When using a vehicle for driving to work, parking outside the office, and returning home after work, it is fairly simple and straightforward to find the proper insurance coverage for your vehicle. Usually, all you will need is general coverage against physical damage and liability, and you’re legally clear to drive.
However, when work takes place in a vehicle – such as meeting with clients at lots of different locations, delivering a product with the vehicle, etc. — that is a much different situation. In these circumstances, it can be much more complicated when it comes to getting auto insurance. But finding the right car insurance for business vehicles can become simpler and easier to understand once you have done some research and are more familiar with the subject.
Regular car insurance is sometimes known as “SDP cover.” That abbreviation refers to the car’s primary use, at least in the estimation of insurers, as something for “social, domestic, and pleasure” purposes. That can mean shopping or social events, visits to family and friends, or transportation back and forth to a single work location. All of these uses are normal, everyday, common, and they are all expected to fall somewhere under the usual auto insurance policy.
Commercial auto insurance is a separate and specialized type of insurance coverage for a different situation entirely. Maybe a certain person must use their own vehicles for work, and they must purchase insurance to properly regulate and legitimize that use. He or she may have to attend meetings, conduct seminars, or hold conferences far away. And the transportation to get him or her there must be properly insured.
It does not even matter how much the vehicle is used for business-related purposes — occasionally, regularly, or exclusively — just that it is at all. No matter what the degree or frequency of the use happens to be, car insurance for vehicles used for any kind of business purpose is a must have.
Once it is clear that the vehicle you use needs an insurance policy that covers its use at work, the next step might be to look into your options for purchasing a commercial auto policy.
To maintain a good cost for the insurance (low premiums, high discounts), the most important thing to do is to communicate clearly, right away, with your insurer. Just be up-front on how the vehicle will be used. Will it be occasional or regular business use? Will it be total commercial use and not used at all for personal purposes? With this information, you’ll be able to avoid under-insuring (or over-insuring) your car.
There are also some strategies for you to help keep insurance costs down:
Establish a good mileage limit. Do your homework on the area you’ll be covering professionally, and plan the driving carefully.
Choose a safe location to park. This is important, especially with a business vehicle that you won’t be around to protect all the time. The insurance company will want to know how safe the parking area is.
Make sure your vehicle itself is secure. Use an alarm or other device to make sure the vehicle is always safe from intruders, no matter where it might be parked.
Shop around and compare rates from several different commercial auto insurers. It is not uncommon for rates to vary widely between insurers. It may also be helpful to work with an independent insurance broker that is able to find you the lowest rate among several insurance companies. This could save you some time in finding the best rate.
For more details on buying commercial auto insurance, read “A Guide to Business Car Insurance,” an article from insurance advice organization Break Down Cover:
Commercial Auto Insurance & the Law
Almost all states in the US have compulsory vehicle insurance. Vehicle insurance is mandated to make sure that damage from auto accidents will be fully compensated, or as close to fully compensated as possible.
If you have an accident while driving for business (no matter where the damage is or whose fault it was) and you only have a conventional, private insurance policy with you, then the insurer may decide not to cover it. This is because the cost of that insurance doesn’t cover the risk associated with business-related travel.
It is imperative to have the right type of insurance for the type of driving you’re doing, so that you don’t end up having an accident and later finding out you didn’t have the proper kind of coverage.
Another important consideration is that you may be more likely to suffer an accident in the first place when driving commercially. Since your use of the vehicle might increase once you’re using it for work, the risk of an accident, as well as the necessity of insurance, increases exponentially.
All of the work involved in understanding, researching, and buying car insurance for business vehicles may seem like a difficult task. However, it is necessary to make sure and obtain the right kind of coverage for your situation. After doing thorough research and having a good idea of what kind of coverage you need, you will be in a better position to make an informed decision and get the proper coverage for your business vehicle.
Jim Wright is a freelance writer for Zonar. Zonar provides fleet management software for fleet management companies.