What You Need To Know Before Starting to Look For A Commercial Auto Insurance

Commercial auto insurance can be a little bit more complicated than personal car cover plans. This is because you can be dealing with multiple vehicles and different drivers. 

What You Need To Know Before Starting to Look For A Commercial Auto Insurance

This is not to say you should be worried, rather, you need to make sure that you are prepared and search for good cheap commercial auto insurance for your business. You need something affordable because of your fleet of vehicles.

With that being said, continue reading to discover everything that you need to know before looking for the best commercial auto insurance for your business.

What is Commercial Car Insurance?

Commercial car insurance is designed for vehicles whereby driving is a key part of the job role. For instance, you may be a driving instructor, delivery driver, Uber driver, or taxi driver.

While it is similar to personal car insurance in a lot of ways, it is designed specifically for cars and vehicles that are used for or by a business. This can include personal vehicles you own and use for business purposes as well as any business vehicles you own.

For instance, commercial auto insurance can cover the following:

  • Company cars
  • Box trucks 
  • Service utility trucks
  • Food trucks
  • Forklifts and other construction vehicles
  • Dump trucks
  • Work vans
  • Delivery vans or trucks

Commercial vehicle insurance can provide both collision and liability cover for business vehicles and the people who drive them. 

Liability coverage is designed to help cover any medical expenses for the other driver or the cost of any repairs if you are involved in an accident.

Collision coverage pays for the medical costs and repairs you experience yourself if you or your vehicle are involved in an accident. 

One of the benefits of taking out commercial car insurance for your company is that your premiums will usually be tax deductible. This means they can be written off as a business expense, which can potentially lower what you owe in taxes for that year.

Personal car insurance premiums are typically not tax deductible, unless the vehicle is being used for tax purposes. Even then, you may not be able to write off the entire premium amount paid. 

Do you need commercial car insurance?

If you run a company that relies on auto vehicles to operate, then it is highly likely that you will need to take out a commercial auto insurance plan to cover your vehicles. Nevertheless, determining whether or not you require commercial insurance if you run a company as a sole proprietor or you are self-employed can be more challenging.

When determining if you need a commercial plan as a sole proprietor, the following elements need to be factored in:

  • What level of coverage your personal auto insurance plan provides
  • The type of vehicle you have
  • How often you use your car for business reasons
  • What type of liability coverage you have with your personal plan in comparison to the level of cover you need based on the activity of your business 

If you already have a personal car insurance plan and you are not sure about whether or not commercial auto insurance is needed, it makes sense to discuss your situation with an insurance broker.

Make sure you have information about what vehicle you have, how you use it for your business, and how often you do so, enabling the agent to accurately assess what is needed for coverage. 

How does commercial auto insurance work?

Commercial auto isnurance is designed for scenarios that are specific to your company and your needs. For instance, you may need to have non-owned auto insurance in place as part of your plan if you have workers who drive your fleet.

If you are self-employed and you drive a vehicle exclusively for business reasons, you need to find a commercial auto insurance plan that will cover this. 

As mentioned above, you can have both collision damage and liability damage as part of your coverage. Your liability coverage limits may be higher than what you would usually get with a personal insurance plan. This is a positive thing if you are concerned about your company being sued because of an incident involving yourself or someone who works for you.

What else does commercial auto insurance cover?

Aside from collision and liability benefits, commercial car insurance can cover a number of other things. This includes the likes of:

  • Employee vehicles that are used for business reasons
  • Rental vehicles used for transporting clients or employees
  • Rental vehicle expenses if you need to rent a temporary replacement vehicle for your company
  • Trailers that are used in conjunction with corporate vehicles
  • Damage caused by underinsured or uninsured drivers
  • Damage relating to weather events, falling objects, vandalism, or theft
  • Personal injury claims or medical payments resulting from an accident 

Your policy could also cover items that you have inside of your business car as well. For instance, if you run a contracting company and you transport supplies or tools in your work vans, these items could be covered if they are stolen. 

Needless to say, every insurance policy is different, so it does depend on the type of insurance plan you take out. This is why it is critical to take the time and effort to read all of the terms. 

How much will commercial auto insurance cost?

The cost of commercial insurance can differ based on a number of different factors. This includes the following:

  • The type of vehicles your company operates
  • The number of vehicles covered
  • The amount of coverage needed

Some research has been conducted into the average cost of commercial auto insurance. According to Insureon, the median cost for commercial auto insurance is $1,704 per annum or $142 per month, assuming a policy limit of $1 million.

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However, it is vital to note that the figure above is simply a median figure. Your costs may be lower or higher, depending on the risk profile of your industry, what is included in your policy, and who is going to be driving the vehicle. 

For instance, should you operate a high-risk company, your premium costs could end up being more costly as a consequence. On the flip side, if your company is lower risk, you could end up paying well below the median for your commercial cover.

When you are assessing the quotes you receive for commercial auto insurance, make sure to get in touch with the insurance provider to discover whether or not they offer any sort of discounts. For instance, some insurance companies are willing to offer reductions if you insure a fleet with a number of vehicles, and so this could end up saving your business a chunk of money. 

How to compare commercial auto insurance companies

If commercial auto insurance is something your business requires, it is imperative to take the time to research the different policy options available to you before you purchase a plan. After all, you need to make sure that you choose a policy that fits into your budget while also offering you the required level of coverage.

When comparing the different policies available, some of the things you need to consider are as follows:

  • Premium discounts
  • Deductible amounts
  • Insurance premiums
  • Covered vehicle types
  • Maximum policy limits 
  • Minimum policy limits
  • Add-on coverage options for rental vehicles or trailers
  • Basic coverage options for collision and liability 

If you already have personal car insurance, it can be a good idea to get in touch with your current provider to find out whether or not they also offer commercial policies. As you are already a loyal customer, they may be willing to offer you a discount if you sign up for a commercial auto insurance policy as well. 

In terms of managing your finances, it can make life a lot easier if you have everything in one place. Just make sure to keep your personal and business insurance costs separate when it comes to your tax and reporting commitments. 

Of course, there are some businesses that specialize in commercial auto insurance only, and you may prefer this because you know that they are experts in their field and will offer you a specialist service that is right for your business. This is especially the case if you heavily rely on vehicles at your business or you have any special requirements.

Find the best commercial auto insurance for your business today

So there you have it: an insight into some of the different points that you need to consider if you are looking for a commercial auto insurance plan for your business. 

We hope that the tips and suggestions we have provided you with above will help you to secure a policy that provides you with ample protection and makes the most sense for your company.

Francis Nwokike

Francis Nwokike is the Founder and Chief Editor of The Total Entrepreneurs. A Social Entrepreneur and experienced Disaster Manager. He loves researching and discussing business trends and providing startups with valuable insights into running a profitable business. He created TTE to share ideas and tips to help entrepreneurs run and grow their businesses.

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