If your business owns a vehicle then personal auto insurance coverage may not offer you the protections that you need. Instead, commercial auto insurance might be the better choice, limiting your liability and offering more comprehensive coverage.
The Difference between Personal and Commercial Auto Insurance
As you can tell by the names, personal auto insurance and commercial auto insurance differ because one is meant to cover your personal automobile and the other your commercial (or business) automobile or fleet. But in truth, the difference is actually more nuanced than that. Personal auto insurance covers insurable events like the bodily injury of you, your passenger, or another driver. It also covers collision costs, uninsured motorist claims, theft of your personal asset and property damage liability when caused by your personal vehicle.
Commercial auto insurance has a different set of liabilities to cover. For instance, let’s say that the passenger in your car is not just a friend or family member along for a ride somewhere—as it would be in a personal vehicle—but a client that is paying you to drive them to a certain location. Or, let’s say that your car is stolen not just with your personal CD’s and sports equipment in it, but expensive business equipment and supplies owned by your client that you were meant to transport somewhere. In both of these examples, not only are the cost of the missing goods or injuries going to be part of the claim, but the loss of use and loss of business caused by the interruption by the insurable incident and subsequent repair of your vehicle could play a major role in the impact of the claim. Additionally, the liability you as the business owner carry as the responsible party to your client’s goods is also much greater than the personal liability involved in losing a few CDs.
As you can see, the liabilities and potential expense of claims can be quite different depending on whether you have a personal vehicle or a business vehicle. And what if you have employees driving your commercial vehicles while on the clock? Your personal auto insurance policy will not cover claims and their personal coverage may not either, which leaves your business exposed.
Why Buy Commercial Auto Insurance?
If you buy a personal auto insurance policy on a business-owned vehicle, it is possible that your future claims could be denied making the policy completely useless. The reason for this is that when an insurance company underwrites, prices and issues your policy they must be able to do so with full access to all the facts of the situation. If you present to them a low-risk personal situation, then they are going to price and issue your policy accordingly. But with a commercial vehicle you actually present a completely different set of risks with different expenses. These risks and expenses need to be honestly considered by the insurer and when you present a business vehicle as a personal vehicle they cannot be. It may even be considered fraudulent activity to attempt to do so.
In addition, insurance is meant to provide protection of your assets from claims. When you buy a personal auto insurance policy you are protecting your personal assets. Your business has a completely different set of assets and different asset value to cover and to do so appropriately means to buy a commercial auto insurance policy. A denied claim resulting from the purchase of the wrong type of auto coverage could ruin your business. Buying a commercial auto policy for your business property is the right step to take in order to get the right financial protection for your business.
Commercial Auto Insurance Coverage Options
Commercial auto insurance offers many of the same coverage options as a personal insurance policy. You can opt for uninsured or underinsured motorist coverage, liability and physical damage coverage. Each of these options may sound similar to those that you get with a personal policy but they are structured and priced so that they can provide the protection, deductibles and limits you need for your business and your future.
Pricing Commercial Auto Insurance
Rates for commercial auto insurance can vary as widely as personal auto insurance rates do and rates are based on many of the same factors including your driving history, type of vehicle and credit rating. But commercial insurers also must consider how many employees will have access to the vehicles, what you use the vehicles for, who may ride in the vehicles, how often the vehicles are driven and what kind of mileage is put on them as well as how many vehicles you have. Each of these factors will be weighted against the others so that your underwriter can develop a specific quote for your individual commercial auto insurance needs.
Remember, buying insurance for anything, including your commercial vehicle, isn’t just about having a certificate of coverage. It is about buying coverage that will protect your unique situation against the risks you face on a daily basis. The only way to make sure you have the right protection is to buy the right policy and to be completely forthright with your insurer.
For a Houston commercial auto insurance quote, give us a call at 713-782-2886.