What is business car insurance?
Business car insurance is an insurance product that provides cover for a commercial vehicle if it is involved in an accident. At a minimum, the cover includes a commercial vehicle accidentally damaging another car or property. Upgraded policies may also include coverage if the commercial vehicle itself is damaged in an accident or is stolen.
Business car insurance, also known as commercial car insurance, can be purchased from an insurer as a standalone product. More commonly, it is an additional product that can be added to or included in a business insurance policy.
Commercial car insurance may include higher levels of cover than personal car insurance to allow for the increased value that a commercial vehicle may have, and other incidentals, such as potential loss of tools.
Is business car insurance necessary?
Businesses that own their own vehicles for employees to use to undertake their duties are likely to purchase business car insurance. However, it cannot be purchased to cover business use if employees use their own private vehicles to undertake their work.
In those instances, the employee may wish to consider purchasing a personal car insurance policy that includes cover for business use. Insurers typically stipulate that the insurance policy be issued to the same entity or person under which the vehicle is registered.
What are the types of commercial car insurance?
The three types of business car insurance are the same as the types offered for personal vehicles – comprehensive, third-party fire and theft and third-party property.
Third-party property
Australia offers two levels of third-party car insurance: compulsory third-party insurance (CTP) and third-party property damage insurance. CTP is either included in your registration or paid separately, depending on the state.
The other level of third-party insurance is third-party property damage insurance, which is optional. This level of insurance is the most basic of the three listed here and covers certain things that CTP insurance doesn’t, including damage caused by your business vehicle to another car or to property.
This cheapest level of coverage can be cost-effective in preventing you from facing large financial costs if an accident occurs, such as if your commercial vehicle crashes into a house or a luxury car. However, as it does not cover damage to your vehicle, you may want to prepare your business to purchase a new car or pay for repairs in the event your vehicle is involved in an accident.
Third-party fire and theft
This level of coverage provides the same level of assistance offered under third-party property to another person’s vehicle or property. It also covers your business vehicle, but only if it is stolen or is damaged in a fire.
This coverage can be a good balanced option in terms of cost for business owners. It enables them to provide some cover for their own commercial vehicle in situations that may be out of the driver’s control, such as vehicle theft, while still being cost-effective.
Comprehensive
Comprehensive commercial vehicle insurance provides cover for theft or damage to your business vehicle and to other vehicles and property. It may include hire costs for another vehicle so you can keep your business operations going while your vehicle is being repaired or replaced. It may also cover the costs of towing your vehicle to a repairer.
This type of insurance is the most expensive of the three, but it can be beneficial if your commercial vehicle has a high value or if it’s necessary to quickly replace the vehicle to keep your business operating.
For example, if employees use the commercial vehicle to travel to various work sites throughout the day, it may be more urgent to replace the vehicle than if they can work from the office or home while the car is being repaired.
What is included in business car insurance?
Commercial car insurance policies include extra benefits that personal car insurance may not always provide. Therefore, consider the advantages of purchasing business car insurance.
Insure multiple vehicles
Insurers often limit the number of vehicles that can be covered under one personal insurance policy. However, they will allow for more vehicles to be insured by a business under a commercial car insurance policy, given a business may operate more vehicles on the road each day.
While you can take out separate car policies with several insurance companies for all your business vehicles, it may be more cost-effective and easier administratively to have all your vehicles covered in one policy.
Integrate into an existing policy
If you have other insurance related to your business or are considering taking out a policy to protect other areas of your business, you may be able to integrate business car insurance into it. For example, many insurers bundle business car insurance into comprehensive policies that also cover public liability, product liability and personal injury.
By combining all your insurance needs in one policy, you may reduce your combined premiums. It may also make it easier to manage administratively, as you only liaise with the one insurer.
Insure tools
Comprehensive business car insurance policies may provide coverage for tools, including laptops, that are secured in the vehicle and are damaged in an accident or stolen from a vehicle. You may be able to negotiate a higher tools value limit than what is offered by the insurer in return for paying a higher premium.
Most private insurance policies only include cover for the contents of the car under more comprehensive policies and often as an add-on.
Coverage for dangerous goods
If your business transports dangerous goods, business car insurance will cover the cost of damage to other people’s vehicles or property. This value is generally less than the value covered if the vehicle is not transporting dangerous goods. Standard car insurance typically does not offer coverage for dangerous goods.
If your business has a fleet of vehicles used daily that carry tools and/or dangerous goods, you might decide to opt for a more comprehensive car insurance policy. In this case, it’s worth taking the time to plan what kind of policy may be best for your business.
