Questions to Ask When Buying Commercial Auto Insurance
Purchasing commercial auto insurance is an important decision for a business owner. To get the best coverage at the best rate, ask yourself the following questions:
Do You Know What Defines Commercial Vehicle Usage?
Although you may use a vehicle infrequently for commercial purposes, your personal auto coverage excludes using a vehicle for commercial purposes. Insurance policies clearly define what is meant by commercial use, so you need to be very clear on the differences so you do not end up having a claim denied.
If your employees are using their own autos to conduct business or personal activities for you, make sure they are covered for liability under your policy. You could be held partially responsible for damages even when a vehicle is not company-owned. Employees may not inform their personal insurance agent that they drive for business because doing so would increase their insurance premium.
How Many Total Drivers and Vehicles Does your Business Require?
Insurers base their rates on number of drivers, number of vehicles, and class of vehicles. If you have multiple vehicles and drivers, consider purchasing fleet insurance instead of insuring each vehicle separately.
Do You Know Your Driver’s Records?
Drivers with multiple claim records or violations are going to cause your premium rates to increase. Ensure that you are aware of the driving records of any new or current employees. Have all employees who drive for your business report any and all accidents or driving infractions immediately. Make it company policy.
You may also want to consider requiring proof of insurance every six months for employees who use their auto for business purposes. Ask your employees to provide the declaration page of their policy to confirm that they have the required insurance limits plus an endorsement that removes the exclusion on driving for business.
What Kind of Car Are You Buying or Leasing?
Having a luxury or sports car makes a statement, but you will pay more for insurance. Instead, consider a mid-sized sedan that has a superior safety rating.
What Anti-Theft and Safety Devices Will the Vehicle Have?
When insuring your vehicle, an insurer is going to consider:
- Location of your business. Higher crime areas will most often lead to higher premiums.
- Presence of alarms, GPS devices, air bags, and other safety devices in the vehicle. Make sure that you tell your insurance agent about these devices.
What Kind of Deductible Can You Afford?
The amount of deductible you are willing to absorb can have a dramatic impact on your premium because all insurers pretty much adhere to a simple formula: the higher the deductible – the lower the premium.
Will Federal or State Laws Impact Your Coverage?
Certain vehicles and what they transport can also be affected by federal laws and, in some instances, can be state-specific. Check out any legislative requirements which impact what you need to do beforehand.
For more information on how to reduce or transfer the risks associated with company-owned and driving for business purposes, consult with a HUB International business insurance broker.