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If your business uses a vehicle, or many vehicles, you may have employees on the road operating a variety of vehicles. Whether you provide company vehicles for your employees or they use their own for business purposes, commercial auto insurance is a must. In fact, in most states it's required by law. Commercial auto insurance provides coverage for cars, trucks and vans used by you or your employees for business purposes.

Do I Need Commercial Vehicle InsuranceCommercial auto insurance will cover many of the same areas as a personal auto policy including liability, collision, medical costs, uninsured motorists and comprehensive coverage only it is specifically for vehicles used for business. Although some personal auto insurance companies will extend their coverage to include use of a vehicle for business, most business owners are expected to have commercial coverage for these vehicles.

Do I need commercial auto insurance?

For some businesses the decision to purchase commercial auto insurance is obvious, for others it can be more complicated. Whether or not you need a commercial policy depends on how you use your vehicle and what company you have it insured with. Every company has different guidelines for business use coverage on a personal auto policy. Discuss your situation with your agent to determine if you need commercial vehicle insurance.

If you need commercial auto insurance, you will want to ask your business insurance agent some important questions as well as ensure that you provide them with a complete picture of your vehicle use. Here are some key points to discuss with your agent:

>> How many vehicles and drivers will need to be covered?

Coverage for commercial vehicle insurance is based on the number of vehicles and drivers to be insured. Depending on the number of vehicles and drivers involved, fleet insurance can often be less expensive than per vehicle policies.

>> How is commercial use defined in the policy?

Similar to most personal auto insurance policies that exclude coverage for commercial use, a commercial policy will establish a definition of commercial use.

Special coverages and considerations

Certain businesses must adhere to federal and state regulatory standards in the operations of their vehicles. For example, if your business will be hauling cargo interstate, there are specific Department of Transportation requirements for insurance that must be met. You will need to make sure you and your insurance professional have a thorough understanding of those requirements. Also, if you will be delivering or hauling for others or using other's equipment such as leased trailers or rental equipment, you will need hired or non-owned vehicle coverage.

Ways to Lower Premium Costs

Many of the same factors that go into determining premiums for personal auto insurance are used for commercial auto insurance.
  • Business Location - the location of the vehicles determines premiums for theft.
  • Driver Records - hire only qualified drivers with safe driving records.
  • Choice of Vehicle - sales people may want sports cars, but five-star safety rated, domestic, mid-sized sedans have the lowest premiums.
  • Deductibles - can your business afford part of the risk and maintain a high deductible? If so, your premiums will be lower.
  • Safety and Anti-Theft Devices - alarms, GPS tracking, air bags, seat belts, and other such devices can significantly lower premiums.
Seasonal Businesses

Don't cancel your insurance each year if you have a seasonal business. If you do, your stored vehicles won't be protected. It's better to maintain a comprehensive only policy that will provide basic protection against incidents like vandalism, theft, falling tree branches, and hail during the off-season. Keeping some form of insurance year round will also ensure that you have continuous insurance. If you drop your insurance completely, you might pay significantly more to get a new policy when your peak season rolls around because most insurance companies want to see proof of continuous coverage.

In general, if your vehicle is used more than three times a month for business purposes it is considered a commercial vehicle. This does not include driving the vehicle to and from work, but actually using the vehicle for your business such as visiting clients in your city or making a trip to another city, or driving to a job site or carrying equipment or people for your business. If the use of your vehicle falls under this category, it is well worth the effort of getting the proper type of auto insurance and receiving the protection you need for any eventuality.


By Matt Reynolds - Google+
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Claude Reynolds Insurance Agency Inc.
6801 Dixie Hwy Suite 232
Louisville, KY 40258
Phone: 502-933-2255
Fax: 502-933-5057
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