Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 15, 2020

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Key takeaways...

  • If you’re driving a vehicle for business use, you most likely need commercial coverage
  • There are steps you can take to lower your business’s insurance risk
  • Compare quotes to find the best rate for the coverage you need

Businesses that don’t carry commercial auto insurance are at great financial risk for being sued.

As a consequence, small business owners are also at risk of financial troubles, both from their legal responsibility and from the loss of their business if they are not covered by business car insurance.

Compare car insurance quotes for your personal and business coverage needs. Enter your zip code into our free rate tool above to get started.

Table of Contents

Commercial vs. Personal Car Insurance

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Many business owners falsely believe that their vehicle that is used as a part of their business is covered by other forms of business insurance, but that just isn’t true.

A Business Owner’s Policy can cover the following:

  • Injuries
  • Buildings
  • Inventory and supplies

It does not usually cover the cars, trucks, and vans used to carry out the daily operations of a business.

Similarly, most home-based businesses also incorrectly believe that their homeowner’s insurance covers their business, according to the National Federation of Independent Business.

That assumption is also false, as the NFIB says that most homeowner’s policies only cover $2,500 in the home and $250 worth of property outside the home.

Personal car insurance coverage does not include most business uses of a vehicle; in fact, it’s one of the questions that insurance providers ask on a car insurance application.

Really, the only coverage option that provides 100 percent of the liability for a business’s vehicles is a commercial auto insurance policy.

Personal car insurance may cover the driver to some extent, but if the vehicle was being operated for company business, then the liability for damages to others will fall solely on the business.

In many cases, this means the business owner is liable as well.

Unfortunately, the litigious nature of our society means that companies really need to protect themselves against lawsuits. Some people feel that a lawsuit against a business only affects the company, but small business owners know better.

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Which Coverage

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There are some similarities between commercial and personal car insurance, even though one covers the business use and the other covers personal use. Both have similar types of coverage.

Business car insurance policies should cover injury liability and property damage liability, and businesses must buy minimum amounts of both.

Each state sets its own minimums for liability insurance; this type of coverage pays for damages to others caused by the driver of your company vehicle.

Similarly, states might also require businesses to purchase uninsured/underinsured motorist coverage or personal injury protection coverage.

Collision and comprehensive coverage options should also be considered by most businesses. These types of insurance protect the value of the vehicle, and most businesses rely on newer vehicles that can be worth a considerable amount.

Would your business be able to absorb the cost of fixing or replacing a damaged vehicle? Would your business be able to operate without its vehicles?

Business vehicles are covered under a Business Auto Coverage Form, or BACF.

Each vehicle will have its own coverage specifics, as different vehicles have different coverage needs. The Insurance Information Institute asserts that the recommended amount of liability coverage on a BACF is $500,000.

This amount should be enough to cover even serious accidents.

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Steps to Getting Coverage

Every business is different, so each business’s insurance needs will be different.

Your commercial auto insurance needs will vary depending on how many vehicles you have, for what the vehicles are used, and who drives the vehicles.

The U.S. Small Business Administration offers businesses the following tips on finding the right amount of insurance coverage.

First, a company needs to assess its level of risk for suffering damages or a loss. A small business that only operates one vehicle, driven by the owner to make deliveries, will have a lower risk.

A company that has many vehicles that are driven by employees and are used to transport volatile cargo or people will have a high level of risk.

Similarly, a company that has vehicles on the highway all day long has a much higher risk than a company that has a vehicle that is used infrequently.

Next, a company needs to get quotes from multiple business auto insurance providers. Some providers specialize along certain industry lines, and others offer coverage to a broad range of companies.

You won’t know which business car insurance provider will have the best rates for your company until you get a quote.

Furthermore, you might want to find a provider who offers car insurance for your business as part of your Business Owner’s Plan. Many providers will bundle services, but auto insurance is generally not a standard part of a Business Owner’s Plan.

Another option available to companies searching for auto insurance coverage is the utilization of an agent. Agents are experts in their field, and they can help your business to find just the right amount of coverage.

You can ask industry peers for recommendations for an agent. Just make sure that he or she is licensed by the state in which you do business.

Lastly, it is advised that every company assess its insurance needs every year. Businesses expand or change focus, and you need to make sure that you and your business are always covered.

If you don’t get coverage for the vehicles for your business, then you are putting your business and your own finances in danger.

If your company vehicle is involved in an accident, you suffer a loss or other damages, or you are faced with a lawsuit, you will be going it alone if you don’t have coverage

Unfortunately, the National Association of Insurance Commissioners found that, in 2008, almost 50 percent of all business didn’t carry auto insurance and that nearly 50 percent of all small businesses relied only on a homeowner’s policy for coverage.

Don’t leave your company open to risk due to a lack of auto insurance coverage!

Ratings Matter

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Just as with personal auto insurance, you want to research the providers you are considering. Many buyers just find the lowest rate and go with it, but that is not the best option for your business.

Just like you don’t always go with the cheapest supplier or the least expensive materials, you also shouldn’t go with the cheapest auto insurance provider. Your business deserves quality, and one way to find a quality insurance provider is through the use of ratings.

First, you need to check out a commercial auto insurance provider’s financial ratings. This will let you know whether a provider has a strong financial standing, or if they have stretched themselves too thin.

Rating organizations such as Standard & Poor’s and Weiss Ratings assess the financial strength of auto insurance providers at least once a year.

Low ratings will let you know that an insurance provider might not really be able to pay your claims.

Secondly, you also want to check out the customer-based ratings of any company you are considering for your commercial auto insurance needs.

Ratings conducted by reliable sources such as the Better Business Bureau and J.D. Power & Associates will let you see which companies have a good reputation with their customers.

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Keep Your Rates Low

While you don’t want to go with the lowest company, no one wants to overpay for any form of insurance. After vetting a company’s financial standing and reputation for customer service, you should also look for ways to get the best deal.

Discounts are a great way to reduce your company’s premiums, so make sure that you receive all that you can. Inquire with each possible insurer as to the discounts they offer for which your business might qualify.

Common discounts include multiple vehicle discounts and bundled policy discounts.

Also, you may receive further discounts if you follow certain procedures, such as checking employee’s driving records before allowing them to operate your company’s vehicles.

Your company may be able to further reduce its risk in the following ways:

  • Driving different routes
  • Lowering the miles driven every week
  • Installing devices that record a driver’s speed and other factors

Where to Compare Quotes

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Comparing quotes from multiple companies is really the only way to find out how much a provider will charge to cover the particular vehicles for your particular business.

Every business is different, and every commercial auto insurance provider will charge different premiums.

Comparing quotes from different providers is most easily accomplished on the Internet. You can certainly get quotes at a brick-and-mortar store or over the phone, but such methods will cost your company valuable time.

Getting quotes from providers’ websites or from quote comparison websites will save time during your search.

Remember to search for the same amount of coverage with each provider, and research those companies on your short list.

Most major personal car insurance providers also offer commercial auto insurance, but quote comparison websites may get you great quotes from companies you have never even heard of.

Use our free quote comparison tool for all of your car insurance needs by placing your ZIP into the FREE box now!