Commercial Auto Insurance
Commercial Auto Insurance Delivers the Protection You Need
Small business owners may be tempted to rely on their personal auto policy rather than buying commercial auto insurance for vehicles used primarily for business purposes. However, the standard personal auto policy excludes coverage for cars used for business. If you get into an accident when driving a car used for business, your insurance company could refuse to cover damage to the car, injuries, and—if you were sued—the large sums needed to pay court costs and the resulting payout.
Commercial Auto Insurance vs. Personal Auto Insurance
According to the Insurance Information Institute, only a commercial auto policy can provide the level of liability coverage that even a small business needs to cover damages caused by a serious accident. They recommend a minimum of $500,000 of liability coverage.
Most personal policies offer a maximum of $500,000. While the main coverages are the same on both policies, the commercial policy offers liability limits of $1 million and higher. If an employee regularly drives the car, the commercial policy allows you to add that driver’s name to the policy and extend coverage. If an employee goes out on company business in her own car and then gets into an accident, coverage can be added to protect your business from that liability as well.
How Commercial Auto Insurance Rates Are Determined
Insurance companies base their rates on the likelihood of you filing a claim, along with the estimated cost of the claim. In general, clean driving records for all drivers on the policy equals lower premiums, while new and high-performance cars can mean higher rates. If your business is located in the center of the city where traffic is heavier, you’ll pay more than if it’s in a remote suburb. If you use the car daily to make sales deliveries, the charge will be higher than for someone who only occasionally meets with clients.
How to Save Money on Commercial Auto Insurance
The good news is there are several ways to lower the cost of your commercial auto insurance policy. The best way to save is to maintain a clean driving record and remain free of claims. Insurance companies also offer credits for safety devices such as anti-lock brakes, air bags, alarms and global positioning systems. Parking in a garage or locked parking lot can lead to additional savings.
Another way to lower costs is to increase your deductible. The deductible is the amount of money your business pays before the insurance policy kicks in to pay the rest of a claim. Although increasing your deductible means that you’d pay more should you file a claim, the premium savings may be worth it. Lastly, a fast and easy way to save money on commercial auto insurance is to shop online and compare quotes from competing providers. If cost is a main deterrent from buying a commercial policy with higher liability, these savings may make the difference.