Many businesses find at some point in the first several years of operation, that using personal vehicles just isn’t expedient anymore. There are many reasons for this, like the desire to separate personal and business, taking advantage of some tax breaks, or wanting to have a vehicle that proudly, and loudly, proclaims that it belongs to your business.
Whatever the reason, and regardless of whether it’s a dump truck or a sedan, as soon as you have an auto that is owned by your business rather than you personally, it’s time to get a Business Auto policy.
Business auto policies are typically one year policies with all of the coverages that you are used to having on your personal auto, just with higher limits. Typically, business auto is written with $1 million liability limits because to the average person, it doesn’t matter if you are just making payroll and paying yourself on the side, if they are in an accident with a vehicle that has a company name on it, they think they have hit the jackpot. So, to protect your cashflow, higher limits cover any liability that comes up.
In addition the higher limits for the typical coverages, business auto policies also have some options that may be right for your business:
Hired and Non-Owned Auto coverage covers the liability that may come up in a car you borrow or rent. This is a broad coverage ranging from your employee who you sent to pick up lunch in their personal car, all the way to a vehicle you rented.
Drive other Car coverage is a must have if you as the business owner have a company car for tax reasons that you or your spouse drive for personal use as well.
There are some things to watch out for on commercial policies, though, that are not like your personal auto policy. Most important and usually the one that is forgotten, is that your business auto policy requires you to name the drivers of the vehicle…..coverage isn’t just provided to whomever you give the keys to automatically. So it’s important to update your agent as your staff changes. It’s also important for your staff to be up front and honest with you about what is happening in their personal lives. A speeding ticket or a DUI on their personal time will impact your commercial auto rates if that employee is listed as a driver.
Business Autos are a great way to advertise your business to the community and separate you personally from your business, but it’s critical to make sure that you protect your business by putting the right coverage in place.
This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on Employment Liability Insurance and how Aaron can help your business prepare for the worst, email him at firstname.lastname@example.org or call (952) 229-5155.