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Business Auto Insurance

Determining if you need commercial auto insurance for your business can be difficult. This is especially true if you run a small company or sole proprietorship without any commercial drivers. However, it's important to find out right away if you need business auto insurance, as your personal car insurance may not protect you or your employees in a vehicle accident.

Business auto insurance applies to most businesses, from very small operations to larger corporations. It will provide financial protection if you or an employee has an accident or other incident in a vehicle driven for business purposes.

Do You Need Business Auto Insurance?

This matter should be discussed with an insurance agent or a financial professional with experience in this area. However, if you run a business that regularly uses vehicles, you are likely to need it, regardless of the size of your company.

Commercial car insurance can apply to a diverse group of professions, including:

  • Plumbers.
  • Landscapers.
  • Delivery drivers (pizza, flowers, etc.).
  • Electricians.
  • Salespeople.
  • Realtors.
  • Truckers and tow operators.
  • Snow plow operators

The above list is not all-inclusive; if your profession isn't listed, you may still need business car insurance.

Hired Drivers

Do you use your vehicle or a company-owned vehicle to perform work as an employee or independent contractor? Check with the company for whom you're performing work to see if you're covered by their auto insurance policy (and, if so, to what extent).

You may need your own commercial auto insurance policy to safeguard yourself while driving on the job.

Types of Business Auto Insurance

You may already be familiar with most types of commercial car insurance, as many have the same names used in personal auto insurance coverages. Common types of commercial auto insurance include:

  • Liability insurance - This is the most commonly required auto insurance. It includes:
    • Bodily injury: Pays for injuries to others you cause with your vehicle.
    • Property damage: Covers the expenses to repair or replace others' property as a result of an accident you cause with your commercial vehicle.
  • Comprehensive: Covers your losses when your vehicle is damaged from an incident not involving a collision.
    • Examples include theft, fire, and vandalism.
  • Collision: Pays for the damages your vehicle sustains in an accident.
  • Uninsured/Underinsured: Pays for your injury- or vehicle-related expenses when hit 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.

IMPORTANT NOTE: Having the above coverages on your personal policy does not mean they'll apply to your business activities

How Much Business Car Insurance is Enough?

Determining the right amount of business car insurance can be tough; a commercial auto insurance agent can help you come up with the right number for you and your business. Understand that at a minimum, you must comply with any applicable state insurance requirements.

Beyond that, you'll have to consider all of the following:

  • The size of your business.
  • The value of your assets.
  • The number of cars your company operates.
  • How many people drive on the job in your business.
  • Your total number of employees.
  • Your business' 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.

When determining the appropriate limits for you and comparison-shopping for commercial auto insurance quotes, also consider whether to purchase a commercial umbrella insurance policy. This affordable coverage acts as a safety net and gets applied after you've reached your business auto insurance limits.

When it comes to business auto insurance, it's best to be smart and err on the cautious side and buy more protection than you think you might need.

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