Maybe your business is growing, and you’re ready to buy a company car. Or, perhaps, your business’ old vehicles no longer suit your needs. Either way, 2018 might be the year that your company buys a new vehicle.
Vehicle ownership opens up a wide range of possibilities for businesses. You can go more places and deliver more services. Still, it comes with its fair share of responsibilities as well. This includes the responsibility to operate legally, including with the right auto insurance. Most businesses need to carry commercial auto insurance on their company-owned vehicles. As you prepare to buy a car, follow the right purchasing process and duly insure the vehicle.
Before Buying, Look at Your Needs and Finances
When you plan to buy a vehicle for your business, you want to do so after careful analysis of your needs. If you don’t get the correct vehicle, you’re going to probably cost the business wasted money in the long-term.
- Consider the type of vehicle you need. For example, will you drive off-road or haul specialty equipment in your vehicle? Will you use your car for delivery services? In such cases, you might need a specialty type of vehicle like a truck or van. A standard sedan might not meet your needs.
- Most companies will pay for and maintain their vehicles using business funds. Therefore, take a close look at your operating budget and income. You should never buy a vehicle that is too expensive for you to afford. Always have a good idea of how much you have in the bank, and how you expect your monetary needs to change in the next year. This can help you better nail down a budget for the vehicle.
- Where will you keep your vehicle funds? Some business owners set aside dedicated funds to finance their company vehicles. This fund should remain solvent throughout the time you own the vehicle. It can help finance vehicle payments, maintenance and other vehicle costs.
- How will you pay for company vehicles? Some companies pay cash for their cars, and don’t need to finance the vehicle. However, other businesses will take out a business loan to pay off the vehicles. Usually, credit unions and certain banks will offer these loans to business owners. Still, owners should take care to research the best financing options for their needs.
If you think you need special financial accommodations, talk to your financial advisor. They can help you determine how to manage your purchasing power.
Promptly Insure the Vehicle
After you purchase a new company vehicle, you will need to buy commercial auto coverage. Because your vehicle will belong to the company, you likely won’t be able to use standard auto insurance.
Commercial auto insurance accounts for the fact that a business is often a liable party following vehicle incidents. Usually, your policy will list the business as one of the insured parties. So, in case liabilities or damages arise, the business will have protection.
Usually, commercial auto coverage will include protection like:
- Liability protection: To protect the business when its drivers are at-fault in an accident that harms someone else.
- Collision coverage: Can help the business afford vehicle repairs following a wreck.
- Comprehensive coverage: Can cover repairs resulting from incidents like theft, vandalism, fire or weather damage.
- Medical payments protection: If you need help with medical expenses after an accident, this coverage might help.
And other forms of protection.
Always tell your commercial auto insurance agent certain things about the car:
- What type of vehicle it is. For example, commercial trucks likely need different coverage than sedans.
- Who will drive it? You might need to list all employee drivers on your policy. However, many policies automatically cover all employee drivers.
- Will employees use company-owned vehicles for personal business? The personal use of commercial vehicles might mandate special coverage riders.
Remember, you will likely have to insure the vehicle to meet minimum standards set by your state. Often, an insurer will automatically place the minimum requirements on your policy. However, business owners should increase these levels as necessary, to guarantee protection of their vehicles.
After Buying, Register the Car Appropriately
Commercial vehicles, like every other car on the road, will require registration. Businesses should visit their state’s vehicle registration department to learn more. Some businesses might need specialized operating registration based on the vehicle or products they transport.
Furthermore, drivers might need to get special licensing to operate certain types of commercial vehicles. All commercial drivers should have the training, licensing and experience to safely operate vehicles. Business owners should monitor their drivers for safety at all times. If a driver's record or experience indicates that they should not drive a company vehicle, then it might be best for the company not to allow that person to operate.
If you have questions about commercial auto insurance, contact one of our agents at 877-999-2644.