Many responsibilities come with running a small business. Auto insurance is one of the most overlooked. You should consider changing your auto insurance coverage from a personal policy to one that covers small businesses.
What is the Difference Between Personal and Commercial Auto Insurances?
Since all states require drivers to have personal car insurance, most of us are familiar with it. Personal auto insurance policies protect us against bodily injuries to the driver, passenger, and other motorists, as well as damage to the vehicle, theft, and liability in the event that we cause an automobile accident while it is being used for personal reasons. It’s easy for small business owners to forget the subtle differences between personal and business automobile use. These scenarios are possible:
- A client is driving you to the airport. You collide with the car and cause injury.
- Your car was stolen while you are transporting high-value goods for your business.
- A worker is driving on a work-related assignment in your car when he collides with another driver.
These tragic events share two commonalities: Your car was involved in the accident and it was being used to conduct business. Personal car insurance policies will not cover these damages. If your employee is driving your car, even though it is covered under personal car insurance, both you and your employer will deny the claim. This leaves you exposed and makes it difficult to pay the cost. You don’t even have to pay for them. You put your business assets at risk when you send your employee to Office Depot for some copy paper.
These damages can be covered by commercial auto insurance.
Is it a good idea to purchase a commercial auto insurance policy for your small business?
Commercial auto insurance is recommended if you plan on using your vehicle for business purposes. Your personal auto insurance policy was purchased by you. You told the underwriter that your vehicle was only for your personal use. This was true in the beginning, but now you have more liability. Also, the underwriter’s prior assessment of risk is invalid. There is more at stake if clients, employees and business goods are in your vehicle. It is also important to note that if your livelihood depends on your car, losing it will have a much greater impact than if they are just driven to the mall.
Commercial Auto Insurance Pricing
Many small-business owners are now self-employed and have retained their personal auto policy simply because it was cheaper. If your insurance company denies you a business-related claim, and you have to pay all damages and repairs out-of-pocket for the rest of the costs, you may be out of business. Small business owners have unique liabilities that will affect the price of your policy. When evaluating your application for a commercial insurance policy, the underwriter will not only look at driving record and credit history. They will also consider factors like the number and type of vehicle that will be driven, the passengers who will be riding in it, the cargo that will be carried in it, and the mileage you intend to drive.
While you may be the owner of a small business, it is important to have insurance that covers you in case something happens. You must ensure that you are covered in the event of a natural disaster.