3 Factors That Influence Commercial Auto Insurance

Starting a business can feel like an overwhelming task. From obtaining your licenses to training employees, the list of things to do seems never-ending. Don't forget to include obtaining commercial auto insurance to the list. If your business will require employees to operate company vehicles as part of their role, you need to have this coverage. Learning just some of the factors that go into the quote-generating process can help you better prepare.

Status Of Vehicle Ownership

Unlike personal auto insurance, commercial polices vary based on the ownership status of the vehicle. If you own the vehicle, you will likely qualify for a standard policy. However, if you are leasing the vehicle or renting it, you may need to secure a non-owned policy.

Polices for owned vehicles cover the entire vehicle, including damages and liability claims. However, with a non-owned policy, there is generally only a liability component. For this reason, ownership polices typically come with a higher premium than non-owned polices.

Employee Driving History

When you secure commercial auto insurance, the insurance company will review your information to assess your risk level. However, they also want details about the employees that will be operating the vehicles. If any of your staff has a less-than-stellar driving record or has even made numerous claims on their personal insurance policies, this can translate into an increased risk.

Since premium rates are heavily focused on risks; the greater the risk, the more you can expect to pay for coverage. If you have the manpower, save the driving responsibilities for those team members with the best driving records.

Vehicle Usage Category

How you intend to use the vehicle will also have an impact on the cost of your insurance coverage. In terms of policy simplicity and lower cost, vehicles that will only be used to transport packages or for delivery purposes generally fall at the base of the totem pole.

However, when it comes to those vehicles that will be used to transport people or that will be used to transport any hazardous materials, the number of policy components you need as well as the cost for coverage will increase. If your vehicle's usage requirements are in line with the latter examples, expect to budget more for your insurance.

The more information you know about what is considered, the easier it is for you to plan the addition of commercial auto insurance into your budget, so make sure you're doing your research.