Business Auto Insurance   

When buying a car, you will be asked to present a proof of insurance. So how is personal and business auto insurance different? Does personal auto insurance fully cover business auto? How should you purchase insurance for commercial vehicles? Below are answers to frequently asked questions.

Some may think personal auto insurance will provide coverage for running a business at home. However, it doesn’t always provide coverage for using a personal car for business purposes. This is why it’s important to consult with an insurance agent. There are two major variables to check. One, is  how often you use your vehicle for business. The second is what purpose you use it for. Reviewing the usage will  help determine the appropriate type of coverage.

Vehicles registered under a business, should be insured under business auto insurance. The same goes for vehicles that are owned by an individual but used exclusively for business purposes. Commercial auto insurance is essential to protect businesses.  This is considering that claimants can file lawsuits against businesses for more compensation in the event of an accident. Another important fact to keep in mind is that General Business Insurance (Liability or Property Insurance) does not cover accidents caused by business-owned vehicles.

 

Types of Coverage

Commercial auto insurance, like personal auto insurance, has similar coverages. Among them, liability is the most important coverage to protect your business. This can be divided into two parts: Bodily Injury and Property Damage. Bodily injury protects your business when you or an employee is responsible for injury or death of others in an auto accident. Property damage covers damage to another person’s property caused by an auto accident. Next, medical payment coverage helps pay medical expenses for occupants who are injured while using the business auto.  These are mandatory coverages required by most states.

There are optional coverages such as “collision” and “comprehensive”. Collision covers the business’ car repair costs in the event of an accident. Comprehensive covers losses from natural disasters and theft.

In some states, it is mandatory to purchase uninsured or under-insured motorist coverage. This coverage protects you when you are in an accident with another driver that doesn’t have insurance or insufficient coverage to pay for your damages.

There are additional coverages such as “towing” for when you need to take your vehicle to a repair shop.

Another is “rental reimbursement”.  This coverage helps pay your rental car costs while your car is being repaired due to a covered accident.

Commercial Auto premium

One way to reduce costs is to increase the deductible for collision coverage. As for liability coverage, maintain sufficient limits.
Each state has a different minimum limit for liability insurance. However, most of those limits are not enough to protect the business. Liability helps pay for  hospital expenses, loss of income, and property damage. If you get into an accident and don’t have enough liability limit, the other party will most likely go after the business.  $500,000 to $1 million in liability coverage is recommended for commercial auto insurance.

Another option is to opt out on collision coverage for vehicles that are old.  If you get into an accident and the cost of repair is higher than the current market price of the car, insurance companies pay the cash value instead of the cost of repair. Therefore, you should consider if collision coverage is necessary in your case.

Business auto insurance is likely to be higher than personal car insurance in terms of cost. However,  it is better to have insurance that will properly cover you in an accident.

Contact us today to learn more or to get a quote.