Auto Insurance for Small Business

JohnTaylor February 28, 2013 0

For businesses that use vehicles as part of their business, purchasing adequate auto insurance coverage is necessary to repair or replace vehicles damaged in the course of your business, or to pay for claims that may arise from parties injured in an accident with a company vehicle.

Even if you’re a one-person business, if you’re using your vehicle for business purposes, you may need to purchase commercial auto insurance as your auto insurer may not provide coverage for a vehicle used for business purposes.

Commercial automobile insurance is necessary for a wide variety of businesses. If you’re involved in a business that makes deliveries or use company vehicles for frequent business trips or visits to a client’s home or place of business, you’ll likely need commercial auto insurance to protect your vehicle and your business.

What Commerical Auto Insurance Covers

Commercial auto polices can provide the standard collision, comprehensive, uninsured/underinsured coverages that traditional auto insurance policies provide, but they also provide other coverages specific to commercial policies, such as:

Employer’s non-ownership liability – This provides coverage to employees running errands or performing other tasks for employers on non-company vehicles.

Hired auto – If your business needs to rent additional automobiles for a big job or project that requires vehicles other than your business’ existing fleet, this provision in your commercial auto policy will provide coverage for these vehicles.

Costs and Other Considerations

When choosing to purchase commercial auto insurance, you’ll need to consider a number of factors, such as how many employees will be using the company vehicle, the number of vehicles you’ll need to insure and the amount of coverage and deductible thresholds you want for the policy.

When quoting a rate for your business, insurers will examine a number of factors, including the number of employees and vehicles you want to insure and the nature of

your business. The riskier a prospect you seem to them, the more the insurer will charge you for insurance.

Many insurers have specific rules about coverage, including rules about employees driving records and the proper use of business vehicles. To ensure that you get a competitive rate for coverage, and to make sure that coverage isn’t denied in an accident because you’ve run afoul of the rules, it’s important to study your business auto insurance policy carefully and make sure that you and your employees comply with your insurer’s rules.

Coverage amounts for commercial auto insurance policies are typically higher than that of personal auto insurance. Most small businesses carry at least $500,000 in coverage, but amounts of $1 million or more are also common.

Business auto insurance is tax deductible only if you use the actual expense model for deducting vehicle expenses. If you deduct mileage, you may not deduct insurance premiums from your taxes.

Don’t rely on individual insurance

If you’re a one-man band and use your vehicle for business purposes, don’t automatically assume your individual insurance policy will provide coverage for your vehicle if it is damaged in the course of your business activities. Individual policies are crafted to provide coverage for personal use, not business use, as they are evaluated by most insurers as separate and distinct risks. If you’re using your personal vehicle for business uses, your insurer may cancel the coverage if it gets wind of your activities or it may deny claims, even if the claim arises from a non-business activity.

If you’re using your own vehicle for business, check your insurance policy to see if personal use is excluded from coverage. If it is, you’ll probably want to inquire into getting a commercial policy to make sure you’re covered in the event of an accident.

Saving on commercial auto insurance

If you’re interested in saving on commercial auto insurance, there are a few proactive measures you can take to reduce your bill, including:

- Limiting the number of employees who are authorized to drive company vehicles. The fewer people driving your vehicles, the less risk you pose your insurer. As a result, your insurer will charge you lower premiums.

- Hiring employees who are experienced drivers and providing training for your drivers. If your drivers are operating big trucks or other specialized vehicles, hiring drivers experienced in the use of those vehicles can score you a substantial discount. Some insurers also offer discounts for employers who require their employees to take driver’s safety and other driving training courses.

- Bundling with other policies. Many insurers provide discounts for customers who also purchase their commercial general liability and other business insurance from them. By buying an insurance package from one insurer, you may achieve substantial savings. Small business owners may also realize a benefit from insuring their personal and business vehicles with the same insurer.

- Reducing coverage limits. Most states have minimum coverage limits for vehicles. For example, in Alabama, the minimum liability coverage amounts a vehicle owner must have is $25,000 in bodily injury coverage for one victim per accident, $50,000 for multiple victims per accident and $25,000 in property damage coverage per accident. By reducing your coverage amounts down to the minimum, you’ll reduce your premium, but you will also reduce the amount of coverage your insurer will have to provide if you’re company vehicles are involved in an auto accident.

- Raising deductibles. By increasing your deductibles, you’ll save on monthly premiums but will pay a higher price should one of your vehicles get involved in an automobile accident. While it may be wise to raise the deductibles somewhat, don’t raise them to a potentially ruinous point.

- Shopping around. It’s a free market. Insurance rates may vary greatly from insurer to insurer. By shopping around, or hiring an insurance broker, you may be able to find a great deal.

By properly insuring your business vehicles, you protect a valuable asset to your business. Exercising a few prudent shopping and policy management suggestions can help make small business auto insurance coverage affordable.

Leave A Response »