Purchasing commercial auto insurance is much different than your personal auto insurance.
Working with a great many business owners, we often find that many business owners are misinformed about vehicle insurance. It is important to review vehicle ownership and use of both business owned and personal vehicles that may be used for business.
Failure to understand how commercial auto insurance works can be costly and expensive and may result in an accident or damage not covered. Business use of a personal vehicle is different from every insurance carrier. Whether you’re an independent contractor or a sole proprietor, discuss coverage with your insurance professional. Even if your auto policy offers coverage, it probably makes sense to raise your liability coverage. Your insurance professional is the key to determining what coverage is needed.
If multiple vehicles are owned or leased by a business, it is necessary to purchase fleet insurance. Depending on the type of company, the number of vehicles differs to qualify for a fleet insurance policy. Remember that trailers and equipment may also qualify as part of the fleet policy. Qualifying for fleet insurance generally reduces the per vehicle cost for coverage. There are commercial auto policies available for businesses which don’t qualify for fleet coverage.
Many variables play into the cost of commercial auto insurance. Makes, models, features, as well as purpose and driving records all factor in to determining the premium. In fact, one poor driving record can increase the premium or even have coverage denied. As your business grows, it is important to screen driving records as part of the hiring process. Business location and mileage estimates will also factor in to determining the premium.
Vehicles traveling longer distances will be charged higher premiums. Care should be taken into choosing vehicles and vehicle replacement. High end cars are expensive to insure due to high cost replacement parts. Mid-size sedans tend to have lower premiums. The same holds for trucks and vans.
As a rule, the more specialized or equipment, the higher the premium will run. It’s important to review upcoming purchases with your insurance professional first, so you don’t get any shock down the road with a jump in insurance premiums. Use your agent as a resource to help guide you through purchasing and adding vehicles without huge spikes in your insurance costs.