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If you're a business owner with company vehicles, a typical car insurance policy isn't going to cut it. You need a commercial auto insurance policy to be fully protected. Here's an in-depth look at what these are, how they work, and how you can find the best companies for auto insurance.
Commercial car insurance is an auto insurance policy that covers vehicles operated by a business. It's like personal auto insurance in many ways. It helps protect other drivers from damages policyholders or their employees may cause. It can also help business owners pay for vehicle repairs, business equipment, and employees' medical care, if necessary.
Commercial car insurance works similarly to personal auto insurance. Here's how business owners can get a commercial auto insurance quote:
Once a business has purchased a policy, it pays monthly premiums. In the event of a claim, the company fills the insurer in on the details of the accident. The insurance company will investigate and then pay the company according to the policy terms.
The main difference between personal auto insurance and commercial vehicle insurance is how drivers use the cars. Personal insurance covers everyday vehicles drivers use for going to and from work and running errands. Commercial car insurance covers vehicles used specifically for work.
There's a gray area for rideshare and delivery drivers who use their personal vehicles to work in a freelance capacity. For a long time, insurers didn't know how to handle this. Now, several companies offer ridesharing add-ons to personal car insurance policies. Drivers who have one of these are fully covered without a commercial auto insurance policy.
Commercial car insurance policies cover all the same things as a personal auto insurance policy, plus some business-specific needs.
A commercial auto insurance policy should include the following coverage options:
There are many additional coverage options available. It's up to each business to decide what it needs and how much it can afford. A company that transports cargo will want extra coverage for that. Businesses worried about downtime after an accident may want to consider rental car reimbursement with downtime. This pays for businesses to rent a vehicle while its own car is being repaired. If it can't rent a suitable vehicle, the insurer will pay for lost income due to downtime.
Coverage options vary from one insurer to the next. Make a list of which coverage options are most important to you and look for a company that can check all your boxes.
Commercial auto insurance usually covers the following types of vehicles:
If you're not sure whether a policy covers your business's vehicles, reach out to the insurer to check before you buy a policy.
The average car insurance cost for commercial policies is typically between $800 and $2,400 annually, often around 8% to 10% more than personal policies. But the cost varies depending on several factors including:
Commercial auto insurance usually has higher policy limits than personal policies, which can make the cost higher. Insuring multiple drivers and vehicles also drives costs up, particularly if the drivers log a lot of hours on the road.
The only way for a business to know exactly how much a commercial auto insurance policy will cost it is to get quotes and compare them.
A business needs commercial auto insurance if a specialized vehicle (like a semi truck) is routinely driven as an essential part of that business. For example, companies that deliver office supplies or other items to stores need a commercial auto insurance policy because they have to drive often to operate their business. Making a quick trip to the store once every couple of months to buy office supplies probably doesn't warrant a commercial policy.
The line can get a little blurry for self-employed individuals, but the rules are the same. Small business owners using their vehicle to get to and from an office typically only need a personal auto insurance policy. If they're using their car to drive to several job sites throughout the day, that's considered business or commercial use.
All states require some bodily injury and property damage liability coverage, though the minimum amounts vary from state to state. The requirements also depend on the type of vehicle and, for businesses transporting people, the seating capacity of the vehicle.
To find out how much coverage your business must have by law, check with your state's department of transportation.
The best way to find cheap commercial auto insurance is to shop around for quotes. All insurers weigh the components of car insurance applications a little differently. That results in different car insurance quotes. Shopping around is the only way to know which will offer your business the best rate.
Beyond that, look for discounts. Progressive commercial auto insurance, for example, gives business owners a discount for paying their premiums in full rather than paying monthly.
Choosing a higher deductible can also help business owners save. Geico commercial auto insurance gives policyholders a choice of several deductibles, so they can choose the one they're most comfortable with. Higher deductibles mean bigger out-of-pocket costs in the event of a claim, but they also reduce premium costs.
Commercial auto insurance doesn't cover personal or leased vehicles. But some insurers let business owners buy extra coverage for these types of cars. Commercial policies also may not cover claims if employees deliberately damage property or if they were operating under the influence.
Commercial car insurance can be expensive because business owners need higher policy limits to be fully protected. This is especially true for businesses that have many vehicles and drivers.
A commercial vehicle is a vehicle driven routinely for work. Getting to and from the office doesn't count. But hauling gear to job sites or transporting goods or people for hire are considered commercial uses.
The best commercial auto insurance for a business depends on several factors. These include where the company's located, the type of business it is, and how much coverage it needs. The only way to know which is best for you is to get quotes and compare them.
Business auto insurance covers vehicles used in everyday traffic situations, like a carpenter driving their truck to a client's home. Commercial auto insurance covers more specialized vehicles, like semis hauling freight.
Yes, business owners can write off commercial auto insurance on their taxes as long as they have proof of how much they paid for the coverage.
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