Business Auto Insurance – Who needs to carry it and what does it cover?

Written by Guest Blogger – Steven Weinberg

Steven writes at where he also maintains a weekly column.

Many are surprised to find that business auto insurance is actually very similar to regular private auto insurance. There’s actually not a lot of differences between the two when it comes to coverage and function, although there are some reasons that a car should definitely be insured with business car insurance versus private auto insurance. Business auto insurance is mainly comprised of liability coverage: bodily injury and property damage, just like a private auto insurance policy. There are other types of coverage available on a commercial auto policy.

When one is attempting to buy auto insurance, often the insurance agency will ask whether the vehicle is used as a private auto or if the auto is used in any kind business or if the auto belongs to a business. Most of all, business car insurance is absolute necessary for cars that belong to a company and that are used for commercial purposes (such as a real estate agent driving clients from property to property, a pizza delivery driver, contractors, and other professions), often including the self employed.

The main aim of business auto insurance versus private auto insurance is so that the company car is being used for is freed of financial obligations that could be presented if an accident should occur and the driver who owns the vehicle causes an accident. Additionally, it helps alleviate the responsibility associated with a company being sued over an accident, and certainly helps to alleviate the stress of an individual being sued for an at-fault accident that happened with a commercial vehicle, making the individual responsible for everything instead of the company.

Who needs business auto insurance and why?

Not every company is required to have commercial car insurance, nor does every insurance company require that all ‘commercial’ related cars be insured with commercial car insurance, and this can also be determined by the insured’s local laws and regulations. For example, companies that have telecommute or work at home jobs don’t always require that the employee carry business auto insurance, largely because the worker is at a minimum risk since the car isn’t being driven as much as well as not being used in the course of business, so the number of accidents, claims, and violations are at a much lesser rate and risk. Additionally, not all insurers will require that a person carry a commercial auto policy.

Deciding what kind of policy one needs is largely dependent not only on whether a company requires commercial insurance, but also on other factors that one should ask themselves if they think they may need to have commercial auto insurance.

Here are some of the things that should be taken into consideration when trying to figure out what kind of policy to buy:

*What do I use the vehicle for the majority of the time?

*Do I own the vehicle outright or does an employer or other company own it as well?

*How do I use the vehicle the majority of the time? For personal reasons or for commercial reasons?

*Do I ever have clients or customers in the vehicle with me?

*Do I carry valuable company property with me in the vehicle?

*Would the company I work for hold me legally liable for any expenses should I cause an accident?

If most of the answers to those questions were yes or if you use a vehicle the majority of the time for work purposes, then business auto insurance is most likely the right answer.

Types of Coverage

After you’ve decided whether or not you need commercial auto insurance, you’ll be able to figure out the details of the policy with the insurance company, and they’ll let you know what coverage would be best for you with your line of work in mind. As previously mentioned, most insurance companies offer a very similar policy for business auto insurance as they do private auto insurance, including liability coverage, full coverage, and other types of coverage, such as:

*Bodily Injury Liability: pays for another person’s medical expenses if you caused an accident. This coverage also helps cover the amounts of any lawsuits brought by the other party.

*Property Damage Liability: pays for the property damage caused if you caused an accident, and is for repairing or replacing any kind of property you’ve done damage to, including cars, homes, fences, and more types of personal property.

*Comprehensive Coverage: Pays for damage to your vehicle for repairing or replacing something from damage from something you have no control over, such as theft, vandalism, broken glass, or damage from animals.

*Collision Coverage: Pays for damage to your auto if you collide with another vehicle or object.

*Medical Payments: Helps pay for your medical expenses if injured in an accident, regardless of who is at fault.

*Rental coverage: Helps cover the costs of a rental car if you have an accident and the car is in the shop being repaired, regardless of who is at fault.

*Coverage for valuable property inside the vehicle: Such as if you worked for a surveying company and carried around surveying equipment so if it were damaged in an accident, there would be coverage to repair or replace it.

While it may be of your best interest, or even required by an employer or by your insurance company, having business auto insurance is typically more expensive than private auto insurance. However, spending the extra money for coverage is well worth it since the risks of being sued or being held liable for costs, either by your company or by the other person if a lawsuit starts, is much higher than when you drive with private auto insurance.

One perk though is that most businesses can deduct their insurance from their taxes if they have to have commercial auto insurance. Additionally, it’s important to remember though that while it is usually more expensive, always make sure you’re carrying adequate coverage that you feel is enough to protect your business and ultimately your investments.

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Auto Upkeep 4th Edition

Michael Gray

Mike has roots in the automotive service industry. He began diagnosing and fixing cars at a young age in his family’s service station. He has worked in automotive parts supply stores, towing companies, and service facilities. After graduating from St. Cloud State University (MN) with a Bachelor’s degree, he implemented and taught a basic car care program at the high school level. During work on his Master’s degree at Illinois State University (IL), he was a curriculum specialist on a National Science Foundation project where he co-authored ten integrated mathematics, science, and technology books designed for team teaching. Mike has also supervised teachers in Career and Technology Education as a school system administrator.

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