Insuring company vehicles: Things to consider

Businesses that operate motor vehicles need insurance coverage to protect themselves, their drivers and other motorists in the event of a collision, injury or loss. Although the principles of insurance are similar to those involving a privately owned vehicle, special considerations should be made when insuring a vehicle for a business.

Who's Driving?

Companies often spend a lot on car insurance because they buy it so any employee is covered while driving it. When business owners and managers declare who will drive a vehicle, they usually get a better rate, especially when the named drivers have good driving records. Listing drivers and their vehicles can especially help if someone at the company has a bad driving record (and the company doesn't want to let that person go).

Quantity Counts

The number of drivers and the number of vehicles matter when buying insurance for company vehicles. By keeping these tallies to a minimum, companies can keep their insurance costs manageable.

Companies that own or lease a fleet of vehicles will find insuring each vehicle individual to be a cumbersome and expensive task. To save money, these companies should consider buying fleet insurance or — if possible — blanket business insurance that covers the entire business and its vehicles.

Personal vs. Business Use

Companies should be aware that privately owned cars used for business may not be covered under either the driver's personal insurance or the company's business insurance. For this reason, employers should not ask employees to user their personal vehicles for business purposes.

Similarly, business fleet insurance may not cover the use of company-owned vehicles for private use. This means employers should check with their insurance company before letting workers borrow trucks or vans for personal matters such as moving. Companies should also check with their insurer before allowing employees to drive company cars to and from work. If a car wrecks under conditions excluded by the insurance coverage, all the costs of the accident will become the employer's.

Location Matters

Businesses located in areas having high crime rates will pay more to insure their vehicles and their business. If insurance costs continue rising, companies can consider moving to another part of town. Moving could be a self-defeating effort, however, because of the higher cost of facilities in the good neighborhood. Sometimes paying higher rates in the bad neighborhood makes financial sense. Business owners and managers should talk to their insurance agent before they move to find out how much premiums would change

Other Considerations

Before businesses finalize the terms of doing business, they should check with their insurer to see which vehicles cost the least insure. The desire to keep costs low can guide the company's purchasing decision

Options that help minimize the risk of loss are obvious ways to pare insurance costs. Buying cars with anti-theft devices, alarms, and GPS equipment installed can all help keep premiums reasonable.

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