Commercial auto insurance works a little bit differently from its personal counterpart. After all, when you drive for work, you probably spend more time in the car, head to places you wouldn’t go in your personal time, and you may even drive vehicles that you wouldn’t drive in your off-time — like cargo vans, delivery trucks, etc. And, when you drive a commercial vehicle, you’re putting the entire company at risk of a lawsuit if something goes wrong.
Bottom line — there are different risks involved with driving a commercial vehicle. And when you’re talking about insurance, you’re talking about paying a company to take on all of the risk you come with.
So, how much will you pay for your commercial auto insurance?
Here’s what an insurance company will look at to figure that out:
1. Your employees’ driving records
Just because you’ve never gotten so much as a speeding ticket, you won’t save any money if you hire people who have violations or have caused accidents. Your insurance company will look at EVERYONE who’s going to drive your company vehicles to decide how much risk they present. If you have employees that drive heavy-duty vehicles — like tractor trailers — their driving records will likely be analyzed even more carefully.
And, remember, here in California, a DUI stays on your driving record for 10 years, so just because your employee is a good driver now doesn’t necessarily mean you’ll pay less to insure him!
2. The type of driving you plan on doing
The more miles your commercial vehicles travel in a day, the higher your risk of getting into an accident. So, if you run a cross-country delivery service, you’ll likely pay higher premiums than a company that only makes short trips around town.
3. Your company vehicles
A brand new vehicle with all kinds of state-of-the-art bells and whistles is worth more than a dingy old vehicle. As a result, you’ll likely pay more to insure it every month. Or, if your commercial vehicles are makes and models that are popular with car thieves, you’ll likely pay more to insure them. And, if you plan on leasing, borrowing, or renting any commercial vehicles, you’ll likely pay more in premiums because you’ll need hired auto coverage.
Luckily, your company vehicles can actually save you some money on premiums every month if they come with things like anti-lock brakes, air bags, an anti-theft device, and an engine cut-off system.
4. Whether or not you have trailers
Most business owners don’t know this, but any trailer that’s used for business purposes needs its own insurance. If your company uses horse trailers, travel trailers, utility trailers, etc., you’ll need separate trailer insurance. Luckily, most commercial insurance companies also provide trailer insurance, but it will come with an additional cost every month.
5. The amount of coverage you want
The higher your coverage limits are, the more you’ll pay for your commercial auto insurance every month. While it may be tempting to save some money by opting for less coverage, remember that your entire business is at risk every time one of your employees gets into the car. If an employee causes an accident, your company can be sued. So, before you sign on the dotted line, make sure you’ve got enough coverage so that you won’t be destroyed financially if the worst happens.
6. The deductible you want
Just like on a personal policy, the deductible on your commercial auto policy is the amount of money you have to pay before your insurance coverage kicks in. And, just like on a personal policy, a lower deductible comes with a higher monthly premium.
Some insurance companies will offer an option called “single deductible endorsement”. In layman’s terms, having this endorsement means you will only have to pay one deductible if you suffer damage to multiple things — like your truck and your trailer, for example — instead of paying a separate deductible for each item.
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