Car Insurance for Your Small Business

Small business car insurance has several different parts, each one paying for something different. You have to have liability insurance on your cars, which averages $538.73 per year.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2020

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Here's what you need to know...

  • Car insurance is divided into several different parts, each one paying for something different
  • Usually, a policy with several different types of coverage is needed to fully protect you and your business
  • If your business owns many different vehicles then you may need to purchase fleet car insurance
  • Every business owner must have the right insurance to protect the company including car insurance.

Owning your own business is an exciting undertaking but also one loaded with responsibility.

No matter what size your company is and whether you work from home or a large warehouse, you need the right level of insurance.

Even if your company doesn’t own a car, you might find that you still need some sort of small business car insurance policy.

If you are shopping for regular car insurance or commercial car insurance then look no further, just put your ZIP in the FREE box for a car insurance comparison.

Liability

If your business owns any cars, you have to have liability insurance on them.

Liability is the part of the policy that pays for the other driver’s expenses if an accident is caused by one of your company vehicles including:

  • Repairs to the car or the cash value of the car if it isn’t fixable
  • Medical expenses for anyone in the other car
  • Settlement for the other people including lost wages or pain and suffering
  • Defends your business if the other driver or passengers sue you

Each state specifies a minimum liability amount. You can choose to buy a higher amount.

Remember, liability protects your company’s assets from lawsuits that could stem from terrible accidents.

Insure U’s small business department suggests having $1 million in liability coverage on your commercial car insurance policy.

However, depending on the assets of your company, the number of vehicles, you have, and other factors, you may need a higher amount.

You might also look into an umbrella liability policy for your company which is a secondary policy that provides extra funds should you need to cover a large settlement.

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Uninsured/Underinsured Motorist

In addition to liability coverage, your state might also mandate that your company carry uninsured/underinsured motorist coverage.

If one of your business vehicles is hit by someone else who doesn’t have any car insurance, uninsured motorist coverage will pay for the damages.

Uninsured motorist also covers hit and run situations.

The underinsured motorist coverage covers any gaps between the insurance limits of the driver who hit you and the cost of the damage.

In some states, the required property liability levels are quite low and might not cover damage to your vehicle.

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Medical Coverage

States differ on whether they require medical coverage on commercial auto insurance, but they don’t differ on the fact that you must cover their injuries in some way.

If your employee is injured while working for you, you are responsible for paying their medical bills.

You might already have some sort of provision for this, whether it’s the fact that you pay for their health insurance or have worker’s compensation.

Worker’s comp will usually pay for the medical expenses from an auto accident which occurred while an employee is working for your business.

Know the worker’s comp restrictions before you decide not to carry a provision on your commercial car insurance.

Comp and Collision

Comprehensive and collision are not be required by any state.

If you have borrowed the money to purchase a vehicle for your business, then your lender will probably require that you carry these until the loan is paid off.

  • Collision – covers damages incurred from a traffic accident caused by the driver of your company vehicle or the company will pay you the actual cash value of the vehicle, minus your deductible
  • Comprehensive – also covers damage to your car, but only if it occurred from something other than an accident such as theft or storm or fire damage

If your cars are owned free and clear, it will be up to you to decide whether to carry comp and collision.

If you are a very small business with only one older car that you could afford to replace if needed, you might choose to forego them.

Keep in mind that your small business auto coverage usually will not cover property stored in the vehicle.

For example, if you own a few work vans that have the tools your employees need in the rear, the car insurance won’t cover the tools. You’ll need to make sure your other business insurance policies cover them.

The U.S. Small Business Administration has more information on the types of insurance your company might need.

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Non-Owners Auto Insurance

If your company does not own any vehicles, you may think that you don’t need to have any car insurance for your business. However, you’ll need to evaluate whether you aren’t opening yourself up to trouble by not having any.

For instance, if you use your personal car for business purposes, like deliveries, errands to buy supplies, or picking up clients from the airport, or have your employees do so, you might have a gap in coverage.

Your personal auto insurance, or that of your employee, might or might not cover the damage you cause in an accident.

Even if your employee’s personal auto insurance does cover the damages and will pay to defend the employee if he is sued, his policy will not pay to defend your business, says the Insurance Information Institute.

Typically, a commercial car insurance policy will cover your business and any vehicle it uses, whether it is owned, borrowed, or rented.

However, if your business doesn’t have any auto insurance, you are left open to situations where non-owners coverage is needed. Your business can buy a policy designed specifically for companies that don’t own cars but need coverage for the occasions when they use one.

Another benefit to this type of policy is that it can save you a lot of money at the rental car counter if your employees travel for business.

The industry experts at the National Association of Insurance Commissioners warn that a person’s personal auto insurance and credit card benefits usually won’t cover rentals if the travel is for business.

So, how much does small business car insurance cost? Find out the answer right now!

Get FREE auto insurance quotes simply by entering your ZIP in the box.

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Average Monthly Car Insurance Rates by State