5 Reasons Why Your Business Needs Commercial Auto Insurance

Published: October 27, 2020 | Updated: November 4, 2020 | Posted by: Moneymax | Car Insurance

Commercial Auto Insurance in the Philippines | Moneymax

We all know that having car insurance on a personal vehicle is important. It’s a requirement when you get a car loan or registering your car with the Land Transportation Office. Car insurance also helps protect you from draining your finances should an accident, disaster, or car damage happen.  However, auto insurance isn’t exclusive to cars for personal use. As a business owner, you can also get commercial auto insurance meant to protect you, your employees, and vehicles while on the road.

As a business owner, it’s essential to protect the vehicle that helps run your business, particularly if you use it on your day-to-day operations. Keep on reading to know more about business car insurance in the Philippines and why you need to get one.

What is Commercial Auto Insurance?

Commercial auto insurance is a policy designed especially for vehicles used by or for a business. Commercial vehicles are cars with commercial value and are used commercially[1].  Sports utility vehicles (SUVs), vans, pickup, and other large motor vehicles may be considered as commercial vehicles.

It’s important to get commercial auto insurance if you’re a business owner who uses any vehicle for business purposes. You must also get this policy if your employees use company vehicles for business operations.

Commercial auto insurance or business car insurance provides coverage for vehicle/s you use for business purposes. In hindsight, commercial auto insurance in the Philippines covers 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 auto coverage may provide insurance add-ons 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.

Read more: Basic Types of Car Insurance Coverage Explained

How Much Does Commercial Auto Insurance Cost?

commercial auto insurance - price of business car insurance

The cost of your commercial auto insurance depends on your insurance provider and your policy coverage. If you own two or more vehicles used for commercial purposes, you may save a couple of thousand pesos by registering them all under one account.

However, keep in mind that this type of insurance is more expensive than personal car insurance because it offers more coverage and higher limits.

Here are some factors that may affect the cost of your commercial auto insurance:

  • Type and value of the vehicle: The more valuable your commercial car is, the more expensive your premiums may be.
  • The number of vehicles: If you use multiple vehicles for your business operations, your insurance cost can go higher. However, you might receive a discount if you are insuring a fleet of vehicles.
  • Policy limit. If you want more coverage from your commercial auto insurance, of course, you have to pay more. However, higher limits can also help you save in the long run. It means better liability coverage before you pay for costs out of pocket.

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Why Do I Need Commercial Auto Insurance?

Here are just some of the reasons why you should consider getting business car insurance.

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 greatly benefit from the protection of car insurance for business vehicles.

Read more: Top Causes of Road Accidents in the Philippines

2. Commercial Auto Insurance Protects Your People, Products, Equipment, and Vehicle

When you drive a personal car, you need insurance to cover not only the vehicle 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.

commercial auto insurance - why do i need commercial auto insurance

3. Business Auto Insurance Provides Better Coverage

Unlike personal car insurance, a commercial policy can provide more coverage that addresses your business needs. Most commercial auto insurance policies cover property damage, medical payments, and liability. However, these are just some of the basics. You can customize your commercial car insurance to add more protections that aren’t usually offered in a personal car insurance policy.

4. Your Business Needs Higher Insurance Limits

As mentioned, driving a commercial vehicle is riskier than driving a personal car. It means that you need a policy that offers higher coverage. Commercial auto insurance plans have higher limits, meaning that your policy may cover larger costs of liabilities. The higher limits may save you money in the long run since you have a higher ceiling before you are required to cover some of the liability costs out of your pocket.

5. Your Personal Car Insurance Won’t Cover Your Vehicles Used for Business

commercial auto insurance - why do i need commercial auto insurance

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 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 purposes.

Having a commercial auto 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.

Read more: The Importance of Car Insurance: 6 Benefits for Car Owners

List of Commercial Auto Insurance Providers in The Philippines

Here are just some providers in the country offering business auto insurance:

  • Etiqa Life and General Assurance Philippines, Inc.
  • FPG Insurance Co. Inc.
  • Malayan Insurance
  • Mercantile Insurance
  • New India Assurance
  • Oriental Assurance Corporation
  • Prudential Guarantee and Assurance, Inc.
  • SGI Philippines
  • Standard Insurance
  • Stronghold Insurance

How to Choose the Right Car Insurance for Business

If you need commercial car insurance, make sure to do your research and compare policies before choosing the best one. You may consider the following when comparing car insurance policies:

  • Basic coverage inclusion
  • Add-on coverage options
  • Policy limits
  • Types of covered vehicles
  • Insurance premiums
  • Payment methods
  • Discounts and other perks
  • Insurance requirements

Final Thoughts

Commercial auto insurance policies cost higher than personal car insurance because of their broader coverage and the higher risks of driving a commercial vehicle. However, the protection they provide for you and your business are worth the extra penny.

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Looking for car insurance? Below is a list of top companies and their features. Compare your options and get a free car insurance quote from Moneymax!

Car Insurance CompanyFeatures
MAPFRE Insular

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  • Alternative Transport
  • Overnight Accommodation Amount - P 3,000
  • Towing Amount - P 5,000
  • Vehicle Removal Crane Services Amount - P 10,000
  • 10 Years of casa eligibility
  • 366 accredited repair shops
  • P 5,000,000 Maximum total insured
New India Assurance

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  • Overnight Accommodation Amount - P 1,500
  • Towing Amount - P 4,000
  • Vehicle Removal Crane Services Amount - P 10,000
  • 10 Years of casa eligibility
  • 30 accredited repair shops
  • P 3,500,000 Maximum total insured
SGI Philippines

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  • Overnight Accommodation Amount - P 2,000
  • Towing Amount - P 5,000
  • Vehicle Removal Crane Services Amount - P 10,000
  • 5 Years of casa eligibility
  • 36 accredited repair shops
  • P 5,000,000 Maximum total insured
Stronghold Insurance

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  • Alternative Transport
  • 10 Years of casa eligibility
  • P 3,000,000 Maximum total insured
The Mercantile Insurance Corporation

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  • Overnight Accommodation Amount - P 2,000
  • Towing Amount - P 5,000
  • Vehicle Removal Crane Services Amount - P 10,000
  • 10 Years of casa eligibility
  • 77 accredited repair shops
  • P 5,000,000 Maximum total insured

Source: [1] What Counts as a Commercial Vehicle? (Coverhound)