Consider purchasing commercial auto insurance if you use a vehicle for business purposes, such as to deliver goods or provide customer support. When using a company automobile or a personal car for work, your employees and you are covered by car insurance for business use. You’re also covered when you use your own vehicle for business-related tasks, such as visiting customers or going to meetings.
Table of Contents
- What Is Business Car Insurance?
- What Does Business Car Insurance Cover?
- How Much Does Business Car Insurance Cost?
- What Makes Commercial Car Insurance Cost More Than Personal Car Insurance?
- Will My Personal Auto Policy Cover Business Use?
- Do I Need Business Auto Insurance?
- How Do I Get Business Car Insurance?
- If You Have Employees Who Drive Company Cars
- If You Use Your Own Car for Business Tasks
- If You Drive for a Ride-Hailing Service
- Final Thought
What Is Business Car Insurance?
Commercial car insurance is a policy you can purchase to cover vehicles you use for business purposes. If you have employees who drive company cars or if you use your own vehicle for business tasks, commercial auto insurance can protect you from financial losses resulting from accidents or theft.
What Does Business Car Insurance Cover?
Commercial car insurance policies typically cover the following:
Bodily Injury And Property Damage Liability
This coverage protects you from financial responsibility if your employees cause an accident that injures other people or damages their property.
Medical Payments Or Personal Injury Protection
This coverage helps pay for medical expenses and lost wages if your employees are injured in a car accident, regardless of who is at fault.
Collision And Comprehensive
These optional coverages help pay to repair or replace your company car if it’s damaged in an accident or stolen.
Uninsured And Underinsured Motorists
This coverage protects you from financial responsibility if your employees are injured by a driver who doesn’t have insurance or doesn’t have enough insurance to cover the costs of the accident.
This optional coverage helps pay for a rental car if your company car is damaged in an accident.
How Much Does Business Car Insurance Cost?
The cost of commercial auto insurance varies depending on a number of factors, including the type of business you operate, the vehicles you use, the number of vehicles you need to insure, the value of your vehicles and the driving records of your employees, and the amount of coverage you need.
Although there isn’t a set price for a small company or commercial auto insurance, bear in mind that in general, you should anticipate paying more for your premiums if you use your automobile for business or commercial purposes as opposed to for personal ones.
When shopping for commercial auto insurance, be sure to compare apples to apples. Some insurance companies offer lower rates but have higher deductibles or exclude certain types of coverage. Others may offer discounts for safety features on your vehicles or for completing a driver training course.
Because the business owner has more coverage for their company vehicle than they have for their personal vehicle, commercial auto insurance is generally more expensive. Commercial auto insurance policies typically cover a minimum of $500,000 and frequently more than $1,000,000.
What Makes Commercial Car Insurance Cost More Than Personal Car Insurance?
There are a number of reasons commercial car insurance is more expensive than personal car insurance. One reason is that business use cars are usually on the road more than personal vehicles, which means there’s a greater chance of an accident or theft. In addition, business use vehicles are often worth more than personal vehicles, so repairs or replacement costs can be higher.
Finally, business owners are typically held to a higher standard than individuals when it comes to car insurance, so insurers may charge more for commercial policies to help offset the increased risk.
Will My Personal Auto Policy Cover Business Use?
Most personal auto insurance policies exclude coverage for business use, which means you probably won’t be covered if you use your personal vehicle for business purposes. If you’re not sure whether your policy covers business use, check with your insurer or read your policy documents carefully.
Do I Need Business Auto Insurance?
You may need commercial auto insurance if you use your vehicle for business purposes, even if you only use it occasionally. For example, you may need commercial auto insurance if you:
- Deliver goods or packages as part of your job
- Drive clients or customers around as part of your job
- Use your vehicle to travel to multiple work sites
- Are an Uber or Lyft driver
If you’re not sure whether you need commercial auto insurance, check with your insurer or an insurance agent who specializes in commercial auto coverage.
How Do I Get Business Car Insurance?
You can purchase commercial car insurance from most major auto insurance companies. Be sure to compare policies and rates from several insurers before you make a decision. You may also be able to get a discount on your commercial car insurance if you purchase other types of insurance, such as business liability insurance, from the same company.
If You Have Employees Who Drive Company Cars
If you have employees who drive company cars, you’ll need to purchase commercial auto insurance. Your employees are covered by your policy while they’re driving for work-related purposes. You may also be required to carry workers’ compensation insurance if you have employees.
If You Use Your Own Car for Business Tasks
If you use your own car for business tasks, such as visiting customers or going to meetings, you need to let your personal auto insurer know. Many insurers will automatically extend coverage to business use, but some may require you to purchase a separate commercial auto insurance policy.
If You Drive for a Ride-Hailing Service
If you drive for a ride-hailing service, such as Uber or Lyft, you need to purchase commercial auto insurance. Your personal auto insurer will likely not cover you if you’re using your car for business purposes.
If you use a car for business purposes, you may be required by law to purchase commercial auto insurance. In some states, using a personal vehicle for business purposes voids your personal auto insurance policy. You could be held personally liable for any damages or injuries that occur while you are using your vehicle for business purposes.
Commercial auto insurance typically costs more than personal auto insurance, but the extra cost is worth it to protect your business from potential liability. If you are found to be at fault in an accident while using your vehicle for business purposes, your commercial auto insurance policy will pay for the damages to the other vehicle and any injuries that occur. Your personal auto insurance policy would not provide this coverage.
Be sure to check with your state’s insurance requirements before using a personal vehicle for business purposes. You may also want to talk to your insurance agent about adding a rider to your personal auto insurance policy to extend coverage to business use.