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Company Car Insurance

Company car insurance is a business expense with many important factors to consider. A company car offers tax advantages and convenience for your company and its employees. However, there are some pitfalls you need to avoid.

Company car insurance is also known as a Business Auto Policy (BAP). It covers the driver's liabilities if he or she injures someone else or damages their property.  A BAP covers all company-owned, rented or borrowed vehicles used on company business.

As with any kind of auto insurance, BAP rates vary because of several factors, especially by how much the vehicle is used. A delivery truck will carry a lot more risk than a car that is strictly used to create a good impression at client meetings, thus the delivery truck will have a higher premium because it will have higher mileage and must also be insured for its cargo.

Like any other car insurance, BAP will vary based on the type of vehicle (coupe, sedan, limousine or truck) and who drives it. That's why it is very important for business owners to hire employees with scrupulously clean driving records. For some reason, many employees tend to be careless with company cars. However, while their personal car insurance may not suffer because of a company-car incident, their employer's insurance will. And the employer will certainly remember such incidents when annual review time comes around.

Company owners have their own particular faults when dealing with company car insurance. Such insurance policies limit the hours and purpose for which the vehicle can be used. However, it is very easy to fall into the trap of using the company car to run a few personal errands. "Oh what the heck, since I'm out anyway, I'll just slip over to the mall to pick up something for the wife's birthday." If a fender bender occurs at the mall, the company owner will be hard pressed to show that he was at the mall on company business. If he can't, then the insurance company won't pay to have the damage repaired.

In order to combat the problem, many companies use mileage meters to differentiate between personal and business mileage. Others use detailed mileage reports. In addition, company car usage policies are included in company policy books, making it clear which uses are allowed or not. They also list what qualifications are needed to drive a company car (e.g. pay grade, driving record, job duties etc.)

If a car is used for both personal and business use that is supported by documentation, customized policies may be created to cover both uses. Such combined coverage generally costs more than standard or personal coverage, but it's worth every penny to prevent a heavy liability claim later on.

How to Get Vehicle Insurance Coverage

Getting insurance coverage for company cars is generally more expensive than for personal vehicles. That's because there are so many more questions involved. What if your employee is injured? What if he or she injured or killed someone else? What if your company car is damaged by another person, whether a stranger, an employer or an employee's relative? What if products are stolen from a company car?

Because of all these potential problems, company car insurance generally involves greater coverage, including medical and property coverage. Thus the premiums can cost up to 30 percent more than personal car insurance.

A very important, and very complicated, question to answer is: What happens if an employee is injured while a passenger in the company car?  The best bet may be to add a Broad Form Drive Other Cars Endorsement to the BAP. This will cover the driver's liability while driving the company car.

One way to save money on more expensive company car coverage is to get a multi-vehicle, or fleet, discount. As with multi-vehicle discounts for personal vehicles, company car fleets can get lower rates by getting insured under one single policy.

You may be able to insure the company car under your personal car insurance policy but it is very risky.  You and the corporation must be listed as the "Named Insured" on the Declarations page of the policy. In addition, your liability limits but be identical to the company's other insurance liability limits.

Company owners are not the only ones who face risks when using company cars, the employees do as well. If the employees have their own cars and car insurance, they should add an Extended Non-Owned Auto Endorsement to their policy to help them cover damage they cause to their co-workers in a company car.  If they only drive the company vehicle, they can buy a similar policy separately which will cover them for all vehicles they borrow or rent.

Finding the right policy for your company car is similar to any other car insurance.  It is essential to compare quotes to get the best price for your money. You can readily get several quotes right now on our website. Start out by entering your company's ZIP code in the box on the home page. You may need the VIN (vehicle identification number) for each of the vehicles you want covered, as well as the year, make and model.  Information will also be needed for each driver.

Play with the Auto Insurance Quote

Thanks to the internet, it's easy to get several quotes to compare to your current policy. You may also "play" with the data to determine the best coverage (e.g. deductibles and collision, comprehensive and liability coverage).  If you have specific questions, you can ask an agent or an attorney who specializes in auto accident claims.  Many states have specific auto insurance requirements.

In addition, you can also "play" with the data in selecting your next company car. While you may think you'd like to upgrade to a larger or more luxurious model, it may not be worth it once you've seen how much more it will take to insure it. The money saved on auto insurance could be used to upgrade facilities or hire new employees.

If you have a question about insurance for your company vehicles, talk to an agent. Is he or she experienced with company car policies? Does he or she appreciate that you have a business to protect?  The company and/or agent you select have a lot of responsibility: namely the future of your company and your employees.

Ask your colleagues and business clients for insurance recommendations. Ask what they did to save money.  Also ask if they have ever had to file a claim for the company car: Was the matter settled smoothly? What would they do differently?

As any business owner knows, financial conditions change rapidly. Therefore, you should reevaluate your company car policies at least annually, if not more often.  Will your company car fleet be growing or shrinking? Are your employees handling the cars well (including the owner)? Have there been any claims?  Are there new vehicles on the market that better serve your company's needs?  Keep up with insurance company trends to get the most value for your dollar.

Business owners are busy and must make many decisions. Fortunately, as important as company car insurance is, reliable quotes are readily available, right here on our website. Take a few minutes right now and find out how to improve your company's bottom line.

 

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