Small business insurance and car accidents: Are you covered?

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You may not be covered by your personal auto insurance when you are using your own car on the job.
The damaged front end of a car.

Small business insurance provider The Hartford reports that work-related vehicle claims cost an average of $45,000 each. That makes vehicle accidents the second most costly type of claim for small businesses.

These claims are relatively rare, accounting for less than 5% of all small business insurance claims The Hartford processes. However, they’re still frequent enough to warrant a policy review for any business owner who uses a car on the job or lets their employees do so.

Small business auto insurance vs. personal auto insurance

Whether you’re driving for Uber, traveling to clients’ offices for meetings and consultations, shipping and delivering packages, or renting vehicles for business trips, you may be exposed to vehicle claims.

Here’s the thing many business owners don’t realize: personal auto insurance policies often exclude claims that happen while a driver is acting in a work capacity. So if one of your employees is driving to a client’s office to deliver a presentation and gets into an accident, their personal auto policy may not cover the damages.

The good news is that there are two business insurance policies that may be able to fill the coverage gap:

  • Hired and non-owned auto insurance can cover damages that happen in a vehicle not owned by the business but used for business purposes. If you or your team use their personal vehicles for work-related errands, adding a hired and non-owned auto policy to your business insurance coverage may fill any gaps.
  • Commercial auto insurance can cover damages that happen in vehicles owned by the business.

If you’re not sure about the current state of your auto insurance, check with your insurance agent to make sure you and your team are covered.

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Minimizing the risk of vehicle-related accidents and expenses

Of course, even if you have the right business insurance policy, it’s always best to try and avoid a claim altogether. Putting safety first means your employees (and your finances) stay out of harm’s way. As a business owner, it’s up to you to create a culture of safety for your team.

“Business owners should help to make it easier for the employees to do their job while driving,” says Scott Marshall, driving safety instructor and owner of The Safe Driver blog.

One way you can do that is to not bother employees with phone calls and texts while they’re driving for work. Even hands-free phone calls can divert a driver's attention.

“Promote having their seating compartment free from distractions,” Marshall says. “Perhaps even reward it.”

Other safety-first best practices include the following:

  • Develop a company policy that outlines what “safe driving” means. Include rewards and potential disciplinary actions.
  • Before letting employees drive for work, check their driving records.
  • Make safety information readily available: training programs, workshops, and seminars on road safety.
  • If you’re buying or leasing a company vehicle, always research its safety record first.

Remember: car accidents are costly but often preventable. Taking the time to build a safer workplace can keep you, your employees, and your bottom line in the best shape possible.

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