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In the Driver’s Seat: Understanding Auto Insurance For Business

For many companies, business depends on cars. This is true whether the business is a sole proprietorship or a corporation with hundreds of employees. When it comes to insurance needs, the type of policy can vary widely.
It all depends on the type of business, who owns the vehicles, who’s driving them, and how often.

Coverage Needs

In most states, business vehicles require liability insurance for both bodily injury and property damage  that may result from an accident involving someone from the company. Many states also require uninsured/underinsured motorist coverage and/or personal injury protection (PIP). If the business owns or leases the vehicle, physical damage coverage is also often purchased.
The typical insurance policy that covers your business operations—a Business Owners Policy (BOP)—does not cover vehicles. A separate policy is needed for autos. In most cases, it will be a Business Auto Coverage Form (BACF).
The BACF doesn’t require the same level of coverage for every vehicle your business uses, however. You can “schedule” them separately, choosing different coverage levels for different vehicles depending on need, but all under the same policy. For example, why get the same $30,000 collision coverage for a beat-up work truck that you would for the brand-new one in your fleet?

Personal Versus Business

Depending on the type of business you own, the vehicle use required and how much the business is worth, you may be fine with your personal auto policy and the policies your employees carry. Personal policies do cover some business use. However, they won’t cover vehicles owned by the business. Personal “umbrella” policies won’t either.
If you or your employees are driving personal vehicles for business, be sure all of you have sufficient liability coverage to protect the business in the event of a serious auto accident. If the coverage limits on each personal policy add up to less than what your business is worth, a victim’s insurance company will likely sue your business.
A minimum of $500,000 in coverage is the recommendation for small business liability protection, which typically only a BACF can provide. Even a very small business can secure $1 million in protection for a slightly higher premium.  
Generally speaking if the business owns, rents or leases vehicles, the driver should be covered with a business policy. If no vehicles are owned/rented/leased, personal policies may suffice. It all depends on coverage limits versus the value of the business.
There are many variables and nuances in determining the right auto coverage for your business. It’s best to talk with a SelectQuote licensed insurance agent who will help you determine the coverage you need. Much depends on who will be driving the cars, whether you own, rent or lease; and if you and employees are likely to be driving their own cars for your business. The answers to these questions will ultimately indicate the exact coverage you need.
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