Why You Should Get Commercial Auto Insurance for Your Business

You expose yourself and your business to various risks if you use personal auto insurance coverage for your business cars. Here are some of the reasons your business needs commercial auto insurance.

Your personal auto insurance coverage offers limited coverage for your business-related activities. Your carrier is likely to pay your insurance claim if you only use your car for occasional business. For example, the personal coverage may protect you if you get in an accident on your way to meet a client.

Don't expect any help from your personal auto coverage carrier if you use your car primarily for business. For example, if you use your personal car as a cab (say in a rideshare arrangement), your carrier won't compensate you for an accident with a passenger in the back seat. In fact, your carrier may even cancel your policy if you hadn't informed the company that the primary use of your car is business.

A commercial auto insurance policy also protects your business against liability claims related to automobile accidents. Without such coverage, accident victims may sue you for damages and even go after your business assets to recover their damages.

Say you own a small moving company, and you crash into a private van one day while in a hurry to make a delivery. If you don't have commercial auto insurance and the driver of the van sues you, then you may have to use your business assets to settle the debts. The government can garnish money in your business account plus any business assets with monetary value to compensate the accident's victims.

Auto insurance coverage comes with a limit (and sub-limits) to protect the carrier's interests. Without the limits, insurance carriers would quickly run out of money if a few clients were to make millions of dollars' worth of claims.

Standard personal auto insurance coverage has lower limits relative to standard commercial auto insurance coverage. In some cases, the same carrier may offer a commercial auto insurance limit that is twice the limit of a private auto insurance policy.

The higher limit is advisable for your business because businesses typically face higher liability claims than individuals. Maybe you have multiple business vehicles and several drivers; your liability exposure is definitely higher than the risk exposures of individual motorists.

Another advantage of commercial auto insurance is that it tends to come with more coverage options than personal auto insurance. Most carriers are more open to customization, where you get to cherry-pick and design the coverage you need, for their commercial clients than their private clients.

For example, you can buy a commercial auto insurance policy that covers not only the cars your business own but also the cars your business leases or rents from other parties. Your coverage may automatically extend to such vehicles, but the same is not possible for personal policies.

Lastly, a commercial auto insurance policy may offer you tax advantages that a personal policy might not have. The government allows you to deduct multiple expenses when you file your business tax returns, and the insurance premiums are part of these expenses.

You just have to prove that you use your car only for business purposes to enjoy a 100 percent deduction. You won't enjoy the deductions if you use personal auto insurance instead of commercial auto insurance for your business car. You will only enjoy partial deductions if you use the car for both private and business purposes.

Coastcomp Insurance Agency can help you get the right commercial auto insurance coverage. Contact us for a quote so that we can help you customize the right coverage for your business.