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Differentiate Business Car Insurance from Personal Car Insurance


It is important to be alert when using your employees’ car registered and insured under your company’s name. They might get involved in an accident when it is being used for personal errands. If this happens, you will not be entitled to any claims. Business car insurance is supposed to only cover medical damage and damage to property claims when a car is on official business.

The main difference between a business car insurance and a personal insurance is that you can use the latter anytime and anywhere and still be covered. This is not the case when it comes to business auto insurance. You are limited to office hours and trips related to operations of business.

The rate of business car insurance depends on the car usage. When a car is sparingly used, rates are lower; essentially giving you reduced rates for low mileage.  It is a different story, however, if it is used extensively in transporting expensive goods. Coverage for the goods or cargo also requires a different payment.  You may have to pay a little extra.

A policy on car usage is in order if your employees have a tendency to drive company cars on personal matters. Company heads are usually the ones guilty of this. They tend to forget that they have their own cars. You may have to install a meter to distinguish personal mileage from business mileage. Inform your insurance agent about the actual use of each car, he will be glad to customize a policy applicable for your situation. It may cost a bit more, but it is better than being denied claims which can result to heavy losses for the company.

It is not unusual for employees not to be too careful of company cars. You will raise your business car insurance rates by hiring a driver with this kind of attitude. Make sure the driver treats company cars like it’s his own. A few accidents, a few traffic tickets here and there, and you get high risk business car insurance with corresponding high rates.

A key to ensuring that car usage stays within limits stated in the business car insurance policy is by defining what are official and what are not. Issue “mission orders” or trip tickets signed by duly authorized company personnel or trip tickets to legitimize requests for company cars.

Definitely, you need business car insurance, but make sure company cars are used according to stipulations in the policy. You stand to lose valuable money if an employee gets hurt or a company car gets totaled in an accident not covered by the policy.