Small business owners may be tempted to rely on their personal auto policy rather than buying commercial auto insurance for vehicles used primarily for business purposes.  However, the standard personal auto policy excludes coverage for cars used for business.  If you are using a car for your business, it is important to get a commercial auto insurance policy to protect it.

Commercial Auto Insurance vs. Personal Auto Insurance

According to the Insurance Information Institute, only a commercial auto insurance policy can provide the level of liability coverage that even a small business needs to cover damages caused by a serious accident.  They recommend a minimum of $500,000 of liability coverage.

Most personal policies offer a maximum of $500,000.  While the main coverage is the same on both policies, the commercial auto insurance policy offers liability limits of $1 million and higher.  If an employee regularly drives the car, the commercial auto insurance policy allows you to add that driver’s name to the policy and extend coverage.  If an employee goes out on company business in their car and then gets into an accident, coverage can be added to protect your business from that liability as well.

How Commercial Auto Insurance Rates Are Determined

Insurance companies base their rates on the likelihood of you filing a claim, along with the estimated cost of the claim.  In general, clean driving records for all drivers on the policy equals lower premiums.  If your business is located in the center of the city where traffic is heavier, you’ll pay more than if it’s in a remote suburb.  If you use the car daily to make sales deliveries, your commercial auto insurance rate will be higher than if the vehicle is occasionally used.

Save Money on Commercial Auto Insurance

The good news is there are several ways to lower the cost of your commercial auto insurance policy.  The best way to save is to maintain a clean driving record and remain free of claims.  Insurance companies also offer credits for safety devices such as anti-lock brakes, air bags, alarms and global positioning systems.  Parking in a garage or locked parking lot can lead to additional savings on your commercial auto insurance policy.

Another way to lower costs is to increase your deductible.  The deductible is the amount of money your business pays before the insurance policy kicks in to pay the rest of a claim.  Although increasing your deductible means that you’d pay more should you file a claim, the premium savings may be worth it.

Lastly, a fast and easy way to save money on commercial auto insurance is to shop online and compare quotes from competing providers.  If cost is a main deterrent from buying a commercial auto insurance policy with higher liability, these savings may make the difference.