Vehicles play a big role in day-to-day business operations. Picking up supplies, transporting people, delivering goods and services, complimentary shuttles for hotel guests — the reasons are many. Yet so are your potential liabilities. It’s key to ensure that the vehicles that keep your business moving have the right protection. That’s where company car insurance comes in.
Company car insurance is a must when considering several scenarios. If your business owns vehicles titled in your company’s name, those commercial vehicles need company car insurance for comprehensive coverage. As a business owner, if your vehicle is used for both company and personal use, a company car insurance policy is necessary.
Company car insurance covers vehicles that a business owns, as well as those that your business leases and those simply used for the business (i.e., those you don’t own or lease).
Important considerations
If your employee uses his or her car for business, ensure they have adequate liability coverage with their personal auto policy. This is because if your employee uses his or her car to run an errand for your business and gets into an accident, your employee’s insurance company will pay the claim. However, the other driver could sue your business for additional damages. In this case, a company car policy — with an added non-owned auto liability endorsement — would protect your company’s assets.
Vehicles used for commuting don’t need to be covered by a company policy. However, if they are used to transport people, goods, or equipment for work, then a company car insurance policy is necessary.
Lastly, consider the vehicle make and model. Some vehicles, regardless of how they’re used or who owns them, need to be covered by company insurance — including trucks over 10,000 pounds or with load capacities over 2,000 pounds and vehicles with commercial modifications, like a ladder rack.
Insurance experts agree that in just about every situation, company car insurance is a practical necessity for business. Why? If an employee is considered negligent or at fault in a car accident involving a vehicle that is used for business, the demands for payment can be rather significant. A company car insurance policy could lessen financial damage to your business.
Physical damage coverage
A liability-only company car insurance policy will cover injuries and property damage that others suffer in an accident that you or your employee cause. Yet, this may not be enough to protect your business from financial losses due to an accident. For this reason, you may also want to purchase physical damage coverage as part of your policy.
Physical damage coverage will help pay to repair your business vehicle if damaged by theft, weather events, or a collision. Additionally, it can help pay for lawsuit costs, like medical expenses and legal fees. A company car insurance policy offers three options for physical damage coverage: comprehensive, specified causes of loss, and collision.
Basic versus additional coverage
What’s the real difference between basic company car insurance and additional coverage? Basic coverage includes liability, medical payment/personal injury, collision, comprehensive and uninsured/underinsured motorist. Additional coverage options include trailer interchange, hired vehicle, and non-owned vehicle.
Offsetting risk and lost business
Purchasing company car insurance can be valuable in keeping your business costs down. This is because it’s a way to transfer risk. In fact, you may want to consider more than just accident-related costs. For instance, if a business doesn’t have a replacement vehicle to deliver goods, it could experience business interruption, which can lead to reputational damage, lost revenue and potentially, loyal customers.
What is the cost for company car insurance? Typical annual premiums range from $750 – $1,200 for a commercial car, $8,000 – $12,500 for a semi-truck, and $4,000 – $6,000 for a limousine. When you consider the negative impact that losing a company car could have on your company’s operations, the cost is a small price to pay relative to the stakes you otherwise take.
Ensuring the greatest protection at the lowest rate
If you’re wondering how you can keep insurance costs down, speak with your JAISIN insurance professional, who can help develop strategies to accomplish this. One way is opting for higher deductibles or by taking on more of a self-insured layer. Another way is through risk/loss control or working together with your insurance company on the policies and procedures they have in place to help mitigate costs. Additional cost-cutting measures might include installing security devices and using economical cars with smaller engines.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.
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