If you own a small floral shop run out of your home, you may purchase a van to make deliveries. If your wife started selling cakes, you may help her out by using a small vehicle especially for selling orders. Small business owners from bakers to mechanics often use their own vehicles for business use without blinking an eye. But what happens when you get in an accident on your way to a delivery? Or you dent your door in the parking lot of a client or customer. Small business owners tend to rely on their personal auto policy for vehicles used primarily for business purposes, but this is a recipe for disaster.

Personal vs. Commercial Auto Insurance

Commercial AutoA commercial auto insurance policy provides coverage for business-related driving activities. Even if the business only owns one vehicle, the commercial policy is necessary for adequate coverage. Many people think that a commercial policy only applies to industries where driving is the focus, such as trucking or fleet services. This is not the case. Commercial policies apply to any business which uses a vehicle. Personal auto insurance generally does not cover any business-related auto accidents, so if you use your own car for your cake deliveries, your auto insurance might not cover your next accident.

Employee Drivers

Commercial auto insurance also offers higher liability levels than personal auto insurance, which is important if you have employees or others driving for you. If an employee regularly drives the car, the commercial auto insurance policy allows you to add that driver's name to the policy and extend coverage. Commercial auto policies can also extend coverage to an employee who may go out on company business in their personal vehicle and then gets into an accident.

Commercial Rates

Commercial rates vary just like personal auto rates vary. The factors that determine your commercial auto rate include the likelihood of you filing a claim, along with the estimated cost of the claim. This can be determined by past insurance history, as well as the value of the vehicles driven. If you sell tacos out of a truck with a state-of-the-art kitchen inside, your insurance will most likely be higher than someone who delivers flowers with a mini-van. The driving records of all covered employee records, the location of the business and the usage of the vehicle also make a difference in determining your rates. A business located in a rural area with minimal driving will have a lower rate than a delivery business in Chicago.

There are several ways to lower the cost of your commercial auto insurance policy:

  1. Maintain a clean driving record and do your best to stay free of claims.

  2. Increase your deductible. This will mean a higher price in case of an accident, but cheaper monthly bills.

  3. Drive safe vehicles. When purchasing a car for business, ensure it has anti-lock brakes, air bags, alarms and global positioning systems.

  4. Shop around; rates can vary widely among providers in your area.

Buying commercial auto insurance may seem unnecessary for the average small business, but the truth is, they are crucial to protect yourself and your business. Personal auto insurance excludes coverage for business-related activities. So that simple fender bender on your way to a client has now turned into an afternoon that cost you a few thousand dollars. If you are using any vehicle for your business, it is important to get a commercial auto insurance policy to protect it.