Your small business is growing to the point that you have to consider ponying up for a few company vehicles. Finding a deal on the cars, though, is only half the battle. You also have to consider what type of insurance you’ll need, commercial or personal. To help you decide, here are a few factors you need to consider:
Ownership of the car
If the car is owned by a business, then a commercial auto insurance plan is ideal. If you own the business, though, getting a personal auto insurance policy is better. The insurance plan would largely depend on how often the car is used. Do you drive it for deliveries or when you buy stocks and materials? These things should factor into your decision as well.
How you use it
According to Progressive Commercial, if you frequently use your car for business, then a commercial auto policy might be best, after all. But again, if by use, you mean you drive the car and use it to commute to and from job sites or to and from work, then a personal auto insurance policy should be your first choice. In an article from Business.com, if the car involves any of these, then you should get the commercial auto insurance coverage instead of a personal auto insurance policy:
- If you use it to carry equipment like ladders, supplies and tools, along with hazardous or flammable material and housekeeping equipment for a business
- If the vehicle is designed with add-ons like winches, snowplows (not for private use) and cranes
- If you use it for a towing service
- If you drive it for your deliveries, whether your business involves wholesale retail, pizza, flowers and anything of this sort
- If you use it for local and long haul trucking
- If you drive it as a taxi service
- If you drive it as a messenger, deliverer or chauffeur for hire
Your vehicle’s type and weight
If you drive a dump truck or tow truck, you’ll have to go for a commercial auto insurance. That applies to you too if you drive semi-trucks and commercial trailers. When accidents happen, heavy-duty vehicles of this sort have the potential to cause more damage. That means higher risk. There are special types of insurance coverage involved too.
If you drive a normal-size pickup or SUV, though, that qualifies you for a personal auto insurance.
Your business and liability limits
If your business requires higher liability limits, then a commercial auto insurance is your best bet. Commercial auto insurance plans provide higher limits than personal auto insurance plans. It’s also necessary if you need any of the following policy extras, like a coverage for a third party as an additional insured, a waiver of subrogation, liability coverage for vehicles you don’t own or hired, and liability coverage for mobile equipment you’re carrying.
If you don’t need any of these add-ons, though, then an auto insurance policy will work for you.
So know what’s necessary and not. If you think the coverage of a commercial auto insurance policy is necessary, but want a personal auto insurance plan, go the safer route, regardless of how much it’ll set you back. Spring for the commercial auto insurance policy and get what you need it.