Business

5 Reasons Your Business Needs Commercial Auto Insurance

3 Mins read

How often do your employees drive as part of their daily duties? Every day? Once a week? Only as needed? Regardless of how often your workers drive on the clock, you need commercial auto insurance to cover them in case of an accident.

1. You might get sued

If you happen to live in a no-fault state, like Florida, car insurance laws work a little differently. You’ll still need a commercial policy for your workers, but you have to be ready for the possibility of getting sued if your employee causes severe or catastrophic injuries.

In no-fault car insurance states, you won’t get sued unless the injuries caused by your employee are considered severe or catastrophic under the law. However, you can’t guarantee it won’t happen. And if you don’t have the proper commercial coverage, you can expect to pay for the victim’s injuries out of pocket after a lawsuit.

The risk of being sued and losing your business or going bankrupt is too great to ignore. Get the commercial coverage you need to protect yourself against catastrophic accidents caused by your employees.

2. Personal car insurance might not cover business use

Do your employees drive their personal vehicle for work? While you can require workers to carry specific coverage on their own insurance policy, that might not cover them while they drive for your business.

Insurance companies largely consider driving for business to be riskier than driving for personal use. This is because driving for work places you on the road more frequently than you would be if you drove for personal use only. For instance, someone who drives for work purposes five times per week is more at risk for accidents than someone who only drives to the store once a week.

3. Your employees might be at high risk for accidents

When obtaining a commercial insurance policy for your employees, the rates you pay will vary based on their profession. Your rates are generally tied to how much money your policy will pay out after an accident. If you get the wrong policy without enough coverage, you might end up owing more money than your policy will cover.

For example, say you have an employee driving 200 miles per day, zipping around from client to client. Their premium will be higher than if they drove 20 miles to and from an office every day. If your insurance policy won’t cover the injured victim’s expenses, you could end up getting sued for the remainder.

4. Don’t leave it up to your employees to get coverage

Some car insurance companies will tailor a personal insurance plan to also cover commercial purposes. This is great for independent contractors who drive for companies like Uber, Lyft, and Instacart. However, it’s not always the best choice for employees.

Leaving it up to your employees to get and maintain their own commercial car insurance coverage is generally a bad idea. If their policy lapses and they have an accident, you will still be held legally and financially responsible for all the damages. This includes personal injuries and property damage.

If an employee’s commercial car insurance policy lapses at the wrong time, and they cause an accident (or even if they’re partially responsible) it could end up putting you out of business. Unless the accident is a small fender-bender, you can expect the damages to be at least several thousand dollars, if not more.

To prevent lapsed coverage beyond your control, take the lead and provide commercial car insurance for your employees if they drive on the clock.

5. Sending an employee out for one errand can be costly

You might not think twice about sending an employee to the store to get something for the office, like pens or a ream of printer paper. Most employees wouldn’t think anything of it, either. Most people would happily go run the errand just to get out of the office for a bit.

Although this is common, it’s also dangerous. If you send an employee out to the store to pick up supplies for your office, they’re considered working under the law, whether they’re officially on the clock or not. If they happen to get into a car accident on the way to or from their destination, you will be held responsible for the damages.

Don’t skip commercial car insurance for your workers

If there’s ever a chance you might have an employee drive for business purposes, even if it’s just a quick run to get office supplies, make sure you have commercial coverage. The risk to your business is too great to skip this requirement.

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Larry is an independent business consultant specializing in tech, social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.
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