Car insurance for your business vehicles will cost a varied rate based on several factors including the type of vehicle, your location, and what types of coverage you require. Understanding each of these variables will help you make the right choice before getting your quote. Owning a small or medium size business provides you with the freedom to make your own decisions and to chart your own course. You already know that it’s a lot of work and a fair bit of stress. One of the best ways to reduce your stress levels and gain some peace of mind is to ensure that you are insured for any unforeseen accidents, thefts, and other perils your business may encounter.
An important part of this protection is ensuring any vehicles you use for business are properly insured on a business or commercial auto policy. This article explores the need, some of its features, and how much business car insurance costs.
Frequently Asked Questions: How Much Does Business Car Insurance Cost?
How does commercial auto insurance work?
In many ways, business car insurance is similar to your personal vehicle’s car insurance policy in that it provides liability coverage, property coverage, and protection for drivers and passengers. However, it also provides coverage tailored to business needs such as covering any equipment on or in the vehicle, higher contents coverage, as well as other coverages targeting business needs.
A business car insurance policy includes coverage that is mandatory for all vehicle owners in Ontario and Alberta. These include:
Accident benefits coverage – This coverage protects you and any passengers if you are injured or killed in an accident. Accident benefits will pay for any additional healthcare costs not covered by your provincial health insurance plan, including rehab costs, physiotherapy, and the cost of home maintenance if you’re unable to perform common tasks. There is some limited loss of income coverage if you’re unable to work, and you can buy higher limits if you the basic coverage doesn’t cover your financial needs.
Direct compensation – property damage coverage – This pays to repair or replace your vehicle and its contents if you’re involved in an accident caused by someone else.
Uninsured automobile coverage – This coverage steps in if you or a family member are hurt or killed by a hit and run driver, or a someone who doesn’t have insurance on their vehicle. It will also pay to repair or replace your vehicle if it is damaged by an uninsured driver who is identified. It doesn’t cover hit and runs, which are covered by optional collision coverage.
Third-party liability – Third-party liability coverage will pay for claims by other people for injury or property damage that are the result of an at-fault accident. If your accident causes property damage or injuries to third parties, this coverage steps in to pay both the legal fees needed to defend you in court, as well as any money awarded by a court or other settlement.
In addition to the mandatory coverage outlined above, there are several optional to expand what your commercial auto insurance covers. Here are a few of the most popular:
Collision coverage – While direct compensation – property coverage will pay for any damage to your vehicle if an accident is caused by someone else, collision coverage pays the cost to repair or replace your vehicle for an accident that you are considered at-fault.
Comprehensive coverage – Comp coverage will pay for claims while your vehicle is not being driven. It protects against vehicle theft, falling or flying objects (think thrown toys, tricycle crashes and wind-swept tree branches) along with vandalism.
Non-owned auto – This provides protection for your company should you rent or borrow a vehicle and experience an accident. It provides liability coverage that will respond if you damage the vehicle and settle and pay any lawsuits that arise from the accident. Adding this coverage will increase the cost of your business car insurance, typically by about $50, making it a much cheaper option than the insurance offered by rental companies.
Including only the mandatory coverage in your policy will reduce your commercial auto insurance costs, but including additional coverage is highly recommended. It’s important to consider the risks of damaging objects as well as bodily injury and medical expenses
What types of businesses use commercial auto insurance?
If you are a small business owner or a business owner of any kind and use your vehicle for business, you probably need a business car insurance policy. The same goes for employees who use their vehicle for business- any vehicle used for business purposes requires commercial auto coverage. If you are unsure if you need business car insurance, some of the triggers are:
· If you drive clients or employees in your vehicle.
· If you use the car to deliver a service, such as consultants, accountants, or computer techs visiting customers at home or at their places of business.
· If the vehicle is used to transport equipment or goods such as a contractor’s tools and parts or pick up stock from a supplier.
· If you use the vehicle to deliver purchases to customers.
· If you use the vehicle for sales calls.
· If you transport goods or people for money, such as working for Uber, Instacart or Foodora.
· If the vehicle is registered in your company name.
If you are still unsure whether your business needs a commercial policy, check out this article to understand when commercial auto insurance is required. Or, if you use your vehicle for anything other than commuting to work, you should talk to an insurance professional to find out if you need business car insurance.
What’s the difference between personal vs commercial auto insurance?
Just like home insurance and business insurance, commercial and personal auto insurance are not exactly the same- and it’s important to understand the differences. If you compare the policies of both, you’ll see that the difference between personal vs commercial auto insurance is actually quite minimal. Both use the standard policy contract, for example.
The main difference is that a business or commercial insurance policy gives you permission to use the vehicle for commercial purposes, which is specifically excluded in a personal auto policy.
What factors affect commercial auto insurance rates?
Commercial auto insurance is rated similarly to a personal car insurance policy, with only a few key differences you need to understand before your insurance quote. Both policies look at:
The type of vehicle- the make, model, and year of the vehicle(s)
The cost to repair or replace the vehicle is a key part of determining your premium. This will include the cost of any specialized racks or equipment that is attached to the vehicle. To get a better understanding of your vehicle’s value, check out this free value calculator.
Where you are located has an impact on your rate. Certain areas may have higher theft risks, and a vehicle located in a city may experience more accidents than one located in an urban area. Your premium will reflect the claims history for your particular location.
How you use your vehicle is also important. The insurance company will want to know how many miles you will put on the vehicle each year. The more the vehicle is driven, the higher the risk of being in an accident.
A company with a history of previous claims will often see higher rates than one with no claims as data scientists have data that shows that past claims activity usually predicts future claims.
There are also some factors that are unique to business car insurance, such as:
A vehicle used to pick up the odd package from a supplier is a very different risk than one that is used every day by a tradesman who carries four passengers to a worksite or delivery driver who drives all day. Each type of business has unique risks, and these will be considered when calculating your rate
Employee driving records
Identifying who will be driving the vehicle is a crucial step to knowing the cost of your business car insurance. Your insurer will likely ask for the names and driver’s license numbers of the employees who will be driving the vehicle. If any of them have traffic violations, their driving history will probably increase your premium.
What is the average cost of commercial auto insurance?
All the factors above will be used to determine your premium. This results in a wide range of premiums for business cars. In general, the usual range is between $100 per month and $600 per month for a single vehicle depending on what additional insurance coverage is included. Find out the best ways to lower your car insurance to be ready for a quote.
What are the types of commercial auto insurance?
There are different levels of business car insurance. The most common are:
Changing your personal insurance policy to include “business use” is an easy way for sole proprietors, salespeople, and small companies where the owner of the vehicle is the only one who uses it for business.
Multiple employee drivers
If the car is in your name, you can purchase a personal auto policy that allows you to add multiple employees to the policy.
This is a full-on commercial car insurance policy that is used when the vehicle is used exclusively for business. Commercial insurance is also used if you have multiple vehicles for your business and if the vehicles have been modified with additional gear such as ladder racks, bush bars, or other modifications.
Contact your insurance professional to determine if you need business car insurance