Should You Purchase Business Car Insurance?

Business car insurance is designed to serve the same purpose as personal car insurance. However, if you drive extensively for your business, or have employees who do so, business car insurance can offer unique advantages.The biggest advantage of this type of insurance is that it offers unique opportunities to save money and receive better insurance coverage.

Business Accounting Advantages

When you use your car for business, you can deduct the costs associated with maintenance, gasoline and insurance. In order to do this, you must track the percentage of time you use your car for business purposes alone. Then, you can deduct this percentage from your taxable income each month. The problem is that it is not always easy to keep track of your calculations and mileage. For most individuals, it is easier to have one vehicle for business purposes that is covered by business car insurance. Then, the entire premium is deductible along with any expenses associated with the car. In a family with two cars, this is easy to manage. Similarly, a business with multiple employees can have one or two "company cars."

Premium Discounts

When you have business car insurance, chances are you will be insuring more than one vehicle. Individuals who run their own businesses may only be able to obtain personal coverage and use the cars for multiple purposes. With a larger business, though, it is more practical to have dedicated business fleets. A fleet will allow you to have more power to negotiate your insurance plans and costs. This can lead to premium discounts. You will essentially be insuring two, five or hundreds of cars with one company. In this way, you can get a "wholesale," or bulk rate, on your car insurance. The result is savings to you and great coverage for your vehicles and employees.

Payout Rate Differences 

Statistically, individuals driving company cars drive much safer than those in their own cars. As a result, not only does the cost of insuring the company car go down, but you may also see greater payouts when you do experience an accident. Insurance companies are more likely to fully reimburse a company car than a personal vehicle. Further, with your business car insurance, you may have access to immediate replacement of the vehicle, or better coverage for a rental while your car is not drivable.

Should you Purchase Business Car Insurance?

Ultimately, if you use your car the majority of the time for business, this type of insurance is something you should consider. There are a few drawbacks. If you are driving the car for a purpose other than business when you are in an accident, the accident may not be covered under your policy. If your employee is driving a company car, their actions can directly impact your business. For example, if an employee is driving a company car and is involved in a drunk driving accident, the company may be partly liable for any damages resulting from the accident. You should only allow business car insurance if you are ready for all of the implications.