You finally did it. After years of working for someone else, you’ve taken the plunge and started your own business. Congratulations! As a new business owner, there are a lot of things you need to think about that you may not have had too before. One of those things is insurance. Specifically, you need to make sure you have a business auto policy in place. Here’s a basic overview of what a business auto policy is and what it covers.
What is a Business Auto Policy?
A business auto policy (BAP) is a type of insurance that helps protect your business from financial losses due to accidents involving vehicles used for business purposes. This can include cars, trucks, vans, and trailers used for business purposes such as making deliveries or transporting products or equipment.
A BAP can help cover the costs of repairs or replacement, as well as medical expenses for injuries sustained in an accident. It can also provide protection for your business if you are sued as the result of an accident.
Types of Coverage
There are two types of coverage included in a typical BAP: liability and physical damage.
Liability coverage can help pay for damages caused by an accident that was your fault, up to the limit of your policy. It can also help with legal expenses if you are sued as the result of an accident.
Physical damage coverage can help pay to repair or replace your vehicle if it is damaged in an accident, regardless of who is at fault. This type of coverage typically includes collision and comprehensive coverage. Collision coverage can help pay to repair or replace your vehicle if it is damaged in an accident with another vehicle or object. Comprehensive coverage can help pay to repair or replace your vehicle if it is stolen or damaged by something other than a collision, such as fire, vandalism, or theft.
How do you know if you need one?
You might think that you don’t need a business auto policy if you only use your car for personal errands and the occasional drive to meet clients. However, personal auto insurance policies often have limitations when it comes to business use. If you use your car regularly for business purposes, it’s important to have a business auto policy in place to make sure you’re properly covered. Here are a few things to consider when deciding whether you need one.
Do You Use Your Car for Business Purposes?
If you use your car to transport products or equipment, visit clients or customers at their office or home, or attend off-site meetings or conferences, you need a policy. Even if you only use your car for these purposes occasionally, it’s still a good idea to have a policy in place so that you’re covered in case of an accident.
Personal auto insurance policies typically exclude coverage for any business-related activities. This means that if you’re in an accident while using your car for business purposes, your personal auto insurance company could refuse to pay out any claims. If you have a business auto policy in place, however, you can rest assured knowing that you’re properly covered no matter what happens.
Do You Have Employees Who Drive Company Cars?
If you have employees who drive their own cars for business purposes, it’s important to make sure they’re properly insured. Personal auto insurance policies typically exclude coverage for any accidents that occur while the car is being used for business purposes. If one of your employees is in an accident while driving their own car for work, your company could be held liable if they don’t have adequate coverage. A business auto policy would provide the coverage you need to protect your company in this situation.
Are You Hauling Anything?
If you regularly transport products or equipment in your car, you’ll need cargo insurance to protect against any damage or loss that might occur during transit. Most personal auto insurance policies don’t cover cargo, so if something happens to the products or equipment you’re transporting, you would be on the hook for the repairs or replacement costs yourself. A business auto policy would provide coverage for any damage or losses that occur while your car is being used for business purposes.
What factors go into determining your rates for a policy?
There are a number of different factors that insurance companies consider when calculating rates for business auto policies. Some of the most important include:
The type of vehicle being insured: Cars and trucks are typically cheaper to insure than larger vehicles like buses or semi-trucks. This is because they’re less likely to cause damage in an accident.
The state where the vehicle is registered: Certain states have higher rates of accidents and vehicle theft, which means that insurers will charge more to cover vehicles registered in those states.
The driver’s history: As with personal auto insurance, businesses will pay more for coverage if the drivers on their policy have a history of accidents or traffic violations. Insurers will also consider the credit scores of business owners and drivers when determining rates.
The amount of coverage being purchased: The more coverage you purchase, the higher your premiums will be. That said, it’s important to make sure you’re not underinsured—or else you could be left on the hook for significant repairs in the event of an accident.
How can you save money on your business auto premiums?
You just got a call from your insurance agent informing you that your business auto policy premiums are going up—again. Your first instinct is to start shopping around for a new provider, but you know that’ll take time you don’t have. Is there anything you can do to lower your rates without switching providers? Turns out, there are a few things. Read on to learn more.
1. Review Your Coverage Annually
Your business circumstances are constantly changing, and your insurance policy should reflect that. Are you still using the same vehicles you were using when you originally applied for the policy? Have any of your employees been driving for longer (or shorter) periods of time? Has your company expanded (or shrunk)? These are all factors that can affect your premium, so it’s important to review your coverage annually and adjust as needed.
2. Raise Your Deductible
Your deductible is the amount you must pay out of pocket before your insurance company starts covering claims. In most cases, the higher your deductible, the lower your premium. Of course, you don’t want to set your deductible so high that you can’t afford to pay it if you do have an accident, so be sure to strike a balance between affordability and savings.
3. Take Advantage of Discounts
Most insurance companies offer discounts for a variety of reasons. If you haven’t done so already, inquire about discounts for things like installing anti-theft devices in your vehicles or taking a defensive driving course. You may be surprised at how much you can save just by taking advantage of the discounts that are available to you.
What are the common mistakes people make when buying a business auto policy?
Let’s look at some of the mistakes people make when buying one.
1. Not Shopping Around: The first mistake people make is not shopping around for the best rates. Just like with anything else, it pays to shop around and compare rates from different insurers.
2. Not Reading the Fine Print: The second mistake people make is not reading the fine print. It’s important to carefully read your policy and make sure you understand what is and isn’t covered.
3. Failing to Get Enough Coverage: The third mistake people make is failing to get enough coverage. Your business auto policy should provide enough coverage to protect your assets in the event of an accident.
4. Relying on Personal Insurance: The fourth mistake people make is relying on their personal insurance instead of getting a separate policy. If you use your personal vehicle for business purposes, your personal insurance will not cover any damage that occurs while you’re working.
5. Not Keeping Accurate Records: The fifth and final mistake people make is not keeping accurate records of their vehicle usage. It’s important to keep track of how much you use your vehicle for business so that you can properly insure it.
As a new business owner, it’s important to make sure you have the right insurance in place to protect your business from financial losses due to accidents. A business auto policy (BAP) is a type of insurance that can help cover the costs of repairs or replacement, as well as medical expenses for injuries sustained in an accident involving a vehicle used for business purposes.
If you want to discuss options for business auto insurance, please call us at 561-732-9305 our quoting hours are Monday through Friday from 8:30 AM to 5:00 PM. In addition, you can request a quote online. Please remember, We Handle All the Work, While You Save!
Rob Macoviak is the President of Oyer, Macoviak and Associates. Oyer, Macoviak and Associates is the oldest independent insurance agency in Boynton Beach and has been in business since 1953.