Protecting your business from catastrophic expenses is just as important as protecting your personal finances from medical expenses. Whether you have a company fleet, a business-owned car, or you allow employees to use their own vehicles for company business, you will need to purchase some type of commercial auto insurance. As with all forms of insurance, it is best to shop around.
Business owner's policies often include commercial auto upon request. This is a money saver sometimes. You could save more, however, by understanding the types of commercial auto insurance and following a few tips from the professionals.
Types of Commercial Auto Policies
There are three basic types of insurance for business autos. Your choice of these depends on ownership. Business policies are the same as individual policies in that coverage options include liability, comprehensive, and collision. Other options are available depending on the type.
Group auto insurance is primarily used to protect a company-owned fleet driven by employees. Larger fleets receive deeper discounts than smaller ones. A significant benefit for group policies is flexibility. There is no penalty attached to dropping or modifying an existing plan at any time.
Non-owned liability coverage applies to employees driving their personal autos for business purposes. It stacks with the individual policy held by the employee. Individual policies may not fully cover personal vehicles used for business, which leaves the business open to claims.
Business endorsement for an individual policy is an option in some states, but the rules differ by state. If you are a sole proprietor, the insurer will want to know the percentage of time the vehicle is used for business. With multiple autos or employee autos, this option leaves the business liable for damages.
Besides choosing a level of coverage, business policies provide a couple of rider policies for additional protection. Non-owned liability coverage can be augmented with non-owned physical damage. This option covers repairs that are not covered by the individual's policy. Employees covered by a non-owned business policy still benefit from a business endorsement on the personal policy.
Car rental insurance is typically bundled with non-owned policies. It covers the cost of renting an auto in case the primary vehicle is out of service. Business fleets covered by group auto are unlikely to need this, but it is useful for small businesses.
Choosing a Provider
Personal auto insurance providers offer products for all demographics, but they usually cater to one. This is one reason why it is so important to shop around for the best prices. An insurer with competitive pricing for senior drivers is not always the best choice for a teen driver. The same is true with business auto insurance to a lesser extent.
Another consideration is the type of vehicles used by your business. Policies are not created equally, and you want to be specific about vehicle type when seeking quotes. Business auto policies are a necessity in most cases. An agent can help you select the right policy and level of coverage.