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Small Business Insurance Simplified
Commercial Auto Insurance
Commercial Auto Insurance Coverage Is Must For A Business Using Vehicles
A business owner needs the same kind of insurance coverage for the car that is used for business purposes as for the one used for personal travel.
This means that the vehicle needs to be insured against collision, liability, medical payments and coverage for uninsured parties who may be injured or suffer loss.
Many small business owners use their personal vehicles for office work and presume that the personal car insurance policy they have will protect them from any claims or liabilities that may arise out of business use.
This could be a big mistake and many personal car insurance policies exclude or specifically do not cover any claims arising from business use of the vehicle. That is why commercial auto insurance is so important. Not only your car, but those of all employees who use their personal cars for work related activities need to be covered. If an employee has an accident while driving on work related activities, he or she, if not covered by their personal insurance, could claim compensation for damages from the employer. And of course, all company owned cars need to be covered by commercial auto insurance.
Wording of Their Personal Policies
Where many business owners get into trouble is with the wording of their personal policies. The policy usually states that it will not cover the vehicle if it is being used primarily for commercial purposes.
Many unscrupulous insurance agents also sell their policies to unsuspecting customers by telling them that primarily means that using the car for 4 or 5 hours out of 24 for business is okay.
The word primarily is open to interpretation and the worst thing that can happen after an accident is for the car owner to get into an argument with the insurance company about the meaning of the word primarily. The car owner is bound to lose.
Commercial Auto Insurance Will Depend on The Type of Work
Whether you need commercial auto insurance will depend on the type of work related driving you do and the specifics policy of your insurance company in this regard.
For example, most policies would cover any damage that occurred while making an office delivery while on the way home from work. But why take chances?
It is best to discuss the use of your car in detail with the insurance agent and obtain their opinion on the matter. Have them tell you about the options open to you.
Cross check this information with a few other insurance companies and go with the one that give you the kind of coverage you need.
Remember that in the case of insurance, nothing is ever implied. The personal or commercial auto insurance policy must state clearly and unambiguously what kind of coverage is available to you.
While the actual coverage provided by personal and commercial auto insurance policies are more or less the same, they differ on a range of technical issues which you should clarify with the agent.
A Common Mistake
A common mistake is in assuming that a personal or business umbrella policy will cover any business related claims arising out of using a car for commercial purposes.Most of these umbrella policies have an exclusion clause about the use of cars for business related purposes.
In many cases, the best option for many businesses is to go in for a "non-owned" commercial auto insurance policy.
This will cover any claims arising out of the use of cars not owned by the business that are being used for business related work.
In other words, both your personal car and those of employees who may use their cars for office work will be covered by this type of policy.
What's Next
Next In This Guide
Part 8:
 Business Interruption Insurance: What would you do if you had to close for a week for circumstances beyond your control? That's where business interruption insurance comes into play.
Previous In This guide
Part 6:
 Workers Compensation Insurance: Are you legally obligated to carry workers compensation insurance? Does it cover your employee's wage? Find answers here.
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