Commercial Car Insurance: What Is It & How Does It Work?

By Tokkie Ferreira       Last updated Sept. 21, 2017


Your business has grown and now it needs a company car to help you successfully carry out your daily transactions or services. Maybe it needs more than one or a small fleet of vehicles?

In order to keep your company vehicles financially protected, you need to purchase a business car insurance policy.

Individual personal car insurance will not cover company vehicles. You will have to get commercial car insurance. So, how do you know if you need it? Searching through insurance company websites may all seem a bit overwhelming so let us break things down into some helpful information. We also want to offer some practical advice and tips to help you when shopping for your first business car insurance policy.

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Commercial motor insurance covers vehicles owned and operated by your business as they are driven to carry out business goals. So, how do you know if you need commercial car insurance?

Here are 3 questions to ask yourself:

  • Is your vehicle used to deliver or pick up goods for the business?
  • Do you use your vehicle to transport people such as a taxi or limousine, or bus?
  • Is your vehicle registered to a business, corporation or a partnership?

If any of these fit, then it is highly recommended that you purchase a commercial car insurance policy for your business. Commercial auto insurance is also known as Fleet Insurance when more company vehicles need to be insured.

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Instead, Fleet insurance factors the risk of the entire fleet of vehicles and evaluates the premiums based on the risks for the entire company fleet-not each individual car or truck. There are flexible insurance policies set up to perfectly fit a small business with a few vehicles or a large trucking enterprise. This insurance covers Heavy Commercial Vehicles (HCV), such as trucks, trailers, medium commercial autos, and mobile business ventures.


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What Should Commercial / Personal Policies Cover?

When shopping for motor insurance there are basic needs that your policy should include in case it is needed.

There are always add-on luxuries that come with higher premiums but putting those aside, here are some necessary needs that should be addressed and met by the insurance provider:

  1. The insurer should process the claims quickly and effectively
  2. Emergency Roadside Assistance should be available 24 hours a day, 7 days a week.
  3. Coverage for towing costs to a repair shop and or storage costs should the need arise.
  4. A reputable repair company should be provided.
  5. Coverage for the removal of wreckage debris.
  6. Coverage for the cost or replacing locks, keys and remote controls, as well as reprogramming of the vehicle’s security system if it is needed.
  7. Coverage outside South Africa’s borders if needed.
  8. Coverage for the vehicles including their spare parts and accessories.
  9. Legal liability coverage for damages to the insured vehicle as well as to other vehicles in a collision.

Some Tips to Save on Commercial / Fleet Vehicle Insurance:


saving-on-fleet-insurance


Combined Policies: The business owner can also purchase insurance in a package that will include the vehicles, business liability and other insurance aspects that may be needed. Combined insurance policies usually cover the cost of common risks that can happen. Talk to your insurance carrier about combining your insurance premiums for a better rate. By bundling your insurance, you can save on monthly premiums.

Gaps: Do not go for a period of time without insurance. Gaps in coverage can get expensive. Continuity is crucial. Update your policy in a timely manner to guarantee that your coverage will not be interrupted.

Raise the Deductible: This strategy will, in turn, lower your monthly premiums. If you increase your Excess, your premiums will come down.

Safe Drivers: Be careful who you hire. Employ drivers who are safe. They should have clean driving records and have commercial driving licenses. These criteria can save you up to 20% on your insurance rates. This may be hard to do but will pay off in the long run if you can manage it.

Business Longevity: Companies who have been in business for more than 3 years can usually get a discount on their premiums, should they have a good Loss history over a period of 3 years and have not submitted too many insurance claims.

Commercial car insurance is a much needed addition to help your business grow and stay financially afloat. Accidents happen. Damages and losses build up if you are not insured, and one unplanned horrible incident can leave devastating repercussions to the business, especially if it is uninsured.

Protect your business and your employees who depend on you to keep them safe. Protect yourself as the business owner to guarantee a long and successful company that will financially remain solvent for years to come.

Get a free broker if you need help and we can steer you in the right direction.

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