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: Oct 18, 2020

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Key takeaways...

  • Temporary car insurance, which is more common in Europe but catching on in America, offers the same protections as regular car insurance
  • Temporary business car insurance works the same way as regular insurance does. It offers the same primary parts of an auto insurance policy: liability, medical, collision and comprehensive
  • If rental vehicles aren’t covered on your commercial car insurance policy, then check to see if a short-term business car insurance policy would be cheaper than buying coverage at the rental counter
  • A temporary policy might also be a good idea if you borrow a vehicle for business purposes or lend one of yours out for some reason

Temporary car insurance, which is more common in Europe but catching on in America, offers the same protections as regular car insurance. The main difference is that temporary car insurance is usually only in effect for up to 30 days.

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But should your business ever consider temporary business car insurance? Is it any cheaper than regular car insurance? When do you need regular business car insurance?

Read on for the answer to these, and other questions about temporary business car coverage.

Table of Contents

What It Covers

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Temporary business car insurance works the same way as regular insurance does. It offers the same primary parts of an auto insurance policy: liability, medical, collision and comprehensive.

It’s illegal to drive without liability insurance. This pays to repair the other car if you damage it in an accident caused by you or any of your employees driving the company car.

It also pays for any medical expenses incurred as a result of the accident. If needed, the liability section will also replace the other person’s car.

Check your state department of insurance website for the exact required levels in your state, though you’ll want to consider carrying high amounts, as your business might be sued.

You can even add medical payments or personal injury protection to a temporary policy. In fact, it’s a legal requirement in some states. This will pay for the medical expenses you, your employee, or other passengers in your vehicle suffer after an accident, no matter who’s at fault.

Collision will pay for the damages done to your car after an accident if it was your fault or the fault of your employee driving the vehicle.

Just like on personal auto insurance, comprehensive will pay to repair or replace your business vehicle if it receives damage from something other than an accident. This might be a storm, a warehouse fire, or even theft.

For more information on what auto insurance covers, see the National Association of Insurance Commissioners’ guide on coverage.

The main difference between regular business auto insurance and temporary, or short-term, business auto insurance is that temporary coverage is only good for a few days or weeks.

It is obviously not intended for day in and day out use. Rather, it is offered for those special circumstances when your standard insurance might not be enough.

There are a few other differences of which you should be aware. In some areas, there is a minimum age you must be in order to buy short-term auto insurance. There are also usually no discounts for a temporary policy.

This can make the insurance for that month more than a monthly payment of regular insurance, but it is still usually cheaper than a full six months of insurance that you don’t really need.

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Moving

If you are moving business locations, you might find yourself in need of extra car insurance. If you are renting moving vans, you’ll need to protect them while you have them in your possession.

The rental company might offer insurance, but you might find it cheaper to get a temporary policy of your own.

Temporary auto insurance usually won’t cover the merchandise and equipment you are actually moving; it only covers the vehicle itself and any other vehicles you might hit.

You’ll need to check your standard business insurance to make sure that the business possessions are covered while they are in transit.

Temporary Employees

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If you hire temporary or seasonal employees who will be operating vehicles, you might want to get a temporary policy to cover them.

If you are adding extra employees to a business car insurance policy, it will most likely cause a pretty significant increase in your rates. And if you have more employees driving, you raise the risk of accidents, which could really cause your rates to rise.

If you add the temporary employees to a separate, temporary business car insurance policy, there are several benefits. Your regular rates won’t increase at all. You’ll only have the extra insurance for as long as you need it.

Additionally, and very importantly, the driving records of the temporary employees can’t have a negative effect on your regular insurance rates.

Any accidents that the temporary employees might get into will not affect the rates on your regular insurance.

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For a Business Trip

If you are renting a car for a business trip, whether as the primary means of getting to your destination or after your plane has landed, you’ll need insurance for the rental.

The rental car company will gladly sell you insurance on the car, but the fees could be as much or more than the cost of the rental fee.

If you have permanent business car insurance, check with your agent to see if rentals are covered under the policy, as well as the regular business-owned cars.

If rental vehicles aren’t covered on your commercial car insurance policy, then check to see if a short-term business car insurance policy would be cheaper than buying coverage at the rental counter.

For more information you need to know before getting to the rental car counter, visit Consumer Reports.

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If You Buy, Borrow or Lend a Vehicle

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If you purchase a new vehicle for your business, you might not realize that there could be a gap in your coverage. Once you drive away from the dealership, the insurance becomes your responsibility.

But often, the vehicle is not added to the insurance until the business owner returns to the place of business.

But what if the new vehicle is in an accident just after it leaves the dealership? You might find yourself in a real bind. Temporary insurance can really help in these circumstances.

You can sign up online. Coverage goes into effect as soon as you give them your credit card information.

This can also help if you haven’t found a regular policy for your business yet. Since you can buy the temporary policy for a few weeks, this gives you time to shop around for the best deal while still having coverage for your business asset.

A temporary policy might also be a good idea if you borrow a vehicle for business purposes or lend one of yours out for some reason. Before doing either, you need to check with your agent to see exactly what is and isn’t covered under these circumstances.

While personal auto insurance policies often cover other drivers to whom you’ve lent your car, business auto insurance is different.

Often it is set up only to cover employees on the policy. Many business owners don’t realize it, but sometimes they put their employees in a precarious situation.

It is not uncommon for business owners to ask their employees to run errands, make deliveries, pick up business contacts, or do other business-related activities in their personal cars.

While there’s nothing inherently wrong in this, there can be a serious problem. That employee’s personal auto insurance might not cover them at all if they are using their personal car for business purposes other than commuting to work.

And if you don’t have insurance in place to handle it, you could be opening him and your business up for a big lawsuit if he’s in an accident.

If this doesn’t normally occur, but you have a large conference or something coming up where you can see this happening, a temporary policy should be able to cover this situation.

When You Need Business Car Insurance

If you find yourself or your business borrowing or renting cars on a regular basis, but don’t have a permanent policy that covers such things, look into a non-owner policy for business car insurance. It is a regular insurance policy, in that it is good for the regular six- or twelve-month terms.

This type of policy is designed for businesses that don’t own a vehicle, but covers the cars they might rent or borrow.

They are usually very inexpensive.Of course, if your business does own any vehicles, whether it is one or a hundred, you need business car insurance.

Not only is it illegal not to have insurance, but it will help protect the business you’ve worked so hard to build in the case of lawsuits.

Because of this, Entrepreneur magazine recommends you carry at least $1 million in liability insurance on each vehicle.

In addition, you might consider an umbrella liability policy. This can be acquired through the same company that supplies your general business insurance.

It will provide additional funds should your company be sued after you or an employee causes a car accident.

For more information about insurance for small businesses, Insure U has set up a website just for this purpose.

Having the proper insurance for your business is a must. And when you need to cover drivers or vehicles for a short amount of time, a temporary business car insurance policy could be just the thing to make certain your business is fully protected.

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References:

  1. http://www.naic.org/documents/consumer_guide_auto.pdf
  2. https://www.insureyourcompany.com/blog/7-tips-for-saving-money-on-your-commercial-auto-insurance-policy/
  3. http://pressroom.consumerreports.org/pressroom/2011/05/cr-warns-against-rental-car-gimmicks-.html
  4. http://www.entrepreneur.com/article/48982
  5. http://www.insurance.insureuonline.org/smallbusiness/