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3 Questions to Help Determine if Your Business Needs an Auto Insurance Policy
Blog / Marketing / Sep 29, 2022 / Posted by Melanie Musson /

3 Questions to Help Determine if Your Business Needs an Auto Insurance Policy

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Not every entrepreneur needs a company vehicle or a fleet of cars for their employees to use on the job. However, if you use a vehicle for business, you could get into trouble if you don’t have the right insurance.

If you’re unsure, you’ll need to ask yourself the following questions to determine if you need commercial auto insurance for your business or if you can avoid that extra cost and only carry a private auto insurance policy.

Do I use my vehicle to visit clients or work locations?

If you have to travel to visit clients or work locations, your personal car insurance policy might not cover you.

Here is an example to consider. While some real estate agents get by with a personal auto policy as a real estate agent, that’s probably not the best route. Not only do real estate agents have to travel to clients’ properties to prepare for selling, but they also have to meet prospective buyers for showings.

If a real estate agent is involved in a crash on their way to a showing and their private insurer finds out they were driving for work, they may refuse to cover the incident because the circumstances are beyond the scope of a standard policy.

To complicate the situation further, some real estate agents drive clients to see homes. In this situation, a personal policy does not provide adequate coverage.

Another example to consider is a contractor. A good contractor will not only seek ways to grow their business through social media advertising and building a good reputation, but they’ll also look for ways to protect their company’s finances.

Likely, a person in that position would transport a trailer of tools from job site to job site. A private auto insurance policy is designed for personal travel. A standard policy doesn’t consider the risks associated with a contractor driving for business.

Your personal policy is sufficient if the only driving you have to do for your company is your daily commute. But you need a commercial policy if you drive to accomplish your work.

Do I require my employees to travel to clients or job sites?

You can’t expect your employees to drive to accomplish their job without providing insurance coverage for them. Not only does a commercial policy protect them from financial loss associated with having an accident while driving for work, but it also protects your business.

Perhaps your employees travel to clients’ homes for nursing care, cleaning, or consulting services. There could be 100s of reasons an employee has to drive for work, but whatever the reason, not having proper insurance could jeopardize your business.

If your employee caused a crash, the other party could sue your company. Without commercial auto insurance, you’ll have to cover your legal fees and the damages. A bad accident could result in your business going under.

If your employees have to drive as part of their job, you need a business car insurance policy that covers them.

Do I transport people or goods?

As in the real estate agent example above, when you transport others for work, you must have a commercial auto insurance policy.

Your private insurer will likely refuse to cover an accident where you transported clients. They may even cancel your coverage if they find out you were driving for business purposes without informing them.

How do I find a commercial auto insurance policy for a good price?

Shopping around to compare quotes will help you find the best commercial auto insurance for the most competitive price.

Another way to save is to be careful who you include on your policy. Perhaps not every one of your employees has to drive for work. For example, if you have a 17-year-old employee with little experience on the road, adding that driver to your company policy could cause your premiums to increase significantly.

If that driver can travel with a more experienced driver with a good record, you can avoid putting them on your policy and save money on premiums.

Even though commercial auto insurance is an extra expense you might not want to pay, it’s worth every penny to protect your company from financial ruin.

About Author

Melanie Musson, a published insurance expert, is the fourth generation in her family to work in the insurance industry. Over the past two decades, she has gained in-depth knowledge of state-specific insurance laws and how insurance fits into every person’s life, from budgets to coverage levels. She specializes in autonomous technology, real estate, home security, consumer analyses, investing, digital security, and business finance.

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