Small business auto insurance is a necessity if you use work vehicles for your operations. Learn about the different types of coverage and how the price is calculated.
What Is Commercial Auto Insurance?
If one of your business vehicles is involved in an accident, commercial auto insurance provides coverage for medical expenses, legal bills, and property damage. When you own a company, small business auto insurance is vital. Protecting your automobiles, trucks, vans, and other work vehicles should be one of your priorities since accidents can occur at any time. If you get in an accident but don't have insurance, you might find yourself facing massive bills that you simply cannot pay. Plus, losing your work vehicle could ruin your company financially if you rely on it for your business.
To prevent these types of risks, you should carry small business auto insurance. One type is commercial auto insurance, and almost every state requires business-owned vehicles to carry it. Virginia and New Hampshire are the only states that don't require it, but drivers remain responsible for damages.
Commercial auto insurance covers property damage and medical payments related to an accident as well as legal expenses if you're sued. Such a policy might also cover vandalism and theft, and some also cover legal costs if one of your employees gets into an accident.
However, this type of policy doesn't cover personal vehicles, so if your employees often drive personal vehicles for business, you might want to buy hired and non-owned auto insurance (HNOA). This type of insurance provides liability coverage for vehicles your company uses but doesn't own.
Commercial auto insurance policies usually have higher coverage limits due to the increased risk. On the other hand, personal auto insurance policies cover claims dealing with personal use, including commuting. They usually cost less and have lower limits. However, if you get into an accident in your personal vehicle while you're working, your insurance company might refuse the claim, so it's best to have some type of commercial insurance as well.
What Factors into Commercial Auto Insurance Costs?
According to Insureon , commercial auto insurance costs a median of $142 each month. Just like regular auto insurance policies, a commercial auto insurance policy's cost varies depending on several factors. Some of these factors include the following:
- Vehicle types
- Number of vehicles
- Type of risk involved
- History of claims
- Employee driving records
- Policy deductible
What Types of Coverage Are Available?
Just like traditional auto insurance, commercial auto insurance offers different types of coverage. Some of the coverage you should consider includes the following:
- Liability insurance. Most states make this type of coverage mandatory. It protects other people if your work vehicle causes an accident. Bodily injury, which pays for medical bills and related expenses, and property damage, which covers the cost of repairs to the other vehicle, are included in this type of coverage.
- Medical payments. This type of coverage pays for the cost of medical care and related expenses for your employees and their passengers. Not all regions offer this type of coverage, so ask your agent for more information.
- Physical damage insurance. This type of policy protects your work vehicle and can prevent losses. If you lease your vehicle or are still paying it off, consider carrying this type of coverage. Comprehensive protection gives you coverage against weather-related incidents and vandalism, while collision damage protection covers you if the vehicle hits another object or has damage from overturning. Specified peril gives you additional coverage from fire and theft.
- Uninsured or underinsured motorist. If your work vehicle is involved in an accident caused by an uninsured or underinsured motorist, you might end up paying the bill. This policy covers the damage, even if the other driver is at fault.
Some companies might offer a business owners policy (BOP) that combines several types of coverage into a single policy. Many BOPs have property and commercial general liability coverage as well as several smaller amounts for umbrella coverage. Combining these coverages into one policy can help you save money on your overall premiums.
As a business, you can also choose your policy's coverage limit, which will determine your monthly, semi-annual, or annual payment. According to CoverWallet, commercial auto liability coverage limits are usually between $500,000 and $1,000,000.
If you operate a business that places your drivers at a greater risk for accidents or suffering damage to the company vehicle, you might purchase a policy with a larger limit.
What Don't Small Business Auto Insurance Policies Cover?
Keep in mind that there are several instances when a small auto insurance policy won't cover incidents. Examples of some of these include the following:
- An accident while committing a crime
- Damage from moving company vehicles
- Damage occurring during civil disturbances
What Are Some of the Best Small Business Insurance Companies?
With so many major car insurance companies available, you might wonder which ones offer small business auto insurance. According to Investopedia, these are three of the best:
- State Farm. This company offers several types of small business auto insurance coverage and sells insurance in every state. State Farm also offers business insurance designed for certain industries, such as retailers, contractors, and professional services.
- Hiscox. This independent contractor has products priced for companies that have fewer than five employees. Although it's not a U.S.-based company, it operates in every state and is a large international insurer. It also has a large lineup of business insurance products, such as professional liability, cyber liability, and business owners' policies.
- Nationwide. This business insurance carrier concentrates on straightforward insurance options, which is ideal if you own a high-risk company. It has agents in every state except for Alaska and Hawaii. The company also offers umbrella insurance, workers' compensation, and business property coverage.
If you own a business, small business auto insurance policies can provide the coverage you need to protect your company and employees in case of an auto accident. Make sure you have the right coverage, otherwise you're putting your business at risk.
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