Protect company cars with fleet insurance

By Mye-Yun Lee

Do you have employees who regularly drive cars to make sales calls, run errands, or deliver items? If so, you might want some insurance for peace of mind.

If your business owns one or multiple vehicles, you'll need commercial automobile insurance. Also called fleet insurance, this type of insurance functions almost identically to personal auto insurance, with liability and damage coverage for injury, damage, or theft.

For the most competitive prices, shop around for 3-4 quotes. Also make sure your company is positioned to receive the best ratings even before you shop. Check driving records when hiring drivers and keep good maintenance records. If your employees take home company-owned vehicles, specify who can drive them so you can maintain control.

To reduce your insurance premiums, definitely consider larger deductibles, if your company can accommodate the occasional claim. And if your vehicle is more than 10 years old, think about dropping the collision damage component of the plan. Waiving this for newer vehicles is a possibility for the truly cash-strapped business, since it can total 35%-40% of your total premium, but may be an option only if you own the vehicles you are insuring.

In general, higher coverage limits are recommended. Many providers suggest a minimum liability coverage of $500,000. However, multi-party claims could quickly eat up this seemingly large sum; it may be worthwhile to explore raising your liability coverage to $1,000,000 or more. Although it sounds like a lot, it won't necessarily cost that much. Generally, it's less expensive to buy higher amounts of coverage on a commercial vehicle than a personal one. Umbrella insurance can also be used for the higher coverage limits.

Even if your business doesn't own any vehicles, you'll probably want non-owned and hired auto liability coverage. This type of coverage provides protection against claims that arise when an employee gets in an accident when driving a personal or rental car while on company business. Although the employee's auto insurance is usually the primary source of coverage for a claim, an injured party can come after your company if their claim exhausts the driver's insurance. With rental cars these days, you can even be on the hook for the whole amount as personal insurance carriers have reportedly rejected claims for cars that were rented for business use.

The good news is that non-owned and hired auto liability is not terribly expensive; expect to pay about $100 for $1 million in coverage. You may not even have to pay any extra for it as some business owner policies include it in their coverage.

To get a quote, start by approaching the agent who handles your general business insurance and see if you can get a quote from the same insurance carrier that you already use. Most providers offer discounts for multiple accounts that might save you up to 20% in premiums.

Rather than wait for an accident to happen, it's worth investigating now. Like time, insurance is never so important in its presence as in its absence.

Quick tips