If your business owns a company car, however, there's no way around buying a commercial auto policy, which is meant to protect your business's assets in the event of an accident. This is an absolute must.
The gray area comes in when your employees use their personal vehicles for business purposes - even for something as simple as trips to the post office. If they get into an accident, their personal insurance will kick in, but anyone involved in the accident can also come after your business.
You need a hired and non-owned policy in this situation. It not only protects your business if your employee is involved in an accident on the way to a sales call, for example, but it will make your employees less apprehensive about using their personal cars for business, since they won't be held personally liable in case of an accident (and their personal auto policies won't be at risk). This type of policy will also cover cars rented for business use.
Depending on a number of factors - from what state you live in to the type of car your business owns - a commercial auto policy can cost more, or less, than your personal auto coverage. Keep in mind, however, that prices in the auto insurance industry overall are on the rise.
What does commercial auto coverage include?
There are a number of parts to a commercial auto insurance policy - some are required and others are just good to have, if you have the cash to pay for them. The more you add to your package, of course, the more expensive your premium.
Liability will be the biggest factor in your business auto policy when it comes to protecting your business. It can be broken down into two parts: bodily injury and property damage. Bodily injury liability (BIL) will protect your business from being sued for bodily injuries, lost wages, or even death by a person involved in an accident with one of your employees. Property damage liability will cover the cost of damages done to property and structures not owned by your employee or business in the event of an accident.
Medical payments is another part of a policy that is required by most states. If your employee is in an accident and the other person involved is hurt, it will cover the cost of treatments that person needs.
Although many states don't require collision and comprehensive insurance, it's good to have since it will protect your property. Collision will cover the cost of repairs for damage done to a company car in the event of an accident (most non-owned polices do not include collision). Comprehensive coverage takes effect if your car is broken into, vandalized, or damaged during a natural disaster.
Uninsured/Underinsured motorists coverage is still required by some states, but usually it's optional. This type of coverage gets tricky, but basically if you are involved in an accident with a driver who has inadequate insurance coverage, or none at all, this will kick in and cover damages and injuries.
Other extras include towing and rental reimbursement. This coverage doesn't include towing due to illegal parking, but if your disabled company car must be towed to a repair shop, it will cover that. And if you need to rent a car in the meantime, it will cover that cost.
