If you use your vehicle as part of your business, you’ll need to get commercial auto insurance–even if you already have a personal policy

When most people think about auto insurance, they think about personal auto insurance coverage. These are the kind of policies that cover most drivers who own, rent or lease personal vehicles. However, if you own or operate your own business, you might need a different kind of auto insurance; specifically, a commercial auto insurance policy for your vehicles.

While most large businesses and established corporations already have most, if not all, of their business vehicles insured, smaller companies, including recent startups, solo entrepreneurs and those operating home-based businesses may not have the coverage they need. Much of this might stem from a lack of understanding about how auto insurance works, or simply a desire to save money by avoiding paying for another insurance policy. However, not having commercial auto insurance can have serious consequences, especially if you get into an accident while operating your business.

To make sure you and your business aren’t at risk for financial disaster due to a lack of proper insurance, make sure you know the what, how, when, and why of commercial auto insurance. Being informed won’t only save you serious money– it can save you headaches, both now and down the line.

Yes, commercial insurance does cost more– but it’s a necessary investment

The average American car owner spends about $815 per year to personally insure their vehicle. In comparison, commercial car insurance policies usually cost an average of around $1200– $1600 per year– an up to 200%+ cost increase. For larger commercial vehicles, like trucks, vans, or limos, commercial auto insurance prices are often considerably higher. These relatively high rates often mean that the idea of needing an additional car insurance policy may come as a financial shock to many small business owners, but it’s something that almost every entrepreneur, business-owner, and many independent contractors need.

When exactly do you need a commercial auto insurance policy?

The line between needing an additional commercial auto policy and simply needing a basic personal auto policy can be awfully thin. For example, using your personal vehicle to transport yourself and two friends to a concert would likely be covered within the bounds of your personal auto insurance policy. However, if you were an Uber or Lyft driver using the same car, going to the same concert, and two passengers were paying you for a ride, you would likely need a commercial auto policy to completely cover yourself.

How are commercial auto insurance rates determined?

Much like personal auto policies, commercial auto insurance policy pricing is determined by a variety of factors. This includes the driving records of all individuals who are insured to drive a specific vehicle, the value of the vehicle, the driving locations and average driving distances of the drivers. In addition, commercial auto policies are often considerably more expensive when purchased individually. Businesses that want to insure several vehicles at once can often purchase group coverage at a considerable discount.

Home-based businesses and commercial auto insurance

Not all home-based business owners need commercial auto coverage, but many do. If you work solely from your home, you may not need a commercial auto policy. However, if you travel often to meet clients, close deals, or transport supplies, you’ll probably need a commercial policy. This is especially the case for those who operate on-the-go businesses that often involve driving to customers’ homes, such as massage therapists, hair stylists, personal shoppers, professional organizers and maid services.

Larger small businesses and commercial auto insurance

Business that specialize in transportation-heavy industries, such as trucking, construction, electrical, plumbing, or roofing work are especially in need of commercial auto insurance policies. For these types of companies, commercial insurance policies may be considerably more expensive, as vehicles and their drivers regularly carrying heavy equipment over long distances are at much greater risk for getting in an accident or experiencing other vehicular issues. Though these types of organizations may foot the largest bills when it comes to commercial auto insurance, they also receive the greatest benefit.

If possible, research commercial auto insurance rates before opening or expanding your business

Running a business, even a tiny one, can come with surprising expenses. That’s why it’s important to consider the costs of commercial auto insurance (and determine whether you’ll need it) before making any big business decisions. This includes opening a business, expanding a current business, or entering into an employment contract in which you’ll need to use your own vehicle for commercial purposes.

While commercial auto insurance might be more expensive than its personal counterpart, it’s a necessary investment in your business’s financial future. Personal auto policies will often simply refuse to cover accidents, breakdowns, and other expensive occurrences if a vehicle is being used for a commercial purpose. That means if you’re using a vehicle to run a business without commercial auto coverage, you might as well be completely uninsured (though that’s a bad idea as well). Regardless of what industry you’re in, good commercial auto coverage can protect you and your vehicles when it matters the most.

To learn more about how commercial auto insurance can help your business grow and protect you from unexpected disasters, contact Avante Insurance today for a free consultation.