Everything you need to know – Nigerian Observer
Driving any vehicle on the roads requires having a driver’s license and a car insurance policy. With over 12 million car accidents each year, having a car accident is more common than you might think. Of these 12 million car accidents, almost 6 million cars are commercial cars doing business. Since businesses are so dependent on their vehicles, an accident can cause a lot of damage to the business.
This is why it is so important to ensure that your vehicles are used for business purposes. And to help you make the right decision, this article will detail everything you need to know about business auto insurance policies, what they are, why they are so important, the coverage they offer and the cost to get one. Let’s start.
Business auto insurance policies are very similar to general auto insurance policies. They are almost identical in their coverage and there is nothing unique about what professional auto insurance offers. So what makes them different?
Let’s say you only have one car covered by general auto insurance. You decide to start a pizzeria and register it as a business. While using your car to deliver the pizza, the car crashes and the damage is extensive to the other car. But there’s nothing to worry about since the cost of repairs is below your coverage limit.
The issue here is that the moment an insurance company finds out the accident happened while you were carrying on business or using the car for business, not only can they legally deny your insurance claim, but it can also remove you from the police. Insurance companies will deny any insurance claims made if you use your car for business purposes. But why?
The reason companies require you to purchase a commercial auto insurance policy is because of the higher risk. For general purpose, people use their car for commuting to work, shopping mall and other general purposes. But when it comes to business, commercial vehicles are driven more, they have schedules to keep and are driven by company employees.
All these factors increase the risk of road accidents and insurance companies do not want this. This is why almost all insurance companies offer general and commercial auto insurance policies. No matter the size of your business, if it is a registered business, you must obtain a commercial auto insurance policy for any car used to operate your business.
Commercial auto insurance coverage is almost identical to general auto insurance. These policies offer liability coverage, collision coverage, comprehensive coverage, and other add-ons such as uninsured motorist coverage.
The liability insurance policy includes liability for bodily injury per person, civil liability for bodily injury by accident and civil liability for property damage. So if your commercial car hits another car or another person or someone’s property, liability insurance will pay for the cost of repairs and medical treatment for the other person.
The same goes for collision and comprehensive insurance policies. A collision insurance policy will cover the cost of repairs if your car has an accident during business hours. Comprehensive insurance will cover all repair costs due to natural disasters, theft, fire, etc.
A major difference between general auto insurance and commercial auto insurance is the coverage limit. Commercial auto insurance policies have a much higher coverage limit than general auto insurance.
This also means that professional car insurance policies are also more expensive. It is recommended that you compare as many auto insurance policies before purchasing one to ensure you get the best policy at the best price and pay the lowest premiums for a good coverage limit.
The most important question is how much professional car insurance costs. It is impossible to say the exact figure as there are many factors that affect the cost. Different companies consider different factors when deciding the price, but here are some of the factors that are surely considered:
- Number of vehicles in your company: The number of cars your company owns impacts the price of the company car policy. Usually more vehicles will result in more cost.
- Vehicle Types: This is another important factor in choosing the price of the policy. Newer, larger vehicles will cost more to insure, while smaller cars and delivery mopeds will cost significantly less.
- Coverage: The insurance coverage limit will directly affect the cost of the insurance policy. A higher coverage limit means higher costs.
- Driving frequency: The type of business you own and the purpose of the vehicles are also important factors in determining the cost. Businesses that use more vehicles such as transportation, etc. will be charged more. It also depends on the mileage of commercial vehicles.
- Insurance claims and location: Previous insurance claims and the location of your business will affect the cost of the policy. If your business is located in an area with high crime and accident rates, the cost of the police will also be higher.
- Your driving record and that of your drivers: Driving records will also affect insurance rates, even for commercial auto insurance policies. Drivers will have bad driving records and traffic violations will increase the cost of the insurance policy.
If you’re looking for a median figure (and that’s a ballpark figure), for $1 million coverage, the cost of commercial auto insurance would be between $1,800 and $2,000 per year. It can drop below $1,500 for some small businesses and go up to $3,000 for large businesses. To get the exact quote, choose the right insurance company and contact them.