Vehicle Insurance for Business — It's Not Personal

While the types of insurance coverage provided by personal and commercial auto insurance policies are essentially the same, there are important distinctions. Typically, commercial auto insurance policies have higher liability limits, for example $1 million. They also may have provisions that cover rented and other non-owned vehicles, including employees’ cars driven for company business.

Several factors determine whether a vehicle used for business should be covered by a personal or commercial policy. Key questions to consider:

• Who owns or leases the vehicle, you individually or the business as an entity?
• Who drives the vehicle, you or your employees?
• How is vehicle used most of the time, i.e., for transporting people, delivering documents or moving hazardous materials?

You should discuss these matters with a licensed insurance agent knowledgeable about commercial auto insurance.

Commercial Vehicle Insurance Tips and Considerations

• If your business owns or leases a vehicle, make sure its name is listed on the policy as the principal insured.
• If you rely on personal auto or liability insurance to vehicles used for business, look closely at the provisions as business-related liability may be excluded.
• If employees operate a company car, make sure they have good driving records and are trained properly.
• Consider increasing insurance on your business vehicle to cover permanently attached items such as a generator or storage unit.
• Premiums are linked to the type of vehicle driven. If you’re buying or leasing a new car or truck, check the insurance rates before you make your final choice.
• Safety devices can help reduce premiums. If you’re buying or leasing a new vehicle, consider getting one with anti-lock brakes, side air bags, automatic seat belts and daytime running lights.
• Adding anti-theft devices such as alarms, and global positioning systems (GPS) that help police locate your vehicle if stolen also may reduce premiums.
• If you have access to an indoor garage or locked parking lot, places that decrease the likelihood of theft, you may qualify for lower premiums.
• The region in which your business operates affects premiums. For example, insurers in areas prone to extreme weather such as hail, wind storms and hurricanes, or high-traffic, high-theft locations typically charge higher rates.
• A high past-claims history can increase insurance costs, while choosing a plan with higher than average deductibles can lower premiums.
• If you use your personal vehicle to conduct business, you may want to consider a higher liability limit. Premiums likely will be higher, but having additional coverage to protect both business and personal assets will be beneficial in the event of a lawsuit because of an accident.
• Adding telematic devices to your vehicle(s) can communicate useful information about drivers, schedules, locations and deliveries.