Do You Need Business Vehicle Insurance

Do You Need Business Vehicle Insurance?

Do employees drive your car?

If so, you could be held liable for damages or injuries if an accident happens. To stay safe, a lot of businesses need to carry commercial auto insurance. However, not all types of companies need a complete commercial policy.

If so, you could be held liable for damages or injuries if an accident happens. To stay safe, a lot of businesses need to carry commercial auto insurance. However, not all types of companies need a complete commercial policy. Read more about commercial insurance.

While some companies need liability coverage, others simply need coverage for physical damages. If you’re not sure what coverages you need, then you’re in the right place.

Don’t leave yourself at risk. Here’s a breakdown of how each works and when you need to purchase business vehicle insurance.

Liability Business Car Insurance

Let’s start with liability coverage for company vehicles. This type of insurance protects businesses from claims made by third parties. The claims can include damages caused by accidents involving the company’s vehicles. In most states, businesses need liability to protect both their employees and property from injuries or damage.

Businesses with liability coverage are required by law to carry a minimum amount of liability insurance. In most states, commercial auto liability insurance must be at least $100,000 per accident.

If you want to run a business that uses vehicles, liability insurance is always wise choice. You especially need commercial coverage when vehicles will be on private property. For instance, if your vehicle will be going from one client’s house to the next, you’ll have increased exposure for liability claims.

Thankfully, the right commercial policy can protect your employees and you. If they’re in an accident while driving for work purposes, the insurance coverages kick in. However, if you don’t have commercial liability, you could be held personally liable for the accident.

Physical Damage Coverage

Next, let’s dive into physical damage coverage. If you only use your car for work purposes, you might not need commercial auto liability coverage. Instead, you may only need physical damage coverage.

Physical damage covers the cost of repairs to your vehicle if damage occurs in an accident. Physical damage does not cover injury or loss of life. However, it does protect your vehicle from damages inflicted by things like hail, flood, fire, vandalism, or theft. Low-risk businesses are prime candidates for physical damage coverage rather than liability insurance.

Questions for Business Owners

To determine whether you need liability coverage or physical damage coverage, ask yourself 3 questions:

  1. Do I own a vehicle that I use only for business purposes?
  2. Is the vehicle occasionally used privately by my employees?
  3. Do I have any employees who drive their vehicles for work purposes?

If you answered yes to all 3 questions, you probably don’t need commercial auto liability insurance. In fact, you may only be eligible for physical damage coverage.

However, it’s important to note that some states require both physical damage and liability coverage, no matter what. Check with your state’s insurance department to make sure.

Do You Qualify for Policy Discounts?

Running a low-risk business can also help you qualify for policy discounts. Insurance providers love bringing on customers that aren’t likely to file a claim.

By doing so, they can then spread or lower risk among a more significant number of clients. It’s worth your time to visit this website to see if you qualify for the low-risk discount.

Safe Driver Discount

If employees are going to be driving your vehicles, make sure you hire drivers with a clean driving record. The safer the driver, the easier it’ll be to secure a low policy rate. You can also check out these hiring tips to ensure the employee stays with your company for a long time.

What should you do when you’re ready to purchase a new policy? Visit an independent agent specializing in business vehicle coverages. They love helping small businesses find the right policies at great prices. Ask about discounts or special offers to save even more on your policy premiums.

Choosing Business Vehicle Insurance Deductibles

If you’re trying to cut down on costs, it might be tempting to raise your deductible. We don’t think this is the right move for most businesses since it increases the amount you’ll owe during an accident.

The deductible amount is the amount you have to pay before coverages kick in. Let’s say you have a $1,000 deductible, and an accident happens. The insurance provider won’t help until you pay the deductible off. In this instance, even though you might have high coverage limits, you’re still out $1,000, ouch!

On top of that, consider any employees who use their cars for work purposes. They may also have a deductible, which means your company is now on the hook for two deductibles instead of one. That’s why we recommend keeping your deductible at a reasonable number.

If you do need a higher limit for commercial auto liability or physical damage coverage, only raise the amount after considering the costs associated with each accident and how much you can afford to pay before help arrives. This will make it easier to stay within budget and prevent an emergency from putting your business in jeopardy.

What Coverages Should Business Owners Carry?

Let’s say you’ve determined that your company needs business vehicle insurance and physical damage. Great! The next step is figuring out which types of additional policies you should have.

You’ll need to determine exactly what kind of business you run, and the types of risks associated with doing so.

An installation service might need workman’s comp insurance and general liability insurance. At the same time, a bakery wouldn’t need worker’s comp but might want to consider product liability protection.

It’s also important to note that some coverages won’t apply when choosing physical damage coverage over liability. For instance, let’s say an employee driving someone else’s car causes an accident. In this situation, the property damage can kick in on the employees policy, while your company will pay for any injuries.

Do You Need Commercial Auto Insurance?

Now you know the difference between business vehicle insurance for liability vs. physical damage. Make sure to check with your state’s insurance department before making any decisions about your policy. Remember to keep your deductible at a reasonable number and hire an independent agent if needed.

Still not sure what coverages you need? Call an insurance provider today and find out once and for all! For more powerful advice, look around the rest of this site.

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Christophe Rude

Christophe Rude

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