The basics on small business auto insurance

Business auto insurance needs to cover more than personal auto insurance does. While a personal policy covers you and your car, business auto coverage has to cover vehicles that are owned by the business, along with other scenarios like employees using their own cars for business and someone driving a company car home.
Small businesses' auto insurance needs are as diverse as small businesses are. And requirements vary by state. But, according to the Insurance Information Institute, some basic necessities include:
  • Liability coverage (for injuries and property damage you or your business' drivers cause).
  • Medical payments coverage or personal injury protection (for injuries your employees sustain while driving on company business).
  • Uninsured/underinsured motorist coverage (in case one of your vehicles gets hit by an uninsured or hit-and-run driver).
  • Physical damage coverage, like comprehensive and collision coverage, to cover damage to the company's vehicles.
Business owners often use what's called the Business Auto Coverage Form to cover their fleet, whether it's made up of cars, trucks or vans, according to the Insurance Information Institute. The business owner can then "schedule" each vehicle separately, customizing coverage for each.
Unlike personal auto policies, business auto policies frequently have what's called a combined single limit. This means that instead of separating the policy's coverage limits by injuries and property damage, the business policy will provide one total limit to cover both types of liability. The Insurance Information Institute recommends selecting a liability limit of at least $500,000 -- enough to cover a serious accident and the resulting court costs.
Things can get complicated if, for example, employees regularly use their own vehicles for work. Employees' personal auto insurance policies would cover them if they use their cars irregularly and infrequently for business, such as visits to clients. But, according to the Insurance Information Institute, if an employee's personal auto insurance limits are exhausted after an accident, the business could be held liable for additional costs.
One way for business owners to protect themselves in this scenario is non-owned vehicle coverage, according to Progressive. This type of coverage applies to vehicles not owned by the business. In addition to covering employees who occasionally use their own vehicles, it also would cover vehicles the business has to rent while a company vehicle is being repaired.
Businesses that use drivers (like delivery businesses) take on additional liability because, in essence, they could be putting unsafe drivers on the road. If you know an employee has a poor driving record, you could be liable for "negligent entrustment," according to the Insurance Information Institute. Organizations are responsible for checking their drivers' records -- and, if a business fails to do so (and a driver causes a crash), it could end up paying additional damages above and beyond what it would have to pay for the accident.

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