Having adequate auto insurance is crucial for business owners and operators. Always make sure you have adequate coverage for all of your company's vehicles when shopping for car insurance. Commercial auto insurance is different from standard auto insurance because it protects vehicles used for business purposes. A clearer picture of what is covered by business insurance, how much it costs, and a quote for coverage will make managing your company much less of a headache.
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What Is Business Car Insurance?
A Business Automobile Policy (BAP) or Business Auto Coverage Form (BCF) is the legal document that specifies the terms of an organization's auto insurance coverage. Vehicles driven for business purposes are protected by this insurance policy. Trucks, vans, or cars owned or leased by the company and driven by employees on company business are all protected by a BAP, per Investopedia. Regular commuting to the same location is not covered by business auto insurance, but driving to and from multiple offices or across the country for work is.
What Kinds of Coverage Can I Obtain With a Commercial Auto Insurance Policy?
Property damage and liability coverage should be included in your BAP. Depending on whether you are leasing or financing the vehicle, you may be required to purchase a different type of coverage.
- Collision: collision coverage is only available in conjunction with comprehensive and liability coverages. Collision coverage reimburses the insured for vehicle damage resulting from a collision with a stationary object, such as a fence or telephone pole. Falling objects and theft are not covered by collision. Even if you are at fault, collision insurance will cover an accident with another vehicle or a structure.
- Extensive: Extensive coverage protects the vehicle against damage caused by unforeseen circumstances. This includes theft, vandalism, natural disasters such as tornadoes, hurricanes, and earthquakes, hitting an animal in the road, and falling objects such as tree branches and hail.
- Liability: Liability coverage compensates for injuries to third parties and property damage to third parties. If a driver for your business injures someone in a traffic accident and that person files a claim against your business, liability insurance will help pay for the claim. Most states mandate liability coverage as a minimum for automobile insurance. You can choose your deductible based on your level of risk, as liability insurance has no mandatory deductible. In some states, your BAP liability coverage will not apply if a driver is convicted of reckless driving or driving under the influence.
Do I Need Commercial Auto Insurance?
If you use your vehicle for business purposes, excluding your commute, you will need business insurance. These are some of the most common instances in which a BAP would be required:
- If a corporation or partnership owns or leases a vehicle, this section applies.
- High mileage for business: If you drive thousands of miles for work, including using your vehicle for ridesharing or delivery, you should consider a mileage reimbursement program.
- Weight or load capacity of the vehicle: If your vehicle weighs over 10,000 pounds or can carry over 2,000 pounds of cargo, you must obtain a permit.
- Regular travel to different locations: If you frequently travel to numerous different locations, such as out of state or to numerous cities, job sites, or offices, you may want to consider investing in a portable wifi hotspot.
- Carsharing or shuttle service: If it is part of your job to drive coworkers or management to meetings, to and from the office, or to multiple job sites, you may want to consider renting a car.
Even if none of these apply to you, you may still require business auto insurance if you frequently visit the post office, bank, or training courses for work.
How much does commercial auto insurance cost?
Due to the fact that commercial auto insurance policies offer different coverage than individual policies, they are typically more expensive. This is because you are driving longer distances and on unfamiliar roads more frequently, which increases risk factors. Here are some factors that will affect the price of your BAP:
- Driving histories of company drivers
- Insurance deductible
- Policy limits
- The number of vehicles you operate
- The make and value of each vehicle
- Your degree of danger
- Your past insurance claims
The average monthly cost of business auto insurance is $142. Almost half (44%) of Insureon's small business clients have policies that cost less than $125 per month.
What is the distinction between personal and commercial auto insurance?
Commercial vehicles are covered by business automobile insurance policies. Typically, these vehicles travel longer distances and more frequently than personal vehicles. BAPs typically have higher limits due to the increased risk associated with higher frequency. Personal auto insurance covers only claims associated with personal use, such as commuting and non-business travel. Their limits are lower, and they cost less on average. If you do not have a BAP and are involved in an accident while driving for work, your insurance provider may deny your claim. Even if they drive for personal reasons the majority of the time, sole proprietors who use their own vehicle for business should obtain business auto insurance.
What is Required to Receive a Quote?
By having the necessary information readily available, receiving an accurate quote can be made even quicker. Here are some of the necessities:
- Estimated mileage per year
- Vehicle registration information
- Any claims within the past five years regarding occupation, job title, or employment status
- The license numbers of any drivers you wish to include on the policy, as well as their personal information.
- The year, make, and model of the vehicle or vehicles covered by the policy.
These are the most common items you will need to provide to your insurance company in order to receive a quote, but depending on the company, they may request additional or different information. In either case, the majority of information is readily accessible, and obtaining an online quote takes mere seconds.
It is now one of the simplest and most convenient ways to provide business owners and employee drivers with peace of mind. Start getting insured and on the road quickly and affordably today by requesting a quote online.
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