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It’s no secret vehicles are EXPENSIVE.
They’re a huge investment and oftentimes someone’s pride and joy. Aside from that, they’re also an essential piece of our economy and something countless businesses rely on to perform their work.
From sole proprietors to landscapers to large-scale delivery businesses, vehicles are the backbone of business operations and may be our only means of transporting ourselves, our employees, and our products from one place to another.
With that being said, vehicles can also be dangerous and they’re only as safe as the people driving them. So, if you’re wondering how you can protect your business (and your vehicles) in the case of an accident, theft, vandalism, or natural disaster… you’re in the right place.
In this article, I cover how business vehicle insurance works, what it covers, what it doesn’t cover, how much you can expect to pay for it, and how to get started choosing the right policy for your business.
So, let’s dive in!
An Introduction to Business Vehicle Insurance
Business vehicle insurance is like personal auto insurance for company vehicles but with higher policy limits. This includes trucks, vans, trailers, cars, and any other type of vehicle you or your employees use for your business.
Before we dive deeper, let’s look at a quick example.
One of your employees rear-ends someone in rush hour traffic on their way back from a job site. It doesn’t matter if your employee is driving their personal vehicle or a company vehicle. The other party can still file a lawsuit against your business and hold it liable for damages.
If your employee is driving their own vehicle, the other party can come after you for damages or medical expenses beyond the limit of your employee’s personal insurance coverage.
On the other hand, if your employee is driving a company vehicle at the time of the accident, your business is responsible for paying damages and any medical expenses that occur as a result. Regardless of who owns the vehicle, these expenses can add up fast.
Without business vehicle insurance, you have to pay them out of your own pocket.
But, a business vehicle insurance policy can help cover medical costs and property damages that occur if your employee is at fault for the accident. It may also help cover the cost of damages to the insured vehicle as well.
Note: The specific types of coverage and the vehicles covered depend on your policy and specific needs. So, you should always talk with an insurance specialist to find the right vehicle insurance policy for your business.
How Does Business Vehicle Insurance Protect a Business?
Business vehicle insurance helps cover the financial liability placed on your business in the case of a car accident while doing anything related to your business. This includes activities like:
- Delivering products from one location to another
- Driving to a work site or other third-party property
- Going to a business meeting across town
- Meeting with a current or potential client
- Driving employees from one job site to another
Covering your financial liability to third parties is only one piece of the puzzle. Business vehicle insurance can also cover damages or loss of your company vehicles as a result of an accident, theft, fire, or other natural disasters.
Furthermore, there are three types of vehicles your business vehicle insurance may provide coverage for depending on the type of policy you choose. These different types of coverage include:
- Only company vehicles you own
- Only company vehicles you own or lease
- All vehicles used for business (including personal vehicles)
The third type is most common and recommended for most business owners as it covers you and your employee’s personal vehicles used for business purposes AND company vehicles you own or lease.
With that being said, it’s important to talk to an insurance specialist to understand the types of coverage you need for your business.
Who Needs Business Vehicle Insurance?
If your business leases or owns company vehicles, you need business vehicle insurance because personal car insurance doesn’t apply in this situation. On the other hand, if you use your personal vehicle for business, you may also want to consider business vehicle insurance.
But it depends on how your personal vehicle is used and who drives it. If you’re the only person driving your car and go to less than two work-sites a day, your personal car insurance policy may provide enough coverage.
However, if you have several employees using their own vehicles to do business-related activities, you should consider purchasing a business vehicle policy that covers all vehicles used for your business.
This helps protect you and your business if one of your employees is at fault for an accident while performing work-related activities and their personal car insurance policy doesn’t cover all the damages and liability owed.
Lastly, if your vehicle is on the large or heavy side (i.e. like a semi or tow truck), consider purchasing business vehicle insurance. These vehicles tend to cause more damage so higher policy limits may be required in this situation.
What Does Business Vehicle Insurance Cover?
There isn’t a one-size-fits-all business vehicle insurance policy. Each business needs different types of coverage so it’s important to talk to an insurance specialist about the types of vehicles you want to cover and the types of coverage you need.
With that being said, most standard business vehicle insurance policies cover:
- Auto accidents where you (or one of your employees) is at fault
- Third-party medical expenses that occur as a result of the accident
- Physical damages to the insured vehicle caused by theft, a crash, or natural disaster
- Damage to the insured vehicle caused by an accident with an uninsured driver
The vehicles covered under your policy (i.e. company vehicles, personal vehicles used for business, or leased vehicles) depend on the type of coverage you choose.
What Doesn’t Business Vehicle Insurance Cover?
Understanding what business vehicle insurance doesn’t cover is as important as knowing what it does. While each policy is unique, most business vehicle insurance policies don’t cover things like:
- Damage to your office building, fences, signs, etc. (see business property insurance)
- Bodily injury or damages as a result of products you sell (see product liability insurance)
- Negligence or oversight claims (see professional liability insurance)
- Injuries that occur at your place of business (see general liability insurance)
- Property in transit from one place to another (inland marine insurance)
- Non-vehicle property damage
How Much Does Business Vehicle Insurance Cost?
The median cost of business vehicle insurance with a limit of $1 million is $142 per month. Many business owners (44%) can expect to pay less than $1,500 a year. And most business owners (78%) can expect to pay less than $3,000 per year.
With that being said, your monthly premium depends on a variety of factors and no two business vehicle insurance policies are the same. So, it’s important to talk with a specialist who can help determine what should and shouldn’t be included in your policy.
How Is it Calculated?
Because there are countless variants between business vehicle insurance policies, your monthly premium will vary depending on a number of factors. Some of these factors include:
- Who owns the vehicles you want to insure
- How many people drive these vehicles
- How often these vehicles are used
- The overall value of the vehicles you want to cover
- Your industry (i.e. higher-travel industries should expect to pay more)
- Coverage limits
- Which state you’re in
How Do I Get Business Vehicle Insurance?
Whether you own several company vehicles, have employees who use their own vehicles, or are a one-person show using your personal vehicle for your business, business vehicle insurance is something you need to carefully consider.
And with so many variants, different types of coverage, and insurance providers to choose from, it’s not always easy to know where to start. So, I recommend starting with a comparison tool that gives you a side-by-side look at your options.
CoverWallet lets you see the best policies for your industry and location all in one place so you can easily choose the right plan and coverage for your business.
Click here to start your FREE comparison today!