How to buy auto insurance for your business.
Company car insurance, more commonly known as commercial car insurance, is insurance you buy to protect cars your company owns and cars your employees drive while doing business for your company, including their own cars and rental cars.
If you’re a new business owner, you may have some questions about how company car insurance works and how it differs from personal car insurance.
Read on to find out:
If you have a company and you or your employees use vehicles as part of your business, you’ll likely need a company car insurance policy. Essentially, there are three factors to consider when deciding whether you need to purchase a company car insurance policy.
1. Vehicle ownership If your company owns any vehicles, those vehicles need company car insurance. If your company uses vehicles owned by individuals (like you or your employees), then you may need company car insurance in addition to personal auto insurance, depending on use (see below).
2. Vehicle use Vehicles used simply for commuting do not need to be covered by a company policy. But if you use your car — or have employees use their cars — to transport people, goods, or equipment for work, then you need a company auto insurance policy.
3. Vehicle make and model There are some vehicles that need to be covered by company insurance regardless of how they’re used or who owns them. These vehicles include trucks over 10,000 pounds or with load capacities over 2,000 pounds and vehicles with commercial modifications, like a ladder rack.
Company car insurance, or commercial car insurance, works just like personal auto insurance in that it offers several types of insurance coverage under one policy, and pays out when you make a claim. These coverage types include:
Liability coverage: In company car insurance policies, there is combined single limit for liability coverage that includes bodily injury liability (BIL) and property damage liability (PDL).
Medical payment coverage / personal injury coverage: Pays medical expenses for the drivers and passengers of your covered vehicles during accidents.
Collision coverage: Pays for damages to your vehicle after an accident, regardless of fault.
Comprehensive coverage: Pays for damage to your vehicles for incidents other than collisions, like weather, theft, vandalism, etc.
Uninsured / underinsured motorist coverage: Pays for damages caused by a car accident with an uninsured driver or underinsured driver.
Commercial policies also offer a number of types of specialized coverage that personal auto policies do not. These include:
Trailer interchange coverage: For trailers your vehicles use that are owned by other companies.
Rental reimbursement with downtime: Pays for you to rent a temporary replacement if your company vehicle needs repairs.
Hired vehicle coverage: Provides coverage for rental cars or vans for employees or clients.
Non-owned vehicle coverage (also known as non-owned auto coverage): Covers you when your employees use their own cars to conduct business for you.
Most insurance companies that sell personal car insurance policies, like Allstate, Geico, Progressive, and AAA, also sell commercial auto insurance policies. If you already have a personal car insurance policy, contact your insurance provider and ask if they also offer company car insurance. And unfortunately, even if you are using your personal car for business, you’ll still likely need to keep your personal car insurance policy and purchase a company car insurance policy.
If you’re starting from scratch, start your search with our list of best car insurance companies.
Commercial car insurance policies generally have an annual premium of $1,000 to $2,000, which is more than personal car insurance, which on average, is just $866 a year. Discounts may be available if you are insuring multiple vehicles.
Logan Sachon is the co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012. Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more.