10 Mistakes to Avoid When Buying Commercial Auto Insurance was written for Playlouder by a contributing author. Please note that contributing opinions are that of the author. They are not always in strict alignment with my own opinions. –Joe.
Did you know that the global commercial auto insurance industry was valued at around $128.5 billion in 2020?
If you're surprised by such a whopping number, you'd also be fascinated to know that the auto insurance industry is expected to grow by 9.2% and reach $307.10 billion by 2030.
As a businessperson, you're responsible for many things if you're starting or have been in operation for decades, having sufficient business insurance is among them.
You might be a specialist in your field but know little about insurance, which is common among small company owners. Getting the right auto insurance takes some knowledge and expertise, yet rookie blunders are still common.
But it's alright. We have brought you 10 a blog on Mistakes to Avoid When Buying Commercial Auto Insurance. While the repercussions of some slip-ups can be negligible, others might have severe results.
Commercial auto insurance: what exactly is it
Auto insurance is one kind of liability insurance that protects people and businesses against the financial cost of damages caused by automobiles to third parties, even their properties.
In the event of a fire, an incident, or robbery, it could also compensate for any damages caused to the car insured. You can learn more about commercial auto insurance.
How does commercial auto insurance protect a business?
Whenever you or a representative of your business causes an accident, commercial car insurance will cover whatever damages to a business vehicle and any physical injuries resulting.
There are five different forms of insurance protection that are provided by commercial car insurance:
- Uninsured Motorist Coverage – Your protection if a driver operating a vehicle without insurance causes bodily harm to the motorist or passengers in your car is provided by uninsured motorist coverage. In certain areas, it will also cover damages to your car that are caused by drivers who do not have insurance.
- Comprehensive Coverage – Theft of a car and the vehicle's damages from other sources, like burglary, are both covered under additional insurance.
- Collision Coverage – Collision coverage pays to repair damage to your automobile from an accident with some other automobile.
- Medical Payments – Compensation for medical expenses incurred from injuries sustained in accidents.
- Auto Liability – If someone sues you for harm caused by your car, your automobile insurance will pay their legal fees.
Certain forms of coverage, like collision coverage, are elective rather than mandatory. State laws require the purchase of many other forms of coverage. In most cases, businesses are required to get commercial car insurance for their fleet of vehicles.
Avoid These 10 Mistakes When Purchasing Commercial Auto Insurance
We recommend you avoid the following mistakes whenever purchasing your car's insurance.
Mistake 1: Purchasing too little insurance
Any local company is at risk of being sued, and the average case cost is between $3,000 and $150,000. Your corporation's economic security and good name could be at risk if sued. It just takes one sizable claim to wipe out your firm completely.
When purchasing general commercial or commercial vehicle insurance coverage, it is important to have enough insurance limits to protect your company from legal action.
Does your firm take on contracted projects or provide contracted services for other firms? Until you can provide them with evidence of liability insurance, some firms can refuse to hire you.
In most cases, the sum of coverage you are required to get will be spelled out in writing. Another reason a landlord could not rent to your company is if you don't have insurance coverage.
Mistake 2: opting for a cheap policy
In today's dying economy, everyone is looking for ways to save costs anywhere, even on insurance policies like those protecting their vehicles or businesses.
Picking the least expensive insurance policy can cost more in the long run. The potential for insufficient compensation in the event of a claim increases proportionally to the policy's low cost.
An unaffiliated insurance carrier is your greatest bet for cutting costs. Free agents can shop around for the best price and provide expert insight into the specifics of their area's regulations.
Therefore, consulting with only an independent agent about your company's insurance requirements is important to choose the best course of action.
Mistake 3: Neglecting mobile equipment
Companies often have trouble finding affordable insurance for expensive equipment like forklifts and bulldozers. It's complicated to insure these mobile cars since they can fall under either general or auto liability policies, depending on the circumstances.
In most cases, basic liability coverage will protect mobile equipment used during employment. Harm sustained during equipment transportation is not covered by standard liability insurance. Protect yourself and your passengers in the event of an accident involving a motor vehicle with auto liability insurance.
Mistake 4: Omitting or misrepresenting information
Whenever registering for car insurance, you must provide accurate and complete details about yourself, your driving record, and your vehicle.
Not disclosing this information or providing false details might make your insurance policy void.
Mistake 5: Not searching about auto insurance online
Online comparison sites are a great resource for finding affordable auto insurance. Everyone is connected to the internet now. Therefore, businesses must change to keep up.
A comparison of auto loans is also available. If you have all the required paperwork, you can acquire various insurance quotes from various online services after filling out a single application.
Remember that a few websites only give ballpark figures, whereas others provide quotations to choose from.
However, regardless of whatever option you choose, you'll still be able to receive a decent summary of the prices currently being offered. You can get quotations from most insurance providers without picking up the phone or setting foot in an office.
Mistake 6: Failing to read the fine print
It can be challenging to comprehend an insurance policy due to the use of legalese and industry jargon.
Because of this, many companies fail to read their policies entirely and are then taken aback by the exclusions. Reading the policy carefully will help you understand what is and isn't covered.
Mistake 7: buying without understanding the contract
Please verify that the correct insurance and premiums are reflected in the policy by carefully reading its terms and conditions before making a purchase.
Remember that your insurance company is there to lead the way and answer any questions you have to make an informed decision.
Mistake 8: Not insuring potential income loss
Regarding insuring their company, some entrepreneurs put a higher value on their physical assets than their income.
When a natural catastrophe, such as a fire or a storm, occurs, not only can companies lose their physical assets, but they can also lose money due to downtime.
Rising back to normal after a tragedy and the downtime that follows can be quite difficult, based on your premiums and the nature of your company activities.
It would help if you insured the revenue your company would lose when it is closed for maintenance or relocation.
Speak to your broker regarding income protection while you cover your company against natural catastrophes or vandalism. Any revenue you lose as a result of having to close shop following a catastrophe is covered by this policy.
Mistake 9: Consider fleet coverage
The cost of insuring a fleet of cars can be spread out across several companies. You can qualify for this policy if you own two or more cars. It can be less expensive than protecting automobiles one at a time since it covers more of them simultaneously.
Certain organizations can use fleet coverage to save expenses even if they provide company cars to workers as an incentive. It's a win-win for businesses: the safety of their work vehicles is ensured at a reduced cost to the firm.
Mistake 10: Switching insurance companies every year
One last method for cutting costs on insurance on our list is to shop annually for the lowest rate by collecting quotes from various providers.
This strategy for comparing insurance costs might seem prudent at first glance, but it often results in higher rates on the road. Many insurance firms provide discounts and other perks to loyal customers.
As part of their underwriting process, insurance providers will also look at your existing policy details. They will be able to see how long you've been insured with each provider.
Specifically, if you've been with ABC Insurance for a while, say three or four years, you could notice a large rise in your premiums. You may have recently included a teenage driver on your insurance plan. Perhaps you don't understand why the rates have increased.
You decide to compare prices elsewhere. They can notice that you have been insured by ABC Insurance Provider for a while when you register for XYZ Insurance.
Even though you have been with your current insurer for some years, XYZ Insurance Company would welcome you as a devoted client.
Your insurance premiums will be reduced proportionately. You still wouldn't qualify for XYZ Insurance Company's best price if you had just been with ABC Insurance for one year.
Avoid mistakes and save up on your commercial auto insurance
Auto insurance is not only a precaution to take in an emergency. Every ethical company has to have it. Protecting your one-of-a-kind business requires a custom insurance plan, and an independent insurance carrier can guide you locate the best one.
You can stop worrying about whether or not you'll be protected in the case of an accident and instead focus on running a profitable company.
Tayyab is a diction enthusiast and an SEO buff with a CS background. He's been serving the SAAS & PAAS world for the last five years.