Posted by United Insurance & Financial Group, LLC on
Providing a work vehicle for your employees has many benefits. For jobs that require a great deal of travel, offering a work vehicle to an employee helps set your business apart from your competitors when recruiting top talent. It’s also a great bonus offering as an employer to motivate a strong work ethic within your team.
However, it is essential and required in many states to have commercial auto insurance for company vehicles. So, what exactly does commercial auto insurance cover, and what factors determine its cost?
Commercial Auto Insurance Components
There are two components included in commercial auto insurance. The first component is the liability section of the policy, which covers your financial responsibility if you were to get in an accident and injure another person. The second component covers the car itself; there are different types of coverage for this component. Comprehensive coverage covers losses from fire, theft, and other perils. Then there is collision coverage that covers damages resulting from an accident. Leasing offices and banks usually require the latter.
The cost of commercial auto insurance depends on a few factors: how many vehicles a company has, each vehicle’s value, the type of business use for each vehicle, and the driving risks, to name a few. Suppose you are a small business looking into commercial auto insurance for the first time. In that case, a few key terms are critical to understand before choosing your plan or asking for a quote.
Premium. A premium is a price you pay for insurance monthly, quarterly, semiannually, or annually. Frequently, insurers will offer a discount to businesses that pay their entire premium when a plan is initiated. Paying your premium on time is the best way to ensure your safety net. When determining your premium, insurance companies look at:
The type of insurance you’re buying
Amount of coverage you need
Policy limits you select
Your desired deductible
Your business type
Your insurance history
Where your business is located
Your business revenue
Your business assets
Discounts applied based on other active policies you have
Policy Limits. If your business has a covered cost, your insurer will cap how much it will pay to settle the claim. These caps are known as policy limits, and the limit size depends on the type of insurance you purchase. There are two types of insurance coverage limits – per-occurrence and aggregate. Per-occurrence limits determine the funds available to cover one specific incident. In contrast, aggregate limits determine the most your policy will pay for all claims during the policy period. These limits tell you the maximum amount of funds your policy will cover for one or more than one covered loss.
Policy Deductible. A deductible is what you pay out-of-pocket before your policy begins to cover costs. Insurance companies usually offer a range of deductibles to small business owners. If you want to keep your claim costs low, choose a low deductible. But keep in mind that a low deductible usually means a higher premium (monthly, semiannual, or annual fee). Conversely, a low premium will often represent a higher deductible. For this reason, it is imperative to read through each policy and do your calculations to understand what you’d expect to pay if you were to get into an accident or injure someone.
Policy deductibles are a smart way to choose the right policy based on your budget and risk appetite.
Commercial Auto Insurance Quotes for Small Businesses
Once you understand what goes into choosing an insurance policy for your business, you can reach out to United Insurance & Financial Group, LLC. We offer free, comparative quotes on Auto Insurance from multiple insurance carriers so you can get the best possible rate for your business.
Want to see how much we can save you? Request a quote here to find out. You can also call us at (484) 881-6848.