How Much Can You Expect to Pay for Commercial Auto Insurance
Commercial auto insurance is going to cost money. Therefore, it is a necessary and important business expense that you must pay regularly to keep your coverage active. Furthermore, once you have your policy in place, there still might be outstanding costs within the policy itself. Therefore, though commercial car insurance is a great way to help you save money when vehicle mistakes beckon, it is not a zero-cost investment. Here is some more information on just a few of the costs you might have to pay in association with your policy.
Costs Within Commercial Auto Insurance
A business auto insurance policy is coverage that will apply to businesses and the vehicles and drivers that operate for them. It exists because most personal car insurance policies won’t cover vehicles used for business. The coverage contained within the policy will apply specifically to the commercial risks associated with a business’s operations.
In most cases, a commercial auto policy can contain numerous types of coverage, such as;
- Auto liability insurance
- Collision insurance
- Comprehensive damage coverage
- Uninsured/underinsured motorist coverage
Your state will likely require you to carry certain coverage, but in other cases you can increase your policy to favorable limits for your own needs.
However, each of these policy limits will come with a cost. Furthermore, they will contain limits and rules on how much and when they will pay on your behalf.
- Your insurance premium
- Costs outside the rules and limits of your policy
Let’s take a closer look at these costs, and how much you might expect them to cost your business.
All car insurance, commercial auto coverage among it, is not free. Therefore, you will have to pay a regular fee that ensures the insurer will cover their investment in you as a customer. This is your premium. Premiums are not usually set-in-stone costs based on the policy you buy. Often, they vary from insurer to insurer and policy to policy.
So, if you and the business across the street both buy the same commercial auto insurance, on the same day, from the same company, you both still might pay different prices. Why is this?
It all has to do with risk factors. Insurers measure risk as a policyholder’s likelihood of having to file a claim against their policy. Therefore, those with higher risks of filing claims are those who also usually have to pay more for their insurance.
To get a good idea of what risk you pose to them, insurers will look at and rate a variety of factors. These might include your:
- Company size
- The type, number and values of vehicles in your fleet
- What type of materials you transport
- Business location
- A history of claims on previous commercial auto policies
- The driving records of those insured on the policy
Furthermore, the types of coverage you buy will also influence the premium. All will include the coverage required of you by state and federal law. However, if you increase your policy limits beyond this coverage, you might see your rates rise.
You must pay your premium on time to keep your coverage active, and that’s why you can’t miss payments because you can’t afford them. Going without coverage is often a risk factor that might lead to higher rates in the future. That’s why your agent is happy to work with you to tap into savings and discounts to make your coverage an appropriate balance of the right coverage and affordability.
Within most commercial auto policies, you’ll find deductibles, usually numerous ones. Deductibles are a policyholder’s personal cost responsibility for a claim before the insurer will pay the rest of a claim. Most collision and comprehensive policies have deductibles attached.
So, let’s say you have a wreck in a company vehicle. Your car has $3,500 in damage. You also have a $1,000 collision deductible on the policy. Therefore, you must pay $1,000 toward the cost of the damage. The insurer will then agree to pay the remaining $2,500. This is based on the formula of (Total Claim – Deductible = What Insurance Pays). So, to plug in the numbers, ($3,500 – $1,000 = $2,500).
Not all portions of commercial auto policies will include deductibles. For example, liability claims usually don’t. All the same, you do have a right, in many cases, to choose a deductible to your satisfaction. Your agent will help you do so carefully.
Don’t Exceed Your Policy Limits
One case where your commercial auto policy won’t pay for your losses is if it excludes the type of claim you wish to make, or if a cost exceeds the limit of your policy. So, if your policy pays to its maximum limits, then you might still be on the hook for extra costs. Or, if your policy won’t cover damage at all, you might have no help available.
That’s why your agent is more than happy to help you increase your coverage to satisfactory limits. With the right commercial auto policy, you won’t have to worry when you will and won’t be able to afford the costs of an accident.