What Auto Insurance Coverage Do You Need for Your Small Business?

If you are a small business owner and you use vehicles for company purposes, then you need car insurance coverage for company cars.

For companies that own cars, vans, or trucks, protecting these vehicles needs to be a priority because accidents can happen when you least expect them. Business car insurance will provide coverage for legal expenses, medical costs, and any property damage incurred. 

Should one of your company vehicles be involved in an accident, and you do not have business car insurance, you and your company may face any expenses that result from the accident. For small companies, a major accident could potentially put you out of business. 

Furthermore, a company car accident may leave you without a vital business tool if the vehicle is out of commission due to the damage. A lack of transportation could cut into company profits as well as compromise your rapport with clients.

Commercial Auto Insurance

To avoid all the worst-case scenarios, the business auto insurance option can protect you from these risks. Commercial auto insurance is necessary for 48 or our 50 states for company-owned vehicles, with New Hampshire and Virginia being the two exceptions. However, in these two states, drivers assume responsibility for any damages incurred.

Car Insurance For Business

What Does Commercial Auto Insurance Cover?

A commercial vehicle insurance policy will cover legal expenses and medical expenses related to an accident as well as any property damage. It may feature coverage options for theft or vandalism and may cover personal legal expenses if an employee is involved.

Using Personal Vehicles for Business Purposes

This kind of policy does not cover personal vehicles used for professional purposes. If your employees use their private cars for business engagements, an HNOA policy may be more appropriate. This is a policy for hired and non-owned auto insurance that provides coverage for liabilities for vehicles that your business does not own but uses. These policies will generally feature higher coverage limitations because there is an increased risk involved. 

Your personal insurance will cost less when using the car for private reasons and may also include commuting to and from work. But if you use your auto for work purposes and are involved in an accident, your insurance provider may refuse your claim. Better to have commercial insurance if there is a possibility that you or your employees will be using personally-owned cars for work purposes.

Factors that will Influence Insurance Costs

Similar to your personal auto insurance policy, there are a variety of factors that will influence the final cost to your company. Considerations on the part of the insurance provider will include:

  • Vehicle make and model
  • Number of vehicles to be insured
  • Risk evaluation
  • Deductible 
  • Company’s insurance claim history
  • Employee drivers and their driving records

What Kind of Coverage can I Stipulate?

Commercial auto insurance providers will offer various options such as:

  • Liability

In many states liability insurance is mandatory. If your company auto causes an accident, this type of coverage will protect the people involved. It will generally cover physical injury including medical and related expenses, as well as property damage. Property damage insurance will pay for repair costs to the other vehicles involved.

  • Medical Coverage

This insurance covers medical costs for any necessary care and related issues for employee drivers and any eventual passengers. The availability of this kind of coverage will vary depending on location and broker.

  • Physical Damage Coverage

A policy with physical damage protection will protect the company’s vehicle and potential losses you may incur because of an accident. This kind of protection is optimal if your company leases vehicles or if you are purchasing a vehicle that has not been fully paid off. Collision damage will be limited to physical damage if the vehicle hits something or overturns. Comprehensive protection provides coverage for accidents caused by weather or damage due to vandalism. You can also opt for specified peril that can furnish theft protection and fire protection.

  • Underinsured or Uninsured Driver Coverage

If the company car is involved in an accident caused by another party that does not have insurance or that is underinsured, the bills may fall on you to pay even if your employee driver is not at fault.

Business owner policies may offer a selection of these various types of coverages within one policy. They may include basic commercial and property liability coverage together with smaller types of other coverages. If you can combine more coverage in a single tailored-to-your-needs business policy, you can probably save money as opposed to purchasing different types of coverage individually.

Coverage Limits

Businesses can select their coverage limit, which will in turn reflect the cost of your premium payment. Liability limits for business policies will commonly range from $500,000 to 1 million dollars. If your employee drivers are at greater risk for accidents depending on how much driving they have to do, how often they drive, and over what distance, consider upping the liability limit.

What will Insurers of Small Business Auto Policies not Cover?

Some types of accidents may not be covered. Examples of non-coverage include:

  • Damage caused by civil uprisings or disturbances.
  • Damage caused while you are moving a company vehicle.
  • Accidents caused while committing a crime.
  • Accidents during food deliveries. If you are a restaurant or small catering business, you will want business auto insurance for employees that deliver. In this case, insurance for Instacart may be your best option.

You have a Responsibility to Insure all Business Vehicles.

Whether you are an independent contractor, self-employed, a business owner with employee drivers, you have a responsibility to insure all vehicles used for business-related activities whether full time or part-time. This includes any personal vehicles of employees used for work activities.

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