1. Commercial vs. Personal: Know the Difference
If your company name is on the vehicle title, you’ll need to buy commercial auto insurance. If the vehicle is owned by an individual, you must purchase personal auto insurance. Know this: Commercial auto insurance is typically two to three times more expensive than personal auto insurance. Why? The risk is greater since several individuals are driving for a company, says Susan Combs, president of Combs & Company LLC, an insurance brokerage firm in New York City.
“If you have a few employees driving as representatives of the company, that’s a good time to think about making the transition [to commercial insurance],” Combs says.
Even though commercial auto insurance premiums are more expensive, commercial insurance offers more coverage. Business interruption coverage is also only available with commercial auto insurance, which means you can be reimbursed for income lost while an employee is recovering from an accident.
2. Get the Most Bang for your Buck
Looking to get a good rate on auto insurance? These factors will influence the price you’re quoted:
- The number of auto insurance claims your company has had in the past.
- The motor vehicle report – or driving record – for all drivers within the company.
- The age of the drivers.
- The safety of the location where you keep the vehicle, such as a garage vs. on the street.
- The number of security mechanism you have in place, which could include anti-theft devices or GM’s OnStar system.
“The safer the insurance carriers feel, the better rates they’re going to give you,” says Combs, adding that the type of vehicle you drive affects your insurance rates. For example, a Honda will be rated lower than a Bentley.
3. How to Cover Non-Owned Vehicles
Even if your company doesn’t own vehicles, coverage is important if your employees are driving their own cars for business purposes, whether every day or once in a while. Combs recommends adding “hired/non-owned” auto insurance coverage, a component of general liability insurance. (You typically need to ask to add it.) This protects your company and employees if an employee gets injured, or in the event of a collision. It can also cover car rentals for employees who travel for business.
4. Tailor Your Insurance
Insurance policies through Progressive, State Farm, Allstate and Geico can be tailored to your business, whether you need personal or commercial auto insurance. Progressive, for example, divides small businesses into industry-specific categories like carpenters and catering, and designs insurance packages according to the type of vehicle you have (such as a van or a concession trailer). Talk to your local agent for details.