Types of Auto Insurance Policies

Auto Insurance Coverage for a Home-Based Business
Business Auto Insurance Policy

Auto Insurance for a Home-Based Business

In most cases, home-based business owners who use their vehicles to deliver goods or services or to transport their equipment from job to job need only the personal auto policy they already have. As long as you are not driving other people around a lot, your personal auto policy is probably just fine. However, depending on your particular use of your car, you may need to purchase higher coverage limits to protect yourself and your business.

In other cases, particularly if you are transporting people for any reason in the conduct of your business, you should consider a home-based business auto policy. A home-based business auto policy is priced no differently than your regular auto policy. Insurance companies look at the number of miles you drive, who will be driving the vehicle, your driving record, and your claims history in order to set your premium.

The liability limits you choose and your comprehensive and collision deductibles are also major factors in how much you are going to pay. The higher your limits, the higher your premium. Lower deductibles are going to cost you more, too.

As a home-based business owner you need to pay attention to liability limits in order to protect both personal and business assets. If you cause an accident, the injured parties can go after you as an individual and as a business owner. In order to minimize financial risk, you might consider higher liability limits.

Many home-based businesses move equipment from job to job, like power washers and ladders for house painters, lawn mowers and other gardening equipment for landscapers. If you have a homeowner's or renter's insurance policy the equipment you haul from job site to job site is minimally covered. Your insurer will typically cover damages from $250 to $1,000, minus your deductible.

If you permanently affix a piece of equipment, like a generator, to your vehicle, the generator will not be covered unless you increase your insurance on your vehicle in order to cover items that are permanently attached.

Business Auto Insurance Policy

A business auto insurance policy covers both property and liability risks that a business owner faces because of ownership or use of autos and trucks. A policy covering a vehicle used in business also may cover your employees when they are operating their personal cars for your business.

Business Auto Liability Coverage

The liability portion of the policy obligates the insurance company to pay because of bodily injury or property damage caused by an accident and resulting from the ownership, maintenance, or use of a covered auto up to the policy limits.

When there is an auto liability lawsuit against the insured business, where the loss is covered by the policy, the insurance company is obligated to defend the business owner or settle the lawsuit. The policy leaves the decision entirely up to the insurance company about whether to defend or settle a given claim. The insurance company's duty to defend or settle ends when the insurance policy limits have been exhausted by the payment of judgments or settlements.

There are three options for liability coverage under the business auto insurance policy: (1) autos owned by the business; (2) all autos owned, hired or leased; or (3) all autos, including those that are not owned, hired, or leased. Most business owners should buy the third type of coverage to protect themselves from liability when an employer or principal is driving a personal auto on company business.

When is the business liable?

An employer is generally liable for the acts of the employees when they are acting within the scope of their employment. So, when employees are driving vehicles on company business, regardless of who holds title to the vehicle, the employer probably will be liable.

For example if an employee takes a company-owned vehicle home at night, generally on the way to and from home, the employer is liable. However, if the employee takes that vehicle out later that night on personal errands, the employer will usually not be liable, because the employee is not acting within the scope of employment.

Controlling Auto Loss Exposures

The cause of most accidents is the driver. Employers should always check driving records of any employees who will drive on company business and never allow persons with a poor driving record to drive.

It should also be company policy that drivers always use seat belts. Driving safety should be frequently emphasized, and all vehicles should be well maintained.

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