Business Automobile Insurance: The Basics

What are the basics of business automobile insurance? What is it suitable for? Does your company need business automobile insurance? Many new business owners have these questions, and we have the answers.

What Is Business Automobile Insurance?

Business automobile insurance is insurance designed to protect an automotive vehicle or fleet used for business purposes. Automobile liability insurance for a business is used to compensate other drivers, fix damage caused by accidents, and ensure the minimal cost to companies that use vehicles for business purposes — no matter how frequently.

What Does Business Automobile Insurance Cover?

It varies depending on the policy and the provider, but most business automobile insurances cover the following:

Liability Damages

Suppose a driver working for you causes an accident in a company vehicle during business hours and is found to be at fault. In that case, business automobile insurance can compensate the injured party. This can include bodily harm caused by the accident, property damage or loss of property, and other accident-related damages.

Collision or Comprehensive Physical Damage to the Vehicle

Business automobile insurance can cover a minor collision or full-body damage to a company vehicle. Business automobile insurance can cover the repair costs if the vehicle is in an accident. Precisely what is covered due to the accident will vary depending on your specific policy. Policies can also cover vehicle theft or other non-collision-related damages.

Medical Expenses

Automobile liability insurance for a business can also cover medical expenses. If a driver for the company or a third party is hurt in a collision or accident, the automobile insurance policy can cover their medical costs.

Protection From Uninsured Motorists

Automobile liability insurance for a business can protect company vehicles from uninsured motorists. If a third party is uninsured and is at fault, business automobile insurance can ensure repairs and compensation for the company vehicle through uninsured motorist coverage.

Does Your Business Need Automobile Insurance, and What Does It Cost?

Yes. You should invest in business automobile insurance if you use your vehicle or a fleet for company purposes. Many states require it by law if the vehicle is listed as a commercial vehicle, which can lead to better financial protection as your business expands.

The cost of a business automobile insurance policy varies from company to company based on several factors, including:

  • The number of vehicles used.
  • Type of vehicles used.
  • Business purposes of the vehicles (ex., delivery, towing, etc.)
  • Employee driving history.
  • Conditions of the vehicles.
  • Risks associated with the job.

Around 40% of small businesses pay less than $150 monthly for a $1 million coverage policy. Again, the numbers vary depending on your specific company and its services, which usually are calculated based on risk-loss factors. Here are some examples of businesses and the level of risk they pose.

Low Risk:

  • Pizza delivery
  • Autoparts delivery
  • Employee transport
  • Food trucks

High Risk:

  • Passenger transport (rideshare, touring vehicles)
  • Towing
  • Interstate delivery
  • Mobile services (dog grooming, plumbing, electrical)

Before you purchase business automobile insurance, make sure you understand what the policy covers, including the number of vehicles, covered and how business automobile insurance can protect your company. For more specific policy questions, Fusco Orsini & Associates has you covered.

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