Why You Need Business Car Insurance

By James Tam on August 4th, 2007

The use of a car for your home-based business brings with it the dilemma of whether you should use commercial or personal car insurance. This is because depending on the usage of the car, each would serve a purpose. Most personal auto insurance policies also have enough coverage to protect the investments of owners, but this does not apply to all owners and their policies.

If the car, which is used for your home based business purpose is used mostly for transporting or driving your clients in and around the city, then a personal cover would suffice. On the other hand, if the business requires the regular transport of goods from on place to another then the better option would be that of commercial auto insurance. This is because the commercial policy provides coverage for both, the car and the goods in the case of an accident.

When you are insuring your car that is used for your home base business, you are required to pay attention to the liability and the protection you receive for your personal assets as well as your business assets. It is because of this that the liability limits and the deductibles play a major role in deciding the amount you pay as car insurance. If the insurance limits are higher and the deductibles are lower, you will be required to pay a higher rate as premium.

The other factor that the insurance company takes into consideration while calculating the premium is the miles on your car. They check to see how much you drive or are likely to drive. They also need to know who drives the car, your insurance history along with your driving records and also if you have made any previous claims and the nature of these claims. All these help in determining the rate of car insurance.

Now depending on the type of business purpose the car is used for, the insurance cover needs to be considered. If your job requires you to carry your own equipment from place to place and you have a home-owner’s or renter’s policy, then your business equipment will have no or minimum coverage. To ensure that the car along with the equipment has sufficient coverage, you may be required to invest in a rider. Here you will be guaranteed insurance on both the car and the equipment essential for the smooth functioning of your business.

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