a vehicle accident.
Do You Need Business Auto Insurance?
This matter should be discussed with an insurance agent or a financial professional with experience in this area.
But, if you answer "yes" to the following two questions, you likely should have commercial car insurance:
- Do I derive income from this business?
- Do I frequently use my car in association with this business?
Commercial car insurance can apply to a diverse group of professions, including:
- Delivery (pizza, flowers, etc.)
- Tow operators
- Cargo haulers
- Snow plow operators
Just because your profession isn't listed doesn't mean you can avoid business car insurance.
Do you work for a company as an employee or independent contractor, and use your vehicle or a company-owned vehicle to perform your job? Check with the company to see if you're covered by their auto insurance policy, and to what extent. You may need your own commercial auto policy to safeguard yourself while on the job.
Types of Business Auto Insurance
You're probably familiar with most types of commercial car insurance, as many have the same names used in personal auto insurance coverages. However, having these coverages on your personal policy doesn't mean they'll apply to your business activities.
Here's a list of some common types of commercial auto insurance:
- Bodily injury: Pays for injuries to others you cause with your vehicle.
- Property damage: Covers the expenses to repair or replace other's property as a result of an accident you cause with your vehicle.
- Comprehensive: Pays for the damages your vehicle sustains in an accident.
- Collision: Covers your losses due to theft, fire, vandalism, and other property matters.
- Uninsured/Underinsured: Pays for expenses caused to yourself or your vehicle by a driver without insurance or with inadequate coverage.
As a business owner, you can extend your commercial auto insurance policy to protect your employees while they perform work-related driving tasks.
How Much Business Car Insurance is Enough?
That's another tough question, and one you should review with an insurance professional. At the very least, you must comply with any applicable state insurance requirements.
Beyond that, you'll have to consider the size of your business, assets, number of cars, number of employees, and ability to absorb potentially large expenses from accident claims or lawsuits. Keep in mind that business auto insurance can pay for your legal expenses if you're sued as a result of an accident.
Fortunately, car insurance becomes relatively less expensive with higher limits; that's because it's unlikely insurers will need to pay out on those amounts. Many business owners also opt for the security of commercial umbrella insurance. This affordable coverage acts as a safety net, and kicks in after you've reached your business auto insurance limits.
To summarize, when it comes to business auto insurance, it's best to be smart and err on the cautious side and have more protection than you think you might need.