How to select the best auto insurance coverage for your business
Key takeaways:
- Your personal auto policy doesn’t cover business-related risks
- Business-related purposes can be murky, but even something as simple as giving a client a ride requires a commercial policy
- Commercial auto policies aren’t just for your protection, they’re required by the State of Florida
- Without the right coverage, you’re exposing yourself to financial risks and even the potential loss of your business
When you own a small-to-medium-sized business, knowing precisely what insurance you need can be puzzling, and one big area of confusion involves auto insurance. Personal auto insurance policies don’t cover a number of business-related risks, and that’s why you may need commercial auto insurance. Just one accident and ensuing lawsuit could end up costing you that business you worked so hard to build. Also, commercial auto insurance is required for commercial vehicles in the State of Florida.
Do you use a vehicle or vehicles for business? Think carefully before you answer, because even if you just deliver some pastries to a valued client, you’re using your car for company purposes. And if you were involved in a fender-bender, your personal auto insurance wouldn’t cover it – leaving you holding the bag for damages.
The line between personal and business use can be a fine one, so let’s take a close look at what a commercial auto insurance policy covers, how it’s different from a personal policy, why you need one, and how to choose the best policies for your business.
Do you need a commercial auto insurance policy?
In Florida, if your company owns vehicles or you use your personal vehicle for business, you need commercial auto insurance. Business use of a vehicle includes things like site visits, sales visits, and deliveries. It can cover a single car or a fleet of vehicles. As you drive to and from work, your personal auto insurance policy covers you. But if you’re picking up supplies or using your vehicle for other work-specific purposes, you need to be protected by commercial auto insurance coverage.
Without commercial auto insurance, you can put your business into legal and financial jeopardy in more ways than one. You set yourself up for an expensive lawsuit if you’re involved in an accident, and the State of Florida can also impose penalties. So clearly, purchasing commercial auto insurance is the smart choice. Now let’s talk about finding the best policy for your company.
How to choose the right auto insurance coverage for your business
First, you need to figure out what coverage you need, and your agent can be a big help here. Florida has laws that define the minimum coverage, but the bare minimum usually isn’t the smart choice. Instead, you’ll want to look at coverage limits that will truly protect you. Here are the available policies and what they cover (there are also exclusions you should discuss with your agent):
- Liability – Covers property damage and injuries to third parties.
- Collision – Helps cover the cost of vehicle damage and replacement in case of an accident with another vehicle, a solo rollover, or collision with an object.
- Rental reimbursement – If your vehicle requires repair, this will help cover the cost of a rental.
- Comprehensive – This covers any damage to your vehicle from water, fire, vandalism, or theft.
- Personal injury – This covers you in the event someone is injured or killed in an accident you caused, and usually also helps with legal expenses.
- Uninsured/underinsured motorist – This pays for your injuries if you’re involved in an accident with someone who has no insurance or inadequate coverage. Sometimes this also includes property damage.
- Medical payments – If you’re hurt in an accident, this will cover your medical expenses and those of any passengers who are injured.
These coverages are available for your personal policy, too. But there are some significant differences between personal and commercial auto insurance. Let’s take a look.
What’s the difference between personal and commercial auto insurance?
You might think, “I have a business owner’s policy. Doesn’t that cover me?” The answer is no. This type of policy doesn’t include your vehicles, so you need a separate commercial auto policy.
And while you might think that personal and commercial auto insurance are the same, they work very differently. There’s a higher risk with a commercial vehicle, so the rates are higher, but so are the limits. And a commercial policy will protect your business assets if someone sues you – your personal policy won’t do that.
The gray areas
If you own delivery trucks or vans, it’s evident that you need commercial auto insurance coverage. But in some circumstances, the issue isn’t so clear. Some examples of the gray area between personal and commercial auto insurance:
- Realtors. You use your personal vehicle to take clients house hunting. You’re using your car for business purposes, but your personal policy should cover you if your vehicle is classified as “business use.” This will give you the proper rating and coverage.
- Food delivery drivers. You must have commercial auto insurance if you deliver pizza or other food for a living. While your employer may offer non-owned liability coverage, that only protects them, not you. Make sure you’re covered.
- Rideshare drivers. Uber and Lyft offer some coverage, but only during specific periods when you’re logged in and working. The coverage they offer is contingent, meaning they will only pay after you’ve used up your personal auto policy.
These are just a few areas where personal vs. commercial coverage can be murky. To determine which coverage fits your needs, have a frank discussion with your insurance agent. To help clear things up before then, here are some questions to ask yourself:
- What is the vehicle type? Those above a certain weight can’t be put on a personal policy
- Who’s driving it? If anyone will be driving the vehicle for work, including employees and family members, you need a commercial policy
- What is it used for? Remember, your personal policy only covers your work commute. If you transport goods, equipment, or people as part of your business, your personal policy won’t cover you. And transporting people can mean just giving a client a ride to the airport.
- What coverage limits are needed? Commercial policies have higher limits and offer more financial protection than personal policies.
Now, it’s time to talk to your agent. Each person, situation, and business is unique, and your coverage requirements, risk levels, and premiums can differ even from other companies in the same industry. Make sure you’re protected; there’s too much to lose.
Avante: Commercial auto insurance tailored to your needs
While ferrying your clients to the airport, one fender-bender in your personal vehicle can cost you far more than any commercial auto insurance policy. Without the right coverage, you risk not only the future of your business, but your family’s future as well.
At Avante, we’ll work with you to build the comprehensive business coverage you need with a deductible that works for you. Reach out today because you never know what tomorrow will bring. At Avante, we’re always standing by.
Disclaimer
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.