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The Basics of Business Car Insurance


A business car is any vehicle used for business purposes. It is usually owned by a company and driven by one or several employees. It is differentiated from a personal car because personal cars mainly used for one’s own benefit without profiting from it in any way.

Drawing a line between these two types of cars is very important to a car insurance company. They outline different sets of insurance policies for each type. Consumers would do well to know more about it and make sure they procure the right type of policy depending on their cars’ main usage.

Business car insurance only covers those hours and travels made related to a business. It is usually more expensive than personal car insurance. Most company cars are driven by several employees and this involves a higher risk whenever these are used.

Premium rates imposed on a business car insurance policy are largely dependent on how the vehicle is used. If it traverses the streets for about two hours a day only, it will incur a lower mileage, and therefore also a lower premium. Those used for deliveries are considered higher risk since they are out on the roads more often. Policy rates for such vehicles are much higher. If the goods transported are delicate or dangerous (say, flammable gas), that further raises the risk of accident and car owners need to pay extra for it.

One of the most important coverage in a business car insurance is the car usage policy. It cannot be helped that an employee will sometimes use a company car for his personal needs. Complications arise when a vehicle figures in an accident outside of business hours, and the employee tries to seek financial help from an insurance company. With the car usage policy, a meter could be set up in a car’s system, so that a clear delineation is set for business and personal mileage. This is usually a customized policy that will cost a little more, but it helps protect the business from abusive employees.

The next plausible question would be; who really needs business car insurance? It is a valid question because a person could be self-employed with a home-based business. The only business things he does with his car is perhaps to go to banks to deposit money. Should he get business insurance for his car? In fact, he does not need one unless he often uses a car to create profit for his business.

Employees who could apply for this type of insurance are those in sales, construction works and deliveries. It is advisable to clarify with an insurance agent first just to be on the safe side.