Whether you own a small business, a home business, or a large corporation, hence you make use of your car for business purposes, or you have a business vehicle, you will need business auto insurance. The article tells you all you need to know about commercial auto coverage and a detailed explanation of how much does business auto insurance cost.
Various persons use vehicles for business purposes to make their operation easier. To this end, vehicles stipulated for business purposes have to be insured under a business auto insurance policy. This step is relevant even if the car is a personal vehicle for business.
Most vehicles insured under personal auto insurance policies are excluded from the coverage in that policy hence they are stipulated for business. If not insured under a business auto insurance policy, the car owner will be at a financial risk. Hence the need to consider how much does business auto insurance cost.
What Is Business Auto Insurance?
Business auto insurance, also called commercial vehicle insurance or Commercial car insurance, is insurance protection for commercial motor vehicles. In Canada, any vehicle used to convey materials, goods, clients, tools, or equipment generally come under the business automobile and requires commercial coverage.
The similarity between business auto insurance coverage and personal coverage is that they both include liability coverage and personal damage coverage. They are different for various reasons that are vital to the commercial purpose of a vehicle:
Most insurance companies don’t have a limit on the number of vehicles covered on the policy.
Various types and sizes of cars can be covered under the policy.
Higher liability limits are available.
For most insurers, the number of drivers on the policy is limitless.
There are various endorsements open to increase the type of coverages.
One of the most vital strong points of the commercial vehicle insurance policy is the endorsement open to including coverage for cars used, which does not belong to the company or owned by employees. By choosing this endorsement, your commercial use of rental cars or employee-owned automobiles can be covered with similar liability coverage limits on the vehicles you own, resulting in better protection for your business.
What Does Business Auto Insurance Cover?
This is sequel to how much does business auto insurance cost. As a bundle policy, business auto insurance offers coverage on a first and third party basis:
- Bodily Injury Liability: This coverage provides financial insurance for your business if an insured motorist is involved in an at-fault accident. The coverage will take care of medical bills, lost income, funeral costs (if there is any need) and any associated costs for a third party if your business is found liable.
- Property Damage Liability: It pays for repair or replacement of cars or any other property when an insured motorist is found liable for an at-fault accident. Having in mind that it is not all accidents that involve two automobiles, it is crucial to take higher liability limits should an insured driver be at fault for being the cause of a multi-vehicle accident, or substantial damage to a building or other property.
- Medical Payments: This valuable coverage pays the medical expenses of an insured driver and passenger if they are injured in an accident irrespective of who is at fault.
- Roadside Assistance: This Coverage refunds the business for expenses incurred when an insured vehicle needs assistance such as fuel, towing, lockout, breakdown, or other assistance required to get the vehicle back in service.
- Uninsured Motorist (UM)/Underinsured Motorist Coverage (UIM): UM/UIM coverage pays if an insured driver (or an insured car in some states) is injured by another party who is uninsured or does not have enough insurance to pay for the medical expenses of the injured driver. In provinces where it is allowed, the coverage can also cover property damage caused by an uninsured or underinsured motorist. UM coverage also covers pain and suffering, which is not usually covered under the Bodily Injury coverage.
- Collision Coverage: The collision coverage, as the name implies, pays for repair or replacement where an accident results in a collision. This is subject to the deductible listed on the policy.
- Comprehensive Coverage: It covers repairs or replacement of an insured vehicle if the damage resulting from occasions other than a collision, such as hail damage, vandalism, or windshield damage. The coverage will also pay to replace the vehicle if it is stolen and not found. Comprehensive claims are equally subject to a deductible if selected.
Loading and unloading liability which is peculiarly vital for small business owners who convey goods to clients or events. For instance, caterers that carry equipment with them from occasion to another. If anything was destroyed while offloading, you could make do with your loading and unloading liability to assist with the costs associated with the repairs.
- Replacement car coverage. Suppose you’re involved in an insured accident and desire a temporary rental car to use for your day-to-day operations. In that case, your business auto insurance policy can help with the expenses.
Suppose your business requires movement of the vehicles to other provinces or states. In that case, you could look into additional coverages to guarantee that you, your employees and any passengers would be protected during those types of trips. You can check with your insurance company to advise you on how much does business auto insurance cost.
What Optional Coverages Are Available?
Depending on the insurance company, there are many optional coverages open to you that also covers business auto insurance, which can be added to the coverage by endorsement. These endorsements allow the business to attune their policy according to their industry and personal needs.
Hired and Non-owned Liability:
This coverage provides liability coverage on automobiles hired by the business or when a worker uses their personal car for business-related tasks.
Hired Auto Physical Damage:
This endorsement permits the business to provide physical damage on cars rented for business purposes and is subject to the deductible selected.
Commercial General Liability Insurance:
Commercial General Liability (CGL) insurance guards you and your business against any loss if you are found legally responsible for bodily harm or property damage to a third party occasioned by the things you sell or the service you render. CGL insurance can also provide protection in circumstances where you or your workers are conducting business offsite.
Product Liability lnsurance:
Product liability insurance is often added in a CGL policy, but not often. It is crucial to cross-check that your commercial insurance policy protects you from perils associated with product liability claims.
Cyber Event Expense Insurance:
Cyber attacks are a current threat to businesses and have continued to grow of late. Cyber event expense insurance is drafted to assist small businesses that depend on technology to reduce some of the expenses that may accrue due to a cyber hack.
If one of your clients claim your counsel caused them a pecuniary loss, your professional liability insurance helps you redeem yourself from the financial consequences that may arise. This policy is also known as errors and omissions coverage, i.e. (E&O coverage).
As a small business owner, your property, tools, equipment and technology are the things you depend on to keep your business up and running. If one of those tools was damaged and needed repair, you may not function effectively. This is where property insurance coverage comes in.
Equipment Breakdown Insurance:
Your property insurance policy covers your equipment for damage caused by outside sources, such as weather, fire and floods damage; however, you may not be covered under electrical or mechanical damage. In these events, you would look to your equipment breakdown insurance.
This is for business owners who transport equipment to different places. Where there is a theft, business auto insurance covers just damage to the vehicle and not theft of its content. Inland marine insurance covers this.
Business owners who may require inland marine insurance include:
Farmers and ranchers
Food truck operators
Photographers and videographers
Contractor’s Equipment Coverage
Business auto insurance does not cover portable equipment like tractors, backhoes, or forklifts. Damage to the worker’s equipment itself mandates contractor’s equipment coverage. This coverage can be a standalone policy or an add-on to business property insurance.
Business owners who park customers’ vehicles on their property may need garagekeeper’s coverage if those vehicles are damaged by vandalism, theft, fire, flood or extreme weather condition. This coverage is worth knowing while making your research on how much does business auto insurance cost. This coverage is optional and is typically found in garage liability insurance.
Businesses that may need this coverage include:
Auto glass installers
Sound installation shops
Auto repair shops
Tow truck operators
This insurance covers third-party injury and property damage claims when they result from garage operations. However, the policy rules out damage to clients’ vehicles when they are in your care, making it important to acquire garage insurance that comes under garagekeeper’s liability coverage.
On-Hook Towing Insurance
This insurance pays for the repair or replacement of other people’s vehicles when they are spoilt during a tow. This policy is useful to tow truck operators; however, it could be helpful to car haulers and other truckers as well.
Cargo Liability Insurance
Cargo liability insurance is a type of property coverage that has two main types of policies:
1. ocean marine, for shipments by sea, and
2. Inland marine insurance for shipping by land. Some cargo liability insurance coverages include all means of transportation. Wholesalers, manufacturers, Import/export companies, distributors, and most likely require cargo insurance.
Commercial Fleet Insurance
If your business possesses more than one car, you may require commercial fleet insurance, which covers all the automobiles your business own under one policy. The more vehicles and drivers your business has, the more risk you have, so a larger fleet requires additional coverage than a single-vehicle.
Does Law require commercial Auto Insurance?
It Depends on the province/state you registered your business vehicle. There are typically laws that mandate commercial auto insurance under a range of circumstances. It is best to accustom yourselves to these laws while finding out how much does business auto insurance cost. Business auto policy is necessary because personal auto policies do not cover liability limits required by the state agency. The following factors affect law regulations on how much does business auto insurance cost:
The vehicle’s weight: A lot of states require vehicles above 1 ton in gross vehicle weight to be insured under a business insurance policy.
Type of Vehicle: Most states necessitate utility-style vehicles, such as vans, dump trucks, trucks, and other special utility vehicles, to be insured under a business auto policy.
Transportation Vehicles: Any vehicle used to convey passengers for remuneration, such as limousines, cabs, and buses, must carry business auto insurance.
Cargo Vehicles: No matter the size or weight, most states require any vehicle that transports cargo, such as a semi-truck, cargo van, or box truck, to carry commercial auto insurance.
It is also important to note that even if your state does not require commercial insurance for the vehicles your business use, a personal auto policy will still exclude coverage for various services such as pizza delivery, even when only done on a part-time basis.
Can You Cover a Vehicle Used for Personal Business?
Most insurers will permit an owner or employee to use an insured car for personal use if the coverage is requested and due disclosure is made on the application. The price for providing coverage for regular personal use is usually an additional $50 per year. In almost all cases, the insurance company carrier will mandate that every person with access to business vehicles be recorded as a driver on the policy. However it s ideal to find out how much does business auto insurance cost with respect to the use of commercial cars for personal use.
Do You Need to Insure Your Car for Business Use?
The rule of thumb posits that if any facet of your job requires you to ride on a regular basis, you need business auto insurance. This means that hence you use your car for any form of commercial purpose, it is wise to find out how much does business auto insurance cost and act accordingly. This does not include everyday daily commute, which is covered under your personal policy.
In some cases, the distinction between a personal vehicle and a business vehicle is clear:
1. If you ride a vehicle with a gross weight of 10,000 pounds in the least or a load capacity of about 2,000 pounds, it requires a commercial insurance policy. The same applies if your vehicle has specific equipment such as hydraulic lifts and loading ramps.
2. Suppose you own a regular car, but driving is an integral part of your job (e.g. taxi driver, driving instructor, or pizza delivery person). You will need to make findings on how much does business auto insurance cost. Without your vehicle, the commercial enterprise would not exist.
Other times, the distinction between commercial and personal use is vague:
1. Let us suppose that you are an odd-job man driving between job sites with your equipment in the boot; again, finding out how much does business auto insurance cost is imperative.
2. If you intermittently use your vehicle for business reasons, but it is not a regular occurrence, you probably don’t need to bother about how much does business auto insurance cost but check with your insurer. They may modify your existing personal policy to cover occasional business use, but it won’t cost as much as a dedicated commercial policy.
How Much Does Business Auto Insurance Cost?
Businesses differ; therefore, there really isn’t a general average cost of commercial auto insurance. Commercial auto insurance cost depends on a number of factors, including how much coverage you require.
Common limits, coverage, and costs with the rider having a clear driving record:
$1 million liability
Comprehensive Coverage: $500 deductible
Collision Coverage: $500 deductible
Average insurance cost per vehicle: $750 – $1,200 per year
There are several factors that can drive the $750 rate to the $1,200 rate:
Motor vehicle reports with tickets or accidents in the previous three years
Vehicles with more than 10,000 pounds gross vehicle weight
Usual radius of operation
Speedy delivery required
Costs for additional coverage added by endorsement:
Hired and non-owned auto liability: $50 per year
Hired auto physical damage ($100 deductible): $175 per year
Roadside Assistance: $50 per vehicle per year
Rental Reimbursement: $100 per year
How much does business auto insurance cost depends on the limits of liability you elect, the types of vehicles you are insuring, vehicle reports of the drivers on the list, and different coverages you decide to purchase. Generally, a restaurant could use one or two cargo vans to pick up supplies and deliver food. The average cost for commercial auto coverage is between $900 – $1,200.
Businesses that may be bothered about how much does business auto insurance cost:
Contractors travelling between job sites
Other instances of when businesses need to be concerned about how much does business auto insurance cost include:
If you are not sure about how much does business auto insurance cost and whether your small business needs business auto insurance, these few questions will help you clarify.
- Who is the owner of the vehicle? This means checking if the vehicle’s title is in your name or your business’s name. If it is registered to your business and utilized primarily for business purposes daily, then there should be a commercial auto insurance cover protecting it. If you are a sole proprietor managing a small business from your home, and you do not regularly make deliveries or travel from one job site to another—your personal auto is probably adequate for now.
- How is the vehicle utilized on a daily basis? This is what will decide the type of auto insurance coverage that is right for you. Suppose you’re an electrician, and you travel from one customer’s property to another all day. You keep your valuable tools and equipment in your truck while moving about your activities. If you are involved in an auto crash, and those tools are destroyed, you may not depend on your personal policy for the repair or replacement costs. So If you use a vehicle for any of the following reasons on a regular basis, you should consider business auto insurance coverage:
- You transport equipment or tools.
- You convey or deliver goods, materials or merchandise.
- You transport clients for any reason (for example, you operate a limousine service or taxi service)
- Your vehicle is used for driver training.
- What type of vehicle do you operate? Sometimes the coverage you need is dependent on the vehicle you drive. Commercial vehicles such as trailers, trucks, tractors or often wreck more havoc if they are involved in an auto crash, and your coverage should reflect that. Even large Sports Utility Vehicles (SUVs) or Jeeps that are commercially used could require commercial coverage above and beyond the personal insurance policy. Anything that is mainly designed for construction or maintenance use should also have business auto protection.
- Do you use a ridesharing service? Ridesharing companies are rapidly springing up in recent times, and more and more riders are looking to them for sources of extra income. If you are partaking in a ridesharing service, it is best always check with your insurance provider to know if your personal auto policy permits ridesharing and if you need any extra commercial insurance coverage.
How Much Does Business Auto Insurance Cost in Ontario?
As aforementioned, there is a lot that goes into determining how much does business auto insurance costs as premiums can be as low as $600 per year and be as high as $10,000 per unit, but the average private passenger or light commercial unit costs roughly $1,000-$1,500 per year.
Business Auto Insurance vs Personal Auto Insurance
Personal and commercial auto insurance is quite different. Personal auto policies naturally exclude business-related driving, especially if business driving occurs on a regular basis. For instance, a consultant who customarily drives to a client’s office most likely requires a commercial auto policy even if his vehicle is not registered in his business’ name, and he is already operating on personal car insurance.
However, business owners who only seldom drive their personal car for work may have adequate liability coverage with their private car insurance. Moreover, going on personal errands in business-owned vehicles may be covered by commercial auto insurance. What is covered depends on the peculiarities of your policy, so you could review how much does business auto insurance cost with an agent to make sure.
Most small business owners insure only one car, so the regular annual premium is $1,200 and below. However, other factors may affect the cost. For instance, truck drivers face more significant risk because they ride more and have more costly accidents, so owner-operators functioning under their own authority may pay up to $12,500 per annum.
The primary factors that affect how much does business auto insurance costs include:
Vehicle type: Typically, larger, heavier vehicles require higher limits because they result in more damage during an accident.
Vehicle value: The premium for physical damage to a vehicle is often a percentage of the vehicle’s value, so a higher value means higher premiums.
Number of vehicles and drivers: The more the vehicles and employees driving, the higher the risk exposure. In this case, it usually requires more coverage and leads to higher premiums.
Distance travelled (mileage): Long journeys, especially interstate trips, increase commercial auto insurance costs.
Type of Coverage: Business owners usually choose from a catalogue of business auto coverages and endorsements, and each one of them contributes to the overall cost.
Coverage limits: Higher limits on coverage mean higher premiums, but they can also mean lower costs to business owners if they file a claim.
Deductibles: Higher deductibles translates to lower premiums, so many insurance agents recommend choosing the highest deductible affordable.
Cargo type: If you are hauling cargo, risk and premiums are usually much lower if you are moving less risky materials—for instance, hay rather than hazardous materials.
Credit history: Insurance firms check credit scores to help assess commercial auto insurance costs so that a poor credit report can escalate your premiums.
Loss history: Insurance companies often lower premiums for businesses with fewer no claims.
Because of the number of factors affecting commercial auto insurance costs, it is best for business owners to understand which factors relate to their situations and how they may affect their bottom line.
Who Needs Commercial Auto Insurance?
Any person who runs and uses vehicles for work should have business vehicle insurance coverage. This includes those who own business-owned vehicles and those who borrow, hire, or rent vehicles for work. It can even include business owners who use their personal vehicles for business purposes because those activities typically are excluded from personal auto insurance.
Average Commercial Vehicle Insurance Rates
Commercial car insurance cost: $1,200 to $2,400
Commercial truck insurance cost: $800 to $2,000
Commercial taxi insurance cost: $5,000 to $10,000
Commercial bus insurance cost: $35,000
Commercial tractor trailer insurance cost: $2,500+
Semitruck (Owner-Operator): $8,000 to $12,500
Delivery or Cargo Van: $3,300 to $6,200
Limousine: $4,000 to $10,000
Manage Your Commercial Auto Insurance Costs
Businesses use cars for various purposes. For instance, a construction firm may have a company vehicle that travels from one job site to another. The firm may also have several commercial trucks to move lumber and building equipment.
Your liabilities will influence your business vehicle cost concerning each of the vehicles, the probable loss in case of an accident and other factors.
It is best to do a yearly review of your insurance portfolio, business car inventory, drivers and commercial automobile insurance rates as many things can change. You may be eligible for additional discounts, for example, in a case where your company remains without claims.
If your using your cars, trucks, or other vehicles has changed, you’d want to ensure you are not paying too much for coverage; you will also want to make sure your coverage is entirely up to date to match your needs. Also, ensure there are no coverage gaps.
One of the necessary coverage types to assess on a regular basis is your company liability coverage. Lawsuits involving commercial vehicle auto crash can result in very significant judgments; ensuring your commercial vehicle liability is adequate is vital.
Many enterprise owners who have one or more commercial cars consider buying a business umbrella policy to cover excessive liability costs over what is built into a standard policy.
An umbrella liability policy will improve your business insurance costs, but it can be a strangely affordable policy for the vast amount of protection it provides.
Your business insurance agent can clear your concerns and work with you to secure your property and your employees. You can also check out these business auto insurance companies in Canada for business auto insurance rates.
FAQs on How Much Does Business Auto Insurance Cost
Business auto insurance policy is compulsory for any business owner who utilizes a vehicle in the course of running their business. Every business that owns, hires, borrows, or rents cars, be it a sole proprietorship or an enterprise with employees, requires at least liability coverage. But, some business operations may need more coverage, so it is imperative to work with an expert who can find a policy that suits the nature of your job. Contact an agent now, and get the aid you need to find the right commercial vehicle insurance rates for your business.
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