If you have a large company with a variety of company cars, you probably know that you need commercial auto insurance. What if your business is a one-man operation and you use your personal car for business purposes? It’s a common occurrence for small business owners to use their personal auto insurance policies to cover them for business miles. However, using your personal policy for business-related driving can cost you in the long run. In this article, we’re going to give you a few reasons why you shouldn’t use your personal policy for business and what you should do instead.
Risks of Personal Policies
If you own a catering business and have an accident while making a delivery, you may be responsible to pay for the repairs, medical expenses, and other related costs. Although your personal insurance would usually cover a car accident, your insurance claim might be denied if your car was being used for a business purpose. If you don’t have commercial auto insurance, you and your business are going to be in trouble.
In many ways, commercial auto insurance is similar to a personal policy. For more information, visit this website. There are a few options for commercial policies.
Liability coverage protects the business if a driver is responsible for a wreck that causes injury or property damage. It is designed to cover every potential employee that could drive a vehicle for a business. If your business employs several people, the premiums are likely going to be higher than personal auto policies. Collision coverage is another option and will pay to replace or repair the business vehicle if it is in an accident
If the vehicle is damaged, victim to a natural disaster or stolen, this coverage is used to pay for the vehicle. It can be used to cover only one vehicle or any vehicles that are used for business purposes.
Other Coverage Options
Uninsured motorist coverage is similar to personal policies and will protect the business vehicle if it is involved in a wreck caused by a driver who does not have insurance. This type of insurance is a good idea especially in the case of a hit-and-run scenario.
Rental reimbursement coverage is important for businesses who rely on a vehicle. The coverage will pay for a rental car if the business vehicle is being replaced or repaired.
Commercial vehicle coverage includes these areas and can usually be tailored to meet a business’s needs. Depending on the size of the company, the amount of time driving, and even the area of the country, coverage needs can vary greatly.
Saving on Commercial Coverage
For small businesses, paying for commercial auto coverage can hurt your bottom line. However, many insurance providers offer discounts to businesses. The discounts vary a fair amount, but there are a few to ask about before purchasing a policy. Commercial vehicle type and features are important to insurance providers. Anti-lock brakes, for example, can earn you a discount.
Companies that have multiple policies with the same insurance company can also earn a discount. Consider bundled coverage if possible to get a better price. Paying up front the full amount may not be possible for small businesses, but this is an easy way to get a lower price. For companies that are claims-free for three years or more, ask about discounts. Finally, consider increasing the deductible. In general, a high deductible means a lower premium. Never raise the deductible higher than you could pay but consider this factor when choosing a policy.
Evaluating for Commercial Car Insurance
A personal policy can be used to cover some business driving. A commute to meet a client just a few minutes away can be covered by a personal policy. However, make sure to inform your insurance company that you use your vehicle for this purpose.
If you drive your vehicle to travel between work sites, to transport products or people, or to make sales, you need to purchase business car insurance. You also need to purchase commercial insurance if your business owns the vehicle. If you have employees who perform any type of work-related driving such as making deliveries, they will need to be covered by the business plan.
In short, having a commercial insurance plan for your company is probably going to be necessary unless your business doesn’t require the use of a vehicle. Even occasional driving should be considered. Before deciding on a coverage plan, evaluate your business to determine if yourself or your employees drive for work. Take note of how much driving is done, the relative distance, and who in the business drives.
Develop a Company Policy
Even for a small business, you should have a policy in place to reduce business liability. Vehicle crashes are not uncommon and can have serious implications for companies. A company policy that emphasizes safe driving and restricts hazardous behavior on the road is essential.
Anyone employed who may be driving should provide proof of driver’s license and a motor vehicle safety inspection certificate if driving their personal vehicle for work. The policy should also outline the importance of driving attentively and restrict the use of cell phone use. Train all employees on the policy and ensure that they take this seriously.
This policy should also be enforced after it is instated. Even small business owners need to regularly communicate the importance of safe driving to their employees. Any employee who is not in compliance with this policy should not be allowed to drive for the company. Since the employer is responsible for worker safety on the job, enforcing this policy should be a priority. Consider an annual training course for employees on this policy with reinforcement as needed.
Although a company policy does not replace a commercial policy, it does help to protect a company. Both large and small businesses should have a commercial policy in addition to company policies for safe driving.
Driving is an activity that is required for almost all businesses. However, the liability attached to using a personal vehicle for business may often be overlooked. These are a few of the risks associated with a lack of commercial coverage and ways that companies can protect their business and employees.