Everyone knows how important it is to have car insurance on a personal vehicle. First, it’s a requirement when you get an auto loan and when you register your car with the Land Transportation Office. Second, it’s meant to protect yourself from draining your finances after a road accident, natural disaster, or any event that can damage your car or cause injury to people.
As a business owner, have you ever considered getting a business car insurance policy? Understanding the importance of car insurance for business isn’t as easy as that for personal vehicles.
Yes, you need to protect the vehicle that helps run your business (including your employees, products, and equipment), especially if you’re in the van-for-hire or car rental business.
Here are three reasons why business car insurance is one of the must-have insurance types for entrepreneurs in the Philippines.
1. It’s Riskier to Drive a Commercial Vehicle Than a Personal Vehicle
Vehicles used to transport goods and equipment spend more time on the road than those for personal use. The longer a vehicle runs, the greater its risk of getting damaged or meeting an accident.
Most of the time, the damage done to a business vehicle (or caused by it) isn’t the driver’s fault. Entrepreneurs can benefit greatly from the protection from car insurance for business vehicles.
2. Business Car Insurance Protects Your People, Products, Equipment, and Vehicle
When you drive a personal car, you need an insurance to cover not only the vehicle itself but also yourself, your passengers, and any pedestrian or property that might be involved when you figure in an accident.
Driving a car for business use requires more protection. In addition to the vehicle, you also have to make sure that your employees, customers, products, materials, equipment, and everything that your company vehicle transports are all protected from untoward events while on the road.
What Does a Business Car Insurance Policy Cover?
A typical business car insurance coverage includes the following:
- Vehicle damage
- Vehicle theft
- Death or injury of passengers in the insured vehicle
- Death or injury of third-party individuals
- Medical expenses
- Third-party property damage
Some commercial car insurance policies may provide extras such as road assistance and anti-carnapping services after an accident or breakdown. Others conduct free road safety or defensive driving seminars for company drivers.
3. Your Personal Car Insurance Won’t Cover Your Vehicles Used for Business
Personal car insurance plans don’t cover business-owned vehicles and even personal vehicles used for business.
Let’s say you run a small business. You use your personal car (not registered under a business) to deliver products to your customers. When you collide with another vehicle and cause injury to its occupants, they can sue you and your company to collect damages from your business.
If you have a personal car insurance, the insurer might deny your claim because the policy doesn’t have coverage for business use. Or it might reimburse your car insurance claim but only up to the policy limit—excluding the payment for damages on behalf of your business. That makes sense because you probably didn’t declare during your car insurance application that your vehicle will be used for commercial purpose.
While some car insurance policies cover both personal-use and business-use cars, most personal car insurance policies exclude coverage for the following types of vehicles:
- Personal cars driven primarily for business
- Commercial vehicles such as minibuses, tow trucks, limousines, food trucks, etc.
- Company or business-owned vehicles
A personal car insurance policy isn’t enough to cover all the damage and injury caused by an accident involving a vehicle that you use for business. You’ll have to deal with car repairs, the legal settlement with aggrieved parties, and medical bills all by yourself. That can have a serious impact on the finances and operations of your business.
Having a business car insurance plan gives you an assurance that when something happens to your company vehicle, you’ll get fair compensation and fix your car (or buy a new one) with minimum cost to you.
Business car insurance policies cost higher than personal car insurance because of their broader coverage and the greater risks of driving a commercial vehicle. However, the protection they provide for you and your business are worth the extra penny.