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Business Car Insurance for Your Vehicle

Written by Todd Clay. Posted in Research Last Updated: 08/08/2010

When you need a business auto policy, what’s the difference between personal and commercial policies, and other things to consider

young business man smiling in a car

When do you need a business auto insurance policy?

Auto insurance isn’t just for your personal vehicle – companies need car insurance for the same reasons. Whether you need business car insurance or fleet car insurance, the need is the same – coverage for company cars.

There are more applications to business car insurance that may not be readily apparent. Indeed commercial car insurance may be ideal for just one person.

When to Cover Business Vehicles

The most important thing to understand about business car insurance is when you need it. If you’re an employee somewhere and use your car to drive to work, a standard personal auto insurance policy works just fine. You’re in the clear.

However, if you’re self-employed or you’re an independent contractor and use your car for business purposes, a personal policy doesn’t adequately cover you. In these cases a commercial policy is the way to go.

The main reason insurance companies make a distinction between personal and commercial auto insurance is because vehicles used for commercial purposes tend to be driven more than vehicles intended for personal use. In many cases, they’re driven a lot more.

Since they’re on the road more, insurance companies want to insure for the extra risk. Even many insurance agents who are self-employed have commercial policies on their own vehicles. Rest assured, experienced agents or brokers are familiar with business auto policies.

Differences Between Business and Personal Policies

On the surface there isn’t that much difference between a commercial auto policy and a personal auto policy. Both have liability limits, uninsured and underinsured coverage, medical payments coverage (unless you’re in a “no-fault” state), and optional collision and comprehensive coverage.

However there are some important differences between business auto insurance and personal auto insurance. For one, commercial insurance policies require a set list of drivers. Personal policies require this too, but they often provide coverage in an accident in which someone not on the policy is driving (this is called “non-owned” coverage).

Not so with commercial policies. You’re either on or you’re not. If you’re not, you’re not covered.

Commercial auto policies also tend to be a bit more on the no-frills side, offering fewer options than its personal counterparts. Commercial policies often offer higher deductibles for full coverage. While most personal auto insurance policies don’t offer comprehensive or collision deductibles over $1,000, deductibles of $5,000 or even higher may be available on commercial auto policies. Also, many commercial insurance policies will not take drivers under 25 or over 74 at all, regardless of driving history.

Other Items Related to Business Auto Insurance

Ironically, assuming they meet the minimum requirements, drivers on commercial policies tend to go through less underwriting than drivers on personal policies. This is despite the increased mileage associated with commercial autos. While there are differences between insurance companies, many insurers find that drivers on commercial polices tend to be safer overall then drivers on personal auto policies.

One final item related to your driver license: unless the insured vehicle has a gross vehicle weight (GVW) of more than 26,000 pounds or is designed to carry 16 or more passengers, a CDL or other type of commercial license isn’t usually needed for commercial insurance. Therefore if you need a commercial policy to cover a car or even a light delivery van or truck, your standard driver’s license will suffice.

Young Drivers Car Insurance For Starting Off

Written by Todd Clay. Posted in Research Last Updated: 08/06/2010

How good grades, marriage, and fewer accidents lessens auto insurance premiums for younger drivers

young woman holding car keys

What she needs to know about auto insurance before she gets behind the wheel.

There are two absolutely inescapable factors to consider when dealing with young drivers car insurance.

First, it’s required. Every state requires at least some sort of liability coverage regardless of how old a driver is. In addition, if payments are still being made the lien holder will require full coverage.

Second, it’s expensive. Insurance is a business of statistics. Statistically younger drivers are responsible for more accidents and more insurance claim payouts than older drivers. That’s why car insurance for teens is more expensive.

This is true for all single drivers until they turn 25. That’s when most insurance companies back off on their premiums.

Accident-Free and Married Young Drivers Pay Less

There’s not much you can do about your age. However, there are some ways to minimize costs.

The single best thing a young driver can do to contain auto insurance costs is to staying out of accidents. If your record is clean, insurance companies will reward you with discounts and lower rates. However, one incident can kill a decent rate. That’s why it’s important to keep your driving record clean.

Another bonus goes to married drivers. Young drivers usually catch a break once they get married – whether or not they’re 25. We don’t recommend getting married just to save on auto insurance, but it is something to look forward to if your wedding day is approaching.

Insurance Less for Drivers With Cheaper Cars

Another tip is to drive a vehicle that is cheaper to insure. That means getting an older, paid-for vehicle and a liability-only policy. If a young driver is still on their parents’ policy, this doesn’t necessarily mean he or she is stuck strictly driving that car.

In most cases any driver is allowed to drive any car on a given policy. But make sure you don’t run afoul of underwriting requirements. Some companies insist on putting the highest-risk driver on the most expensive car to insure. Some agents and brokers can be sticklers about that one – just check with your insurance company to be sure.

A young driver should also stay on a parent’s policy as long as possible. At the very least insuring separately usually means the loss of any multi-car and longevity discounts. Many companies will allow a child to stay on a parent’s policy until college graduation, marriage or age 23, whichever comes first. These rules vary widely from company to company, so check with your company to be sure.

Good Grades Lower Rates for Young Drivers

Another benefit auto insurance companies offers are good grade discounts. Most insurance carriers offer student discounts to high school and younger college students. The good news is you don’t need to attend Harvard to get the discount. Documented proof of a 2.0 GPA or higher from a school transcripts should be sufficient to qualify for the discount.

How is this possible?

Insurance companies figure that young drivers in school with good grades get into fewer accidents than young drivers with bad grades or not in school at all. It’s all in the statistics – that’s why they reward good grades and good driving with better insurance rates.

Van Insurance for Commercial Use

Written by Todd Clay. Posted in Research Last Updated: 08/04/2010

Considering drivers, work equipment, licenses and other factors for your business van policy

yellow vans

Why you need a different policy for a work van.

There are two types of van insurance: personal and commercial. Commercial van insurance deals with the vans used in business, such as those for construction, painting or delivery operations.

This sort of business insurance is different than a personal auto insurance policy and is closely related to fleet car insurance.

Getting Started With a Van Policy

Many personal car insurance policies don’t cover the vehicle while it’s being used in commercial settings. That’s why a personal auto policy is inadequate for commercial use. But commercial van insurance is designed specifically for a work-related van.

Commercial van insurance is underwritten by an insurance company that specializes in insurance risks. However, most major property and casualty insurers have a commercial insurance subsidiary. Chances are the same agent or broker who handled your personal policies can handle a commercial policy.

Registration and Drivers for Van Insurance

The van should be dedicated to commercial purposes. Ideally, it should be registered by a sole proprietorship DBA or corporation rather than an individual. The driver is insured as well. The driver should be able to document proof the he or she is licensed to drive the insured vehicle.

With a van a regular driver’s license should suffice, but with a larger vehicle a commercial driver license (CDL) may be required. Check with your state for specific requirements.

The driver’s record should also be good. It doesn’t to be perfect, but the driver may be declined if there are too many incidents on their record. Many commercial insurance carriers won’t insure a driver under age 25 regardless of driving record. Remember, all drivers need to be specifically listed on a commercial policy. These rules are much stricter than with a personal policy.

Commercial insurance is geared towards change. As long as they qualify, adding and removing both vehicles and drivers is usually a simple matter of submitting a change request to the insurance agent. The important thing to remember is to keep it current.

Extras on a Van Insurance Policy

Van insurance is only the first part of the commercial insurance process. If you’re using a van for work, you may have many valuables for your job in the van. Unfortunately, van insurance usually only covers the van itself and whatever was bolted inside of it by the factory. Tools and equipment need to be insured separately.

In a commercial setting this is typically accomplished by an “inland marine” policy. The same company that wrote the van policy should be able to write the inland marine policy. Just get your equipment together, place a value and date of manufacture on it, and submit the list to your insurance company. Premiums on inland marine policies are typically quite reasonable, and well worth every penny if something happens.

Also, don’t forget about your trailer. If you have a trailer, you’ll need to insure that separately. Trailers can usually be added to the commercial auto insurance policy. All of these things will help if you need to insure your commercial van.

Student Car Insurance For Young Drivers

Written by Todd Clay. Posted in Research Last Updated: 08/02/2010

How getting good grades and staying on a parent’s policy will help students pay less for auto insurance

young female student driver

Good grades and staying on a parent's policy can help lower auto insurance rates for students.

Car insurance for students, like insurance for any young driver, is expensive. But there are some advantages students have while they’re in school.

Student car insurance considerations are usually only valid for individuals under 25. Older, non-traditional students generally aren’t subject to these conditions (or eligible for student discounts), even if they go to school full-time.

Good Grades Can Improve Insurance Rates

There are very few things high school drivers can do to keep their insurance premiums down. Statistically speaking, they are among the highest-risk drivers around. Even an otherwise modest liability-only policy can be very expensive for them – same thing goes for learner driver car insurance or car insurance for teens.

Even so, students can limit their insurance bill. Staying out of accidents is the most important thing they can do. But maintaining good grades is a close second. Most companies offer good student discounts of up to 20 percent for high-school age students. The good news is you don’t have to be the valedictorian to be eligible. A 2.0 GPA is usually all that’s required.

Students can document good grades by providing a current transcript or letter from a school to the insurance company. What’s more, good student discounts often extend to college-age students under 23.

Try Keeping Student Auto Insurance At Home

Many insurance companies allow a child to stay on his or her parent’s policy past age 18 if they are a full-time college student. This usually lasts until the child leaves school, gets married or turns 23, whichever comes first. Specific requirements can vary widely from company to company – so always check with your agent or broker.

Because a parent’s policy often offers discounts that a student could not usually get – like longevity and multi-car discounts – it’s often a good idea to keep student car insurance on the parent’s policy as long as possible.

Special Situations for Student Car Insurance

One caveat to staying on a parent’s policy: if the student goes to school in a state where the parent’s insurance company doesn’t do business, there may be an issue with staying on the parent’s insurance.

If the insurance company discovers the out-of-state student, they may drop the student and force them to insure separately in that state. There may also be a problem if there’s a claim. Be sure to check with your agent or broker if this is an issue.

Even if the student is forced to go it alone, maintaining constant coverage should remain a priority. Any gap in coverage may force the student into a high-risk company later – even with a spotless driving record. This could make a bad situation worse. It certainly doesn’t hurt to shop around. The good student discount and other discounts may still be available to them.

Sports Car Insurance for Your Ride

Written by Todd Clay. Posted in Definitions, Research Last Updated: 03/23/2011

Things to consider when insuring an exotic, high performance, or other sports cars – such as raised limits, stated value, and more.

convertible sports car driving on sunny day

Don't forget coverage for your sports car before you drive off the lot.

There isn’t that much difference between insuring a sports car and any other car. But there are special considerations when dealing with sports car insurance.

In most cases the basics remain the same. All sports cars need to be insured to satisfy state liability requirements and any lienholder requirements for full coverage. This is particularly true if a sports car is intended to be driven rather than just looked at.

Raising Limits On Sports Car Insurance

Sports cars aren’t cheap. Insuring them isn’t cheap, either. Most companies consider sports cars to be significantly higher-risk models compared to run-of-the-mill SUVs and sedans. Premiums can therefore be quite expensive, even for low-risk drivers. This has nothing to do with the color of the car (the notion that a red sports car costs more to insure is a myth), but with the model itself.

Also, insurance costs may vary widely among different models of sports cars. For instance, high performance car insurance can be very expensive, while car insurance for other vehicles is cheaper. Each car and driver is quoted differently. Rates can also vary greatly between companies on higher-end vehicles – that’s why you should shop your rate.

You should also keep liability limits on actively driven sports cars high higher than state-mandated minimums. Sports cars attract attention across the board. This attention is not always welcome. If your sports car is in an accident – especially if you’re at fault – you are more likely to face litigation than if you just drove a Ford Focus. If that happens, you’ll be glad you had those higher limits.

The same holds true for material damage. Even when a sports car is paid off and the bank no longer requires full coverage, there’s probably a lot of intrinsic value in the car. Keeping full coverage after payoff is usually a good idea.

Consider Stated Value on Your Sports Car

Traditional sports car insurance may not be enough for older, collectable sports cars or expensive high-end models. For a typical auto insurance policy the vehicle’s value is determined by blue book and other market-driven factors. This may not translate well for classic cars or exotic models where a stated value policy may be more beneficial. In such a case, classic car insurance or an exotic car policy may be a better choice.

There are special considerations for these policies as well. For example, a classic car insurer may decline to insure a vehicle that is regularly driven, even if it qualifies otherwise. Consult your agent or broker for more information.

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