Business car insurance is indispensable if you regularly drive your vehicle for business purposes. The average owner does not use the car daily for lengthy trips. Moreover, as a business owner, you may also need to use vans and lorries apart from passenger vehicles. Commercial auto insurance is quite different from the typical policy sold to car owners.
When Do You Need Business Car Insurance?
If as a business owner, you use your vehicle to travel to and from your office, the personal auto insurance you have is enough. Business car insurance is a separate category from personal ownership auto policies. Almost all businesses have needs that are far more unrestricted.
Not only employees drive a car to and from work but also use it for personal reasons.
Often employees would use a vehicle registered in the name of the company.
There may be one or more passengers.
The vehicle may be used extensively for making deliveries or collecting bills.
Most importantly, many businesses do not own one or two cars, but several. It is expensive to buy insurance separately for multiple vehicles, and buying combined cover is helpful to defray the expenses.
None of these is usual for a private owner.
Types of Business Car Insurance
Business car insurance is easy enough to define. The products on offer are, however, far more complex. It is not a simple matter of choice between a plain vanilla third party or comprehensive coverage.
There are the following classes of insurance for business car use.
Class 1 insurance covers driving for personal reasons – social and domestic – as also to your place of work. You are also allowed trips between various sites. The Class 1 policy usually covers spouses but not any other driver. Door to door deliveries is not covered.
This type of insurance policy expands on Class 1 by allowing you to add more drivers. Typically it helps businesses that require employees to drive to different sites and carry one or more coworkers as a passenger and alternate driver. This type also does not cover door to door deliveries.
This type is the most far-reaching. The vehicle can travel any distance and visit any destination. It can be used for making deliveries and covers vans and lorries.
Choosing between these three classes can happen after a thorough evaluation of your needs. Every insurer has an expert advisor who helps you arrive at the decision that is most suited for your business.
However, it is important to understand that this is not the type of coverage that rental vehicles or taxis can avail of. If the purpose of a business is to transport people, there are separate policies that address the same.
Is Business Car Insurance Expensive?
The premium will, of course, be higher than personal auto insurance. The reason is not hard to understand. A business vehicle will be driven more miles and perhaps have more than one driver. The chances of breakdowns, damage, and accidents are more and the cost of insurance rises accordingly.
The main advantage is that you can write off the premium every year against your profits. Personal auto insurance cannot be treated as a business expense in this way.
Why Is Business Car Insurance Different?
If you are driving your car for reasons other than your daily commute, there is a need for business car insurance.
There are two main reasons:
The vehicle might carry expensive equipment. In standard auto insurance, such payload would not be insured. But in business car insurance the cost of equipment is aggregated with that of the vehicle. You do not need to buy separate insurance for your tools.
There is a need to frequently travel to unknown places along busy routes. It is natural that a driver might make errors on an unfamiliar road and cause damage to vehicles and others. Of course, it is not a given, but insurance depends on possible scenarios and not what will indeed happen.
What Factors Affect Business Car Insurance?
There are a number of variables that an insurer considers. These include:
The number of drivers who would use the vehicle
The place and time at which it would be used
The purpose of usage
The average daily mileage
When buying the policy, take care that you include all the above correctly. While under-reporting might cause your premium to drop, it is essential to realize that such a practice can lead to your insurance payout to diminish or even for the coverage to be invalidated.
Affordable Business Car Insurance – Tips to Purchase
Despite all the advantages they provide, company car insurance can be expensive for a small business. It is a recurring expenditure, and it is critical for all businesses to keep such overheads low.
However, it is not impossible to get rebates while buying business auto insurance. Follow some common sense tips, and you could save quite a large sum.
Choose inexpensive vehicles
It is a no-brainer that spare parts of expensive vehicles cost more. Insurers regularly study the cost of 23 essential spares to decide the premium. Buy inexpensive vehicles with low cost of maintenance to bag an insurance deal that fits your budget.
Be careful about mileage
It is not possible to be accurate, but your estimate has to be close to what it will be driven. The car is insured against the mileage. Do not choose a higher bracket as it will lead to needless expenditure.
Equip the vehicle with anti-theft accessories that would ensure that it is not stolen. Maintain company vehicles in secured garages during the night to reduce the chance of theft.
Buy temporary insurance
If you do not need an annual car insurance policy, do not hesitate to buy a temporary one. They are more expensive on a per month basis, but your overall expense would be less.
Convince your employees to be careful
There is the all-important factor of those who drive the car. You could probably work out an incentive, financial or otherwise, for employees to drive their company-owned vehicles cautiously so that no claim is recorded.
Business Car Insurance-FAQs
1. Who is a named driver?
Car insurance is never open-ended. It works only when a designated driver is operating the vehicle. One or more named drivers is included in business car insurance. The owner of the vehicle can, of course, drive it at all times.
2. Can an employee-owned vehicle be covered?
Not usually. A business based plan always covers assets owned by the business. In the case of an employee-owned vehicle, the same title over the assets is not present. However, business car insurance plans might extend to vehicles leased or rented by an employee for business reasons. Of course, such as a lease has to be as an employee and not for private use.
3. Am I liable for a bad driver?
You are liable when you allow someone else to drive vehicles owned by you or your business. That is why you have to carefully scrutinize the driving record of your employees entrusted with business cars. Owning insurance would, of course, diminish your liability, but the cost of renewal would rise in the coming years.
If you want to purchase robust insurance coverage for your car, White Recovery offers you the finest insurance products on the market.
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