Get Business Auto Insurance: What You Need To Know

Business auto insurance is a necessity for any company that uses vehicles for work purposes. It provides financial protection in the event of an accident, covering legal fees, medical expenses, and property damage. This type of insurance is especially important if your business owns vehicles titled to the company, transports clients or employees, or relies on delivery drivers. Even if your business only occasionally uses vehicles for work, commercial auto insurance is still a smart choice as it can protect you from costly medical bills and legal fees. When selecting a policy, it's important to consider factors such as the type of vehicle, the level of risk, employee driving records, and the desired policy deductible and limits. By choosing the right coverage, businesses can ensure they are protected in the event of an accident while using vehicles for work.

Understanding the difference between business and personal auto insurance

When it comes to auto insurance, it's important to understand the difference between business and personal coverage. Both types of insurance are designed to protect you financially in the event of an accident, but there are some key distinctions to keep in mind.

Personal auto insurance is typically meant for personal vehicles used for personal reasons, such as commuting to work or running errands. It covers the owner of the vehicle and, in some cases, their immediate family members. It's important to note that personal auto insurance usually excludes business use, so any accidents that occur while driving for work may not be covered.

On the other hand, business auto insurance, also known as commercial auto insurance, is designed for vehicles owned by a business or used primarily for business purposes. This includes vehicles used to transport goods, equipment, or people as part of the business's operations. Commercial auto insurance tends to have higher liability limits and can cover a wider range of vehicles and drivers, including employees. It also typically offers higher coverage limits, as the risks and potential costs associated with business driving are often greater.

The type of insurance you need depends on several factors, including who owns and drives the vehicle, the type and weight of the vehicle, how it is used, and the required liability limits. If you're a sole proprietor or use your vehicle for both personal and business purposes, the lines can blur, and it's best to consult with an insurance professional to determine the right coverage for your specific situation.

Additionally, it's worth noting that commercial auto insurance isn't just for large vehicles like big rigs or box trucks. Everyday cars and pickup trucks can also qualify for commercial auto coverage if they are used primarily for business purposes. Ultimately, the key difference between personal and business auto insurance lies in the ownership and primary use of the vehicle, as well as the level of coverage and protection needed for your specific situation.

Knowing when you need business auto insurance

Business auto insurance is a must for anyone who owns or runs a business and uses a vehicle in company affairs. This type of insurance is also known as a Business Automobile Policy (BAP) or Business Auto Coverage Form and differs from personal insurance policies in that it covers the commercial use of vehicles.

If you are driving on roads in the UK, you need to have car insurance by law. Whether or not you need specific business car insurance depends on how you use your vehicle for work. If you only commute to and from a single place of work, you should be covered by your standard car insurance, provided you have a social and commuting policy.

However, if you use your vehicle for business purposes, you will need business car insurance. This includes:

• Driving to multiple work locations, such as different offices or job sites.
• Running business-related errands during working hours.
• Door-to-door selling.
• Making deliveries or collections.
• Driving clients or business associates.
• Allowing colleagues to drive your car.

Additionally, if you use your vehicle primarily for business purposes, such as a taxi or lorry, you will need commercial vehicle insurance. This type of insurance is required for vehicles that are used first and foremost for business purposes, such as taxis, minibuses, vans, limousines, and larger transport types like heavy goods and agricultural vehicles.

If your business owns vehicles, it is recommended to get a business car insurance policy. This will protect you and your employees in the event of a car accident while driving for business, even in the case of a fatal accident. Business car insurance can also help cover property damage and medical expenses resulting from an accident.

Furthermore, if you or your employees use personal vehicles for business purposes, it is important to have hired and non-owned auto coverage. This type of coverage can be added to a Business Owner's Policy (BOP) and will protect you and your employees while using personal, leased, or rented vehicles for work.

Without the appropriate business auto insurance, you may be responsible for claims, repairs, legal fees, and medical payments out of pocket if an accident occurs while driving for business. Therefore, it is crucial to understand your insurance coverage and ensure you have the right policy in place to protect yourself, your employees, and your business.

What business auto insurance covers

Business auto insurance, also known as a Business Automobile Policy (BAP) or Business Auto Coverage Form (BACF), is a type of auto insurance specifically designed for vehicles used for business purposes. It covers vehicles used in company affairs, including those owned or leased by the company, as well as employee-owned vehicles used for work.

A BAP provides financial protection to both the business and its employees by covering auto liability insurance and auto physical damage, with options for additional coverage. It is important to note that personal auto insurance policies typically do not provide coverage for business-related accidents and incidents.

• Property Damage and Liability Coverage: This includes damage to another person's property, such as their vehicle or building, if you or your employee is at fault. It also covers the legal costs if you are sued over the incident.
• Collision Coverage: This covers damage to the insured vehicle caused by a traffic accident or collision with a static object like a fence or telephone pole. Collision coverage is often combined with comprehensive and liability coverages.
• Comprehensive Coverage: This covers damage to the vehicle from events beyond the driver's control, such as theft, vandalism, natural disasters, falling objects, and collisions with animals.
• Medical Payments or Personal Injury Protection: This covers medical expenses for the insured, their drivers, and passengers, regardless of who is at fault. It may also cover lost wages and funeral expenses.
• Uninsured or Underinsured Motorist Coverage: This protects you and your passengers if you are hit by a driver without insurance or with insufficient liability coverage.
• Gap Insurance: This helps cover the difference if you owe more on your vehicle loan or lease than the value of your totaled vehicle.
• New Vehicle Replacement: This assists in paying for a new comparable vehicle if your work vehicle is totaled.
• Rental Car Reimbursement: This helps pay for a rental car if your insured business vehicle is in the shop due to a covered problem.
• Roadside Assistance Insurance: This covers the cost of services like towing, jump-starting, or flat tire assistance if your insured business vehicle is disabled.

How much business auto insurance costs

The cost of business auto insurance varies depending on the specific needs of a business. For example, the type of work conducted, the number of vehicles, the frequency of driving, and the location of the business will all influence the cost of business auto insurance.

In 2023, the national average monthly cost for commercial auto insurance in the US ranged from $257 for contractor autos to $1,041 for transport trucks. However, 37% of small business customers pay less than $100 per month for their policies.

Business auto insurance is typically more expensive than personal auto insurance because it provides more coverage. Personal auto insurance usually excludes work-related accidents, whereas business auto insurance covers employees driving for commercial purposes.

Some factors that influence the cost of business auto insurance include:

• The type of work conducted: Businesses that require driving to job sites or driving long distances will likely pay more for insurance.
• The number of vehicles: The more vehicles a business owns, the higher the insurance cost.
• Driving history: A clean driving record with no incidents will result in lower insurance rates.
• Location: The state or city where the business operates can impact the cost of insurance due to factors such as population, property prices, crime rates, and natural disaster risks.
• Policy limits: Higher coverage limits will increase the cost of the policy.

It is important to note that business auto insurance is essential for any company that uses vehicles for business purposes, whether owned by the business or the employees. Without proper insurance, businesses may face legal and financial consequences in the event of an accident.

How to get cheaper business auto insurance

Business car insurance is often more expensive than standard car insurance because those who drive for work are seen as more of a risk to insurance providers. This is due to the likelihood of driving more miles, driving during busier times, and driving on unfamiliar roads, all of which increase the risk of an accident and a subsequent insurance claim.

However, there are several ways to get cheaper business car insurance:

• Increase your voluntary excess: This is the amount you pay towards a claim. Typically, the higher your excess, the cheaper your policy. Just make sure the amount you choose is affordable should you need to make a claim.
• Pay annually: While it may be more convenient to pay monthly, paying annually can help reduce the cost of your insurance.
• Park in a secure location: If you can, park in a locked garage or driveway. This reduces the risk of theft or accidental damage, which can help bring down your insurance costs.
• Protect your no-claims bonus: Every year you go without claiming, your no-claims bonus (NCB) increases, which can get you cheaper insurance. You can also protect your NCB with an add-on to your policy, allowing you to claim a few times without it being affected.
• Install security devices: If you visit multiple clients or work sites per day and park in multiple locations, consider installing immobilisers and steering wheel locks to reduce the risk of theft.
• Compare quotes: Shopping around and comparing quotes from different providers is a quick and easy way to find a cheaper policy.
• Choose fully comprehensive cover: Despite offering a higher level of protection, fully comprehensive insurance is often cheaper than third-party cover due to the high number of claims made on third-party policies in the past.
• Give an accurate mileage figure: Be honest about how many miles you drive each year. Giving an accurate figure ensures you're not paying for more cover than you need.
• Improve your car's security: See if improving your car's security, such as by adding an alarm or tracker, affects your premium price.
• Fleet insurance: If your business has three or more cars, it might be eligible for fleet insurance, which is often the cheapest way to insure a group of cars and drivers.
• Black box or telematics insurance: This type of insurance can help keep costs down by showing that you're driving carefully.

Frequently asked questions