What is the need of having a Business Car Insurance?

This article will discuss on the need and prospects of Business Insurance for car or any vehicle in the USA. Firstly, we need to understand what purpose does a Business Car Insurance serves. Any business owner requires some sort of the insurance coverage for all the cars, trucks, vans or other vehicles that are used in his/her business operations.

It is similar to having insurance coverage for personal vehicles. Secondly, it is important to note here that Business Owners Policy or BOP does not include any coverage for the vehicles used in the respective business operations and such vehicles need to be insured separately.

The main reasons behind maintaining a Business Car Insurance

Most of the U.S. states mandate purchase of a liability insurance offering coverage for bodily injuries and any damage to property due to a vehicular collision. This extends to business owners as well who may face similar involvement in vehicular collision while carrying out organizational functions and operations.

Moreover, most of these U.S. states also mandate legal requirements for maintaining an Uninsured Or Under-Insured Motorist coverage along with Medical Payments coverage which is also referred as Personal Injury Protection or PIP in some U.S. states.

Owing to the aforementioned legal requirements a business owner has to purchase a Business Car Insurance for securing damage coverage for all vehicles used in business purposes either such vehicles are owned, on a long-term lease or hired for short-term.

The legal status of Business Car insurance

The Business Car insurance is availed using Business Auto Coverage Form or BACF. It is the customary form for availing car or vehicular insurance. It is utilized by various insurance providers to offer commercial auto coverage. The term “autos” referred in the form includes all vehicles intended for driven on public roads, i.e. cars, trailers, trucks, vans and any other such vehicles.

Any vehicle used for the business purposes can be independently “scheduled” on the Business Vehicle insurance policy accompanied by their respective coverages. This allows business owners to choose diverse insurance coverages for every vehicle.

This variation in coverage for every vehicle may depend on the features such as size, make, safety rating, and theft rating associated with the respective vehicle and the required minimum coverage regulations for such vehicle.

Business owner needs to have a Business Car Insurance

The need of having a Business Car Insurance depends on the following factors:

• the use of vehicle for business purposes or not;
• the person driving the said vehicle;
• the status of vehicle i.e. owned, rented or leased; and
• the personal vehicle of business owner and the employees are likely to be included if driven for business purposes.

Depending on the aforementioned factors any business owner can determine the type of insurance coverage is needed for his/her business.

Usually, the level of insurance liability coverage that a business requires can only be availed by using the BACF. Currently, most of the insurance providers in the USA recommend average limit of One Million U.S. Dollars along with a minimum limit of $500,000 for the purpose of maintaining Business Vehicle Insurance coverage.

This is even applicable on small scale businesses as they too may require ample protection against the potential litigations due to vehicular collision followed by incurred damage compensations to the affected parties the said collision.

Personal vehicle insurance policy cannot cover business purposes

The business owners’ personal vehicle insurance policy of the vehicle may provide coverage for certain business purposes only. Likewise, the personal vehicle insurance policies of employees for their respective vehicles may provide coverage for certain business purposes subject to the business type.

Other than the specifically excluded purposes, the use of any vehicle with any amount of acceptable risk may or may not be covered by the insurance provider under a personal vehicle insurance policy. Some insurance providers may allow such business purposes in exchange of imposing additional premium whereas some may entirely refuse to insure or even cancel existing policies if such purposes pose too much associated risk.

The aforementioned cases or refusal and cancellation require purchase of any Business Vehicle Insurance policy. If any vehicle is mostly used for business purposes then Business Vehicle Insurance might be the best option, as no personal vehicle insurance policy may offer ample coverage for such purposes.

However when a personal vehicle is occasionally used for business purpose then the insurance provider may offer certain personalization of personal vehicle insurance policy to accommodate such usage. It is important to note here that when a vehicle is solely owned by any business entity, then such vehicle will not be able to avail coverage using personal vehicle insurance policy; only Business Vehicle Insurance policy can satisfy such commercial requirements.

For instance, a very severe vehicular collision with multiple injured people and huge property damage may not reimbursed using the limited coverage of any personal vehicle insurance policy. In such eventuality, the aggrieved parties are likely file a lawsuit against the business entity to collect compensation for these damages.

Therefore, it would be wise to not solely rely on any comprehensive personal vehicle insurance policy for reimbursing any claim settlements that may arise due to commercial use of any personal vehicle. Usually, such comprehensive personal vehicle insurance policy by default excludes any or all claim requests made in the pursuance of a vehicular collision occurred while using the respective personal vehicle for business purposes.

Type of vehicles can be covered in a Business Vehicle Insurance

The scope of business vehicle insurance policy in offering the liability coverage to insured vehicle owner can be either narrow or broad. It primarily depends on the choices opted while purchasing the said policy. For instance, it could either be:

• purchased to be applied only for one explicitly designated vehicle (narrow application); or
• purchased to be applied to cover any liability exposures of the insured business owner that may result due to any vehicle’s use (broad application).

The types of Business Vehicle Insurance coverage

Overall, there are three broad options for availing Business Vehicle Insurance coverage:

• For vehicles owned by the business entity;
• For vehicles owned, leased or hired by the business entity;
• For vehicles used by the business entity, comprising any vehicle that isn’t owned, leased or hired by the business entity.

Majority of the business entities are recommended to purchase the third type. Reason for this recommendation is that only here the offered coverage protects the business entity from any liability regardless of who (i.e. owner or employee) is driving any personal vehicle for business purposes.