How to Insure the Company Car for Your Business

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How to Insure the Company Car for Your Business (Photo: @MaryIonita via Twenty20)
Cheryl Knight · Writer · Dec 03, 2020
TABLE OF CONTENTS
    In addition to car insurance for your privately-owned vehicle, you need insurance for your company car. Commercial car insurance covers you and your employees while using company vehicles on company business.
    To make sure you get the right amount of coverage for your company vehicle, check out the following key details about commercial car insurance.

    What is commercial car insurance?

    Commercial car insurance provides insurance coverage for any vehicle owned by a business. Due to liability issues most states require a business to purchase a separate policy for the vehicles they own. This allows insurance liability for accidents that happen in a company car to remain separate from a personal insurance plan. That way, if someone sues the company for an accident someone caused in a company vehicle, the company pays any settlement and not an individual business owner.
    The main differences between a commercial and personal car insurance policy include the following:
    • Commercial car insurance has an increased liability risk, so there are higher liability minimums compared to a personal car insurance policy.
    • Coverage options that extend the liability coverage to any existing vehicles owned by the company, as well as any new vehicles the company purchases in the future.
    • If your business hauls non-owned trailers under a trailer interchange agreement, it needs Trailer Interchange Insurance.
    • Single-deductible options that allow a company to only pay one deductible on a trailer and vehicle involved in an accident as opposed to paying a deductible for both separately.
    • Individual named insured or non-owned vehicle coverage, both of which extend a company’s commercial insurance to protect you or your employees when driving a vehicle not owned by your company.

    Do you need a commercial car insurance policy?

    Whether or not you need commercial car insurance depends in part on what you primarily use your car for. If you use your car mainly for business purposes, then you do need this type of insurance. Your insurance agent should let you know if you need to fill out a Business Auto Coverage Form (BACF). Insurance companies commonly use a BACF to provide for business auto liability insurance. Most states require at least the same minimum liability insurance coverage as they do for personal insurance, as detailed in this chart from ValuePenguin.
    Coverage Requirements By State
    State Body Injury Liability Per Person / Bodily Injury Liability Per Accident / Property Damage Coverage Requirements
    Alabama $25,000 / 50,000 / 25,000
    Alaska $50,000 / 100,000 / 25,000
    Arizona $15,000 / 30,000 / 10,000
    Arkansas $25,000 / 50,000 / 25,000
    California $15,000 / 30,000 / 5,000
    Colorado $25,000 / 40,000 / 10,000
    Connecticut $20,000 / 40,000 / 10,000
    Delaware $15,000 / 30,000 / 10,000
    District of Columbia $25,000 / 50,000 / 10,000
    Florida $10,000 / 20,000 / 10,000
    Georgia $25,000 / 50,000 / 25,000
    Hawaii $20,000 / 40,000 / 10,000
    Idaho $25,000 / 50,000 / 15,000
    Illinois $20,000 / 40,000 / 15,000
    Indiana $25,000 / 50,000 / 10,000
    Iowa $20,000 / 40,000 / 15,000
    Kansas $25,000 / 50,000 / 10,000
    Kentucky $25,000 / 50,000 / 10,000
    Louisiana $15,000 / 30,000 / 25,000
    Maine $15,000 / 30,000 / 10,000
    Maryland $30,000 / 60,000 / 15,000
    Massachusetts $30,000 / 60,000 / 15,000
    Michigan $20,000 / 40,000 / 10,000
    Minnesota $20,000 / 40,000 / 10,000
    Mississippi $25,000 / 50,000 / 25,000
    Missouri $25,000 / 50,000 / 10,000
    Montana $25,000 / 50,000 / 10,000
    Nebraska $25,000 / 50,000 / 25,000
    Nevada $15,000 / 30,000 / 5,000
    New Hampshire $25,000 / 50,000 / 25,000
    New Jersey $15,000 / 30,000 / 5,000
    New Mexico $25,000 / 50,000 / 10,000
    New York $25,000 / 50,000 / 10,000
    North Carolina $30,000 / 60,000 / 25,000
    North Dakota $25,000 / 50,000 / 25,000
    Ohio $12,500 / 25,000 / 7,500
    Oklahoma $25,000 / 50,000 / 25,000
    Oregon $25,000 / 50,000 / 20,000
    Pennsylvania $15,000 / 30,000 / 5,000
    Rhode Island $25,000 / 50,000 / 25,000
    South Carolina $25,000 / 50,000 / 25,000
    South Dakota $25,000 / 50,000 / 25,000
    Tennessee $25,000 / 50,000 / 15,000
    Texas $30,000 / 60,000 / 25,000
    Utah $25,000 / 65,000 / 15,000
    Vermont $25,000 / 50,000 / 10,000
    Virginia $25,000 / 50,000 / 20,000
    Washington $25,000 / 50,000 / 10,000
    West Virginia $25,000 / 50,000 / 25,000
    Wisconsin $25,000 / 50,000 / 10,000
    Wyoming $25,000 / 50,000 / 20,000
    In addition, most commercial car insurance policies have a combined single limit, which allows you to handle claims on multiple vehicles under one policy. Combined single limits usually start at around $100,000, although you sometimes can choose higher limits ranging from $500,000 or more.

    Different types of commercial car insurance

    In addition to acquiring the needed liability insurance for your company cars, you should also purchase additional coverage options, just like you do with regular personal car insurance.
    • Physical damage coverage: Coverage options such as comprehensive and collision also extend to commercial car insurance. You should also consider gap insurance, allowing you to more easily replace a vehicle if the insurance company declares it a total loss in an accident.
    To determine the true market value of your company vehicle, check sites such as Kelley Blue Book, Edmunds, and Autotrader to determine whether you need gap insurance.
    • Rental and towing: Rental and towing coverage comes in handy when your company vehicle breaks down. Roadside assistance can help if you break down or have a flat, while rental coverage reimburses you if you need to rent an alternate vehicle following an accident.
    • Non-owned auto liability endorsement: A non-owned auto liability endorsement allows you or your employees to drive vehicles not owned by your company. This endorsement also covers your employees if they must occasionally use their private car for company business.
    Significant differences do exist between personal and commercial car insurance, though both insurance types usually provide payment for bodily injuries and property damage costs in case of an accident. Make sure you have the proper amount of coverage for your company car for your next commercial car insurance policy.
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