If you're self-employed and use your vehicle for business, personal auto insurance may not protect you. Unfortunately, auto insurance geared for businesses can be more costly than a personal policy, even if the "business" is simply you as "sole proprietor!"
Commercial auto insurance can easily be five times more expensive than a personal policy with similar coverage. But there's another category known as business auto insurance with premiums that can cost less than half as much. Qualifying for a less expensive business auto policy depends on the particulars of your business and, more importantly, the insurance company's underwriting guidelines.
Let's look at two examples: A vendor with many gumball machines scattered around town, and a freelancer who does audits, business verifications, merchandising, and mystery shopping. Both drive the small cars they owned before starting their businesses.
One auto insurance company underwrites based on the number of business stops per day. Both of these entrepreneurs would be forced into a commercial policy simply because they stop at too many places in one day.
Another insurance company uses transporting merchandise as an underwriting guideline. While the freelance auditor could get a business policy through this company, the gumball vendor would have to buy a more expensive commercial policy simply because a box of gumballs rides in the passenger seat next to him!
A third insurance company underwrites based on whether the policy is for what they consider a commercial vehicle. Anyone driving a step van or a large pickup truck would have to go with a commercial policy, but both of our proprietors would be eligible for a less expensive business auto policy.
Armed with this knowledge, you can shop for auto insurance more intelligently. Here's how!
Contact insurance agencies for quotes. Not all insurance companies offer business-oriented insurance and some will have a different telephone number or division dedicated to it, so you'll have to do a little research. Be sure each agent you speak with understands exactly what you do, because seemingly small details can determine whether you're directed to a business or commercial policy.
Gather information about your vehicle(s), driver(s), business(es), and the insurance desired. Each insurance company will probably want different information; for example, one might ask how many miles you'll be driving each year, while the next won't care because that's not one of their underwriting criteria. Since it's difficult to anticipate everything you'll need, you can start with your existing policy as a basis and add information to the list as you call around.
Verify you actually need new insurance. Call your current insurance agency and explain to them what you're doing. If your business is mostly home-based and related use of your vehicle is incidental, you may not need to change anything at all. Be certain the agent you speak with understands your situation exactly, and be honest when providing information. You don't want to be denied coverage later if you file a claim! If you're told you don't need to change your policy, try to get the particulars in writing.
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