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When Do You Need Commercial Auto Insurance?

min read

As a business owner, you know what an investment the whole enterprise can be. True, it can be very worthwhile, but there are endless tasks to handle in the meantime – planning ahead, staying on top of cash flow, and keeping your workers satisfied. Then there are all those questions that aren’t necessarily clear, that can range from should you hire an accountant to keep track of your books to when do you need commercial auto insurance, and when not?

A Few Types of Insurance You Know Your Business Needs

Questions like when do you need business car insurance, frankly are fair to consider. As a business owner, you reasonably know that there are all sorts of small business insurance policies you need to protect your business and peace of mind. But sometimes your requirements are less clear.

For example, you know that general liability insurance is an absolute must-have in any line of work. While not necessarily required by law, liability insurance is widely recognized as an essential for closing deals with customers. This is true whether you’re a personal trainer, landscaper, or general contractor.

But your insurance needs most likely don’t end there. If you have employees, you most certainly have to pay for workers’ compensation insurance (a.k.a. workers’ comp), which is required by law. You may also have property insurance to protect your premises or workspace, and health insurance, to look after your health. And of course, if you drive a car, we’re assuming you have auto insurance. At least we certainly hope you do! But then the question arises when do you need commercial auto insurance, and when does personal auto insurance suffice?

What Is Commercial Auto Insurance Anyhow?

To better address the question of when do you need business insurance for your car, it’s good to first understand what commercial auto insurance actually is.

In a nutshell, commercial vehicle insurance, as the name implies, is a type of policy that insures vehicles used for business. These can include company cars as well as commercial trucks, food trucks, and even ride sharing services.

Beyond different types of vehicles, commercial auto insurance can cover a range of different activities and damages, depending on the exact policy. Some of these include accident liability, personal injury, collision coverage, rental reimbursement, underinsured motorists, and towing and labor reimbursement, all of which we’ll elaborate on in a bit.

Put even more simply you might say, commercial auto insurance provides insurance coverage for both the vehicle that’s being used for business purposes as well as your commercial drivers. And if driving is part of your job – or the work required of your employees – the odds are good that you need this type of coverage.

When Should You Consider Getting Commercial Auto Insurance?

If you find yourself wondering “when do I need business car insurance”, in all likelihood, you should at least be considering commercial auto insurance.

Of course you can speak with an insurance pro to help you determine 100%. But like we mentioned before, if you’re using your vehicle as part of your job, then the answer is near certainly yes. A few examples? A food truck or mobile hair salon would certainly need such a policy as their business is totally on wheels. Someone who is doing delivery services by truck would also need one. This includes movers, grocery deliverers, and regular truck drivers. And of course, taxi drivers and similar such services need commercial auto insurance as well.

A few simple questions you may ask yourself to determine for sure include:

  • Are you being paid to transport either people or products?
  • Do you have employees that drive your vehicle (other than yourself)?
  • Are you using a haul trailer or some other large vehicle with 2 axles or more?
  • Do you provide a service directly from your vehicle (like the food truck and mobile hair salon examples above)?

If any of these relate to your line of work, then yes, business vehicle insurance is likely something you need.

Owner vs. Driver – The Responsible Party for Purchasing the Policy

Keep in mind, the question of “when do I need business car insurance”, is not only about you as an individual. If you have workers driving for your business, then you need to get them commercial vehicle insurance.

Benefits of Having Commercial Auto Insurance

In addition to being a legal obligation in many states, commercial auto insurance helps protect your business in a number of ways. These mainly have to do with saving you from financial devastation in the event of any number of accidents, mistakes, or unfortunate instances.

So the answer to when do you need commercial auto insurance is also when you want protection in the event of:

  • Bodily injury. For example you run a stop sign, smash into another car, and injure the woman driving. Graphic and awful we know. But it can happen. Your policy can be activated to cover her medical bills. And it can reimburse her for missed work pay while she’s lying in bed recovering.
  • Property damage. Your commercial auto policy can also cover damages to the woman’s car, in the example above. In addition, it can cover legal expenses if you have to go to court over that.
  • Personal injury. In this case instead of a third-party, your policy also covers your employee doing the driving, should he or she be injured while behind the wheel.
  • Collision coverage. If you rely on your vehicle for work, this type of coverage can be a huge benefit to your business. It will pay for a replacement vehicle should yours be off the road following an accident, amongst other things.
  • Comprehensive coverage. This element of your policy can replace or repair your vehicle after unforeseen events that couldn’t possibly be your fault. Think vandalism, garage flooding, or a tree falling on your truck and you know what we mean.

And of course, beyond all these payments and coverage, a commercial auto insurance policy demonstrates what a professional you are to all customers and clients who ask.

What Is the Cost of Commercial Auto Insurance?

And now for the million-dollar question. Beyond wondering when do you need commercial auto insurance, you’re likely wondering how much it will cost. Without knowing the exact details of your business, this is honestly quite hard to say. If you’ve done any research, you may have seen prices all over the map. They can easily jump from $750 up to $3,000 a year. Such a large range makes sense with so many factors going into the overall pricing. These include how many vehicles you are insuring and what types of vehicles they are. Also who will be driving them and for what purposes.

Basically, to help keep your costs down, you need a commercial auto insurance policy that is customized to your exact field. Plus, if you can pay on a monthly basis, it will likely help with budgeting.

Bottom line

Overall, what is most important is that you get the coverage you need. Commercial auto insurance can save you a lot of time, hassle, and money in the long run. And in most states, if your business is in any way being conducted on the road, it’s the law. As such, you can see it as another essential tool for your business success and an investment that pays off in multiple ways.