Does my business need company auto insurance?

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Things to remember...
  • Business auto insurance provides financial coverage for a company when it is faced with damage to its vehicle
  • The problem with being a business owner and providing employees with vehicles to drive around for your company is that you can’t really control the way they drive
  • Business car insurance functions the same way as regular private auto insurance coverage in terms of benefits

Business auto insurance provides financial coverage for a company when it is faced with damage to its vehicle, or the car is involved in an accident harming someone else.

Instead of the business directly paying for expenses, a policy is paid for monthly to assume the payment cost and provide legal defense to related lawsuits.

If you use a vehicle for your business, whether it be a sole proprietorship or a corporation, an auto insurance policy is a practical necessity. Additionally, in some states, it’s also a legal requirement, removing any business discretion in the matter whatsoever.

Find the right insurance policy for your business  by entering your zip code in the box above!

Liability Risk is the Top Concern

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The problem with being a business owner and providing employees with vehicles to drive around for your company is that you can’t really control the way they drive.

Additionally, even if employees do drive fairly well or safe, they can still end up being responsible for harm to a person or property in a vehicle accident.

When this occurs, so does the liability chain. Unfortunately, that means an injury victim’s lawyer can then sue your company for recovery, including punitive damages that can far exceed the actual injury costs.

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How Coverage Works

Business car insurance functions the same way as regular private auto insurance coverage in terms of benefits.

Coverage can be comprehensive, providing insurance for all typical possibilities associated with normal driving and risk, including theft and damage to the car itself.

Policies can also be tailored down for cheap auto insurance, only providing insurance for liability, leaving the vehicle repair to the responsibility of the business owning the fleet car.

In either case, the business maintains a policy with an insurance provider for all of its identified vehicles to be included.

The policy will allow multiple employees of the company to drive, treating the vehicles as a covered fleet for the business rather than an individual employee.

A number of vehicle insurance providers exist in most states, so finding a policy regardless of the size of a business is not hard. Instead, business owners and managers involved should take advantage of comparison tools and quotes to realize the best auto insurance package for their needs.

Why It Helps

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Aside from the risk of litigation and accident costs ended up being charged directly to a company for one of its vehicles, business car insurance also helps protect fleet vehicles.

Business cars many times are left at the business, which leaves them exposed on a company yard.

The given cars can be subject to theft, vandalism, or someone else’s accident if parked near or on a street adjacent to a business. Absent insurance, the business owner is essentially stuck with the repair or replacement cost.

Instead, with insurance, the loss could be lessened or avoided with the policy repairing or replacing the lost vehicle.

Typical Cost of a Plan

Costs of auto insurance for businesses will depend on a number of factors that vary from business to business. First will be the type of business involved.

For example, a truck-driving business will generally have a much higher cost to cover versus a hotel franchise with a passenger van for transport.

The number of vehicles to be covered will also increase or decrease a plan’s total auto insurance costs.

Finally, the number of employees driving at any given time and where the driving occurs can influence policy premium determinations.

Driving around in a city area will have more risk for an insurer than if the driving occurs on the highway in a suburb or rural area.

The average cost of auto insurance equals approximately $150 per vehicle per month in the U.S. With a business, auto insurance companies will likely discount this figure since more cars are being insured in one policy, bringing in more business for the provider.

How to Save on Costs

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There are a number of ways a business can save money on business car insurance while still being required to have the ng required to have the minimum auto insurance coverage.

These include the following:

  • Many businesses that have medium to large fleets already have maintenance crews or car repair vendors that handle the majority of general vehicle maintenance and fixes. In this respect, a lot of the little dings and damages can be taken care of by a business with is own fleet resources.
  • Requiring employees to participate in a safe driving program can also reduce insurance costs. Educated and aware employees drive better, reducing the amount of risk a business’ fleet may have in a given year. Typical safe driver programs require the employees to go through some kind of a standard training program approved by the insurer and documented certification each employee driving has completed the course successfully.
  • Reducing the number of business employees allowed to drive for the business also reduces covered risk. If only 10 employees in a company need to drive at any given time with the company cars, then that’s the amount that should be covered.
  • Finally, small businesses and larger companies should annually or bi-annually compare fleet insurance quotes from a variety of providers to determine if staying with the existing insurer is still worthwhile.

In some states, businesses have no choice, their cars have to be insured if used on the public roads. The requirement does not have to be onerous or extremely expensive.

There are ways for even small businesses to make their dollars stretch while keeping their vehicles covered financially.

Much of the challenge just takes some good, old-fashioned research and comparison window-shopping alongside planning what and who needs to be covered in a business.

See what kind of rates you could pay for auto insurance by entering your zip code in your FREE comparison tool below!

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