Remember when driving was fun? Summer would come along, and you’d just hop in your jalopy, pick a direction, and take off.
That was before you took on the responsibility of business ownership. Now driving is not an adventure, but a task to be completed – hopefully under budget.
Perhaps it’s not as fun as traveling Route 66 and stopping at the Cadillac Ranch, but knowing how to protect your business while you’re on the road is one of those grownup joys your younger self probably wouldn’t understand. Luckily, your younger self isn’t running your business.
Let’s review some of the ways your business might hit the road and how your Commercial Auto Insurance might apply in different driving situations.
Driving to Client Meetings
Client meetings may be part of your workday routine, but the fender bender you have on the way to their office certainly isn’t. Not only does it throw today’s schedule out of whack, but severe damage may make the rest of your week a nightmare of public transit and taxi cabs.
Before you protest that you would never drive without coverage, note that most personal auto insurance policies exclude business driving. That means if you haven’t purchased Commercial Auto Insurance, you may be on the hook for your repairs and medical expenses – and possibly the other driver's.
Cost-saving tip: Commercial Auto is a necessary expense, so figuring out other ways to cut costs while driving is a smart move for business owners. Marin Perez, a writer for the mileage tracking app MileIQ (@MileIQ), says small-business owners can save money when they drive by:
- Watching their top speeds. Perez points to a study from Oak Ridge National Laboratory, as reported by Green Car Congress, that shows traveling faster than 50 mph may lower fuel efficiency.
- Lightening the load. A car that doubles as a storage facility wreaks havoc on your gas mileage, so only carry what you need in your vehicle.
- Logging all your drives. If you can't get more mileage out of your car, Perez recommends getting the most out of your miles. Each business drive could be worth $.54 per mile in the form of a tax deduction. Get more details from the IRS.
Employee Driving for Business Errands
Sending an employee to drop off packages or pick up clients seems like a win-win situation. They get a break from the office, and you cross some tasks off your to-do list for cheap. However, when employees act on your behalf, the liability falls back on you – even if they drive their own cars.
If your business has company cars, you most likely have a Commercial Auto policy that covers employees. But Hired and Non-Owned Auto Insurance (HNOA) is the policy that addresses your liability if a staff member causes an accident in their own vehicle while on a work trip.
Cost-saving tip: You can add HNOA as a rider to your General Liability Insurance, which may keep insurance costs down.
Not sure if you need HNOA? Maybe the article “Commercial Auto Insurance vs. Hired & Non-Owned Auto Insurance” can clear things up.
Driving Rental Cars for Business
As you already know, you're responsible for damage that happens to the cars you rent.
"If disaster strikes, the car rental company can and will come after you first," says according to Michael Goldman, president of the leading car rental booking site AutoRentals.com (@AutoRentalsCom). "It will be your responsibility to pay for damage, and then figure out if someone else will reimburse you for it."
If you rent cars often, you may also want to purchase a Hired and Non-Owned Auto Insurance policy. While HNOA typically doesn’t cover physical damage to the rental car, it may cover your business's liability in an accident.
Cost-saving tip: You may not be able to control insurance rates, but you can manage car rental prices by shopping around.
“There are many comparison websites out there that allow quick and easy price discovery,” Goldman says.
How to Save Money on Commercial Auto Insurance
Goldman’s tip to comparison shop for car rentals applies to Commercial Auto Insurance. Getting quotes from multiple carriers gives you more options so you can choose the coverage that best suits your business.
Here are some other ways to save on Commercial Auto Insurance:
- Hire employees with good driving records. Insurers consider drivers’ records when determining premiums, so try to hire people who are safe drivers.
- Select a higher deductible. Your deductible is your out-of-pocket costs for an accident. Choosing a higher deductible may lower your premium, but be careful. That’s only a deal if you can afford to pay it if you have an accident.
- Look for payment options. Insurance companies may offer discounts if you pay your premium in full rather than spreading out payments over the course of a year.
There may be other ways you can influence your premium. Learn more in “What Goes into a Quote for Commercial Auto Insurance?”
About the Contributors
Michael Goldman is president of AutoRentals.com, a car rental booking and price comparison website. Before AutoRentals.com, Michael was a corporate lawyer in Silicon Valley and a writer for a variety of publications, including The New York Times. You can visit Michael’s website AutoRentals.com to find cheap car rentals and to sign up for exclusive rental car discounts.
Marin Perez has been writing about how technology improves lives for about a decade. He's excited to see how entrepreneurs are using tools like MileIQ to be more successful. When not working, he's thinking about his next trip.