Driving any vehicle on the roads requires you to have a driving license and an auto insurance policy. With over 12 million car accidents every year, getting in a car accident is more common than you think. Out of these 12 million car accidents, almost 6 million cars are commercial cars conducting some business. Since businesses rely on their vehicles so much, an accident can cause a lot of damage to the business.
This is why ensuring your vehicles are used for commercial purposes is so important. And to help you make the right decision, this article will describe in detail everything you need to know about business car insurance policies, what they are, why they are so important, the coverage they offer, and the cost of getting one. Let’s get started.
Business Car Insurance: What Makes Them Different?
Business car insurance policies are very similar to general car insurance policies. They are almost identical in coverage and there’s nothing unique in what business car insurance offers. So what makes them different?
Let’s say that you have just one car that is covered under general car insurance. You decide to start a pizza place and register it as a business. While using your car to deliver the pizza, the car gets in an accident and the damage is substantial to the other car. But there’s nothing to worry about since the cost of repairs is under your coverage limit.
The problem here is that the moment an insurance company will find out that the accident occurred while you were conducting business or using the car for commercial purposes, not only can they legally deny your insurance claim, but they can also drop you from the policy. Insurance companies will deny any insurance claims made if you use your car for commercial purposes. But why?
What Makes Business Use of Cars Different?
The reason why companies require you to get a commercial auto insurance policy is because of the higher risk. For general usage, people use their cars for commuting to work, going to the mall, and other general uses. But when it comes to business, commercial vehicles are driven more, they have schedules to follow, and are driven by employees of the business.
All these factors increase the risk of road accidents and insurance companies do not want that. This is why almost every insurance company offers both general and commercial car insurance policies. It does not matter how large or small your business is, if it is a registered business, you need to get a commercial car insurance policy for any car that’s used to run your business.
What Commercial Car Insurance Covers
Commercial car insurance coverage is almost identical to general car insurance. These policies offer liability coverage, collision coverage, comprehensive coverage, and other add-ons such as uninsured motorist coverage.
Liability coverage policy includes bodily injury liability per person, bodily injury liability per accident, and property damage liability. So if your commercial car hits another car or person or someone’s property, liability coverage will pay for the cost of repairs and medical treatments of the other person.
The same is true for collision and comprehensive insurance policies. A collision insurance policy will cover the cost of repairs if your car gets in an accident during business hours. Comprehensive insurance will cover any cost of repairs due to natural calamities, theft, fire, etc.
One major difference between general auto insurance and commercial auto insurance is the coverage limit. Commercial auto insurance policies have a much higher coverage limit compared to general auto insurance.
This also means that business car insurance policies are more expensive as well. It is recommended to compare as many business car insurance policies before getting one to make sure you get the best policy at the best price and pay the lowest premiums for a good coverage limit.
Cost of Business Car Insurance
The most important question of all is how much does business car insurance cost? It is impossible to say the exact figure because there are a lot of factors that affect the cost. Different companies consider different factors while deciding the price, but here are some of the factors that are surely considered:
- Number of vehicles in your business: How many cars your business owns impacts the price of the business car policy. Usually, more vehicles will lead to more costs.
- Types of vehicles: This is another important factor in deciding the price of the policy. Newer, larger vehicles will cost more to insure, while small cars and delivery mopeds will cost substantially less.
- Coverage: The insurance coverage limit will directly affect the cost of the insurance policy. A higher coverage limit means higher costs.
- Driving frequency: The type of business you own and the purpose of the vehicles is also major factor in determining the cost. Businesses that use vehicles more such as transport, etc will be charged more. It depends on the mileage of the commercial vehicles as well.
- Insurance claims and location: Previous insurance claims and the location of your business will affect the cost of the policy. If your business is located in an area where the rate of crime and accidents is high, then the cost of the policy will be higher too.
- Your and your drivers’ driving record: Driving records will also affect the insurance rates, even for commercial car policies. Drivers will have poor driving records and traffic violations will increase the cost of the insurance policy.
If you are looking for a median figure (and it is a ballpark figure), for coverage of $1 million, the cost of commercial car insurance would be somewhere between $1,800 to $2,000 per year. It can go down to below $1,500 for some small businesses and can climb as high as $3,000 for large-scale businesses. To get the exact quote, choose the right insurance company and contact them.