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Understanding Car Insurance for Home-Based Businesses

All across the country, more people are choosing to be self-employed, whether due to job loss, layoffs, or simple entrepreneurial desire. High on the list of responsibilities of a home-based business owner is to ensure auto insurance coverage is up to legal standards, sufficient to protect anyone who might drive or ride in the vehicle. There are some basic principles to bear in mind, facts that can help you to understand your car insurance needs for your home-based business.

It is important to note that not all business owners need commercial insurance for their vehicles. In most cases, when business use of a vehicle is restricted to the delivery of goods or of equipment from job to job, you only need a personal auto insurance policy to cover your vehicle. Complications to this formula arise when other passengers are in the car or truck with you when you're making deliveries to customers' homes or dropping off equipment to the job site. If you do not drive other people around very often in your business travels, your personal auto insurance policy is probably sufficient to cover you.

Commercial Versus Personal Auto Insurance

Specific coverage issues aren't greatly influenced by whether or not you have a commercial auto insurance policy. For example, if you have a business vehicle and a member of your family drives it to go to the store or to drive across town on some other personal errand, they will be covered in the event of an accident or other insurance claim regardless of whether you elect personal or commercial insurance for the vehicle. Conversely, if one of your employees gets injured in an accident while driving your car, their injuries will be covered by your workers compensation policy, regardless of auto insurance type.

The cost of a commercial auto insurance policy for a home-based business is generally figured the same way as any other policy, taking into account the same general set of variables. For example, your commercial auto insurance provider will consider the number of miles you will be driving, the list of drivers who will be authorized to get behind the wheel of your car, your driving record and your claims and credit history. The liability limits you take on as well as whether or not you elect comprehensive and collision coverage or uninsured/underinsured motorist coverage will also play a large role in the amount you end up paying for your commercial insurance plan, same as they would in a standard personal insurance policy. It is intuitive and yet necessary to mention that the more coverage you choose to purchase, the more you will pay, and that things like higher deductibles and discounts will bring prices back down. In many cases, the difference in cost between a personal and commercial insurance policy may not be at all substantial [1]; the customer should choose based on which policy type more closely matches his or her needs as a business owner.

One important thing to keep in mind as a home-based business owner is that you need to carry enough liability coverage to protect both your personal and business assets. If you get into a car accident and you are found liable, the other driver may end up suing you both as a business owner and an individual. They could come after both your personal assets and your business holdings. For this reason, you should make sure to take on high enough liability limits to cover yourself the best you can in a worst-case scenario.

Advantages of Commercial Insurance over a Personal Auto Policy

In accident situations where you end up in litigation over your liability, commercial auto insurance may be a better fit. The liability limits of commercial policies are usually much higher than they are in personal auto plans, so they can offer you much greater protection when things go wrong. They also may contain helpful provisions such as rental or non-owned vehicle coverage, which can come into play if an employee vehicle is involved in an accident or otherwise damaged while the employee is using the car for business purposes.

While it is often no slam-dunk one way or another in terms of whether you ought to choose personal or commercial auto coverage for your home-based business vehicle, there are some simple factors to consider which can help shed light on the right choice. Taking a look at these factors can guide you if you are undecided which insurance type to go with. Some of these factors are the vehicle's ownership, its drivers and its use.

If you own the vehicle personally, you might be inclined to insure it in your own name with a personal policy; while it might make more sense to get commercial coverage on a car or truck owned or leased by the company. If you are the primary driver of the business vehicle, it will be easier for you to get adequate coverage in a personal policy than it would if your employees were the primary drivers of the car or truck. If the vehicle is normally used to transport materials to the job site by a single driver, a personal policy may suffice; but if those materials are hazardous, or if more than one driver or passenger is in the vehicle on a regular basis, a commercial policy is probably a better fit [2].

Final Considerations on Home-Based Business Auto Insurance

If your business owns or leases the vehicle in question, make absolutely certain that the business name is listed on the insurance policy as the principal insured. You should only be listed as the principal insured if the vehicle is titled in your name. If employees will be driving the vehicle, make sure they have good driving records and that they are well-trained. Training is particularly important if they are driving a specialty vehicle like a cube truck or a truck with a trailer. Training in how to drive, park and back up these vehicles safely and at safe speeds is very important to keep your employees safe and cut back on insurance claims against your policy. Certain vehicles also require state Department of Transportation certifications or medical examinations. Be sure to check with your insurance representative or your state insurance office to find out what the specific requirements might be for your vehicle.

You also might want to check into getting extra insurance protection for items permanently attached to your business vehicle, such as a generator. Such items could be damaged in a car accident, and without separate coverage, their replacement or repair would not be included in coverage. Whatever the specifics of your situation might be as a home-based business owner, you can use common sense to guide most of your decision-making when it comes to figuring out your auto insurance needs. Remember that your circumstance is probably not entirely unique, that most insurance companies have seen it all, and that they can probably come up with a coverage option that makes sense to you in terms of coverage while giving you a rate you can live with as a business owner.

[1] http://www.insure.com/articles/businessinsurance/home-business-auto.html Retrieved 2009-12-07.
[2] http://www.insureuonline.org/smallbusiness/topic_home_based.htm#intro_auto Retrieved 2009-12-07.

 

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