Top Mistakes Businesses Make When Choosing Auto Insurance

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Business auto insurance is a legal necessity for all businesses using vehicles to conduct work. Whether you have a fleet of trucks navigating the country’s roads each day, you use your vehicles to carry out work in clients’ properties, or you use them for meetings, getting around for business purposes, and commuting, you need adequate business auto coverage that meets your needs and protects you, your drivers, and the public in the event of any incidents involving your vehicles.

However, choosing Business Auto Insurance isn’t as simple as choosing coverage for your personal vehicle; It involves a lot more planning and attention to detail to ensure you get the policy that meets your needs and covers you for everything you need it to.

Let’s take a look at some of the common pitfalls of choosing auto insurance so you don’t find yourself with an entirely unsuitable policy.

Buying on Cost Alone

Sure, you don’t want to buy the most expensive policy on the market, but does the cheapest policy cover everything you need? There is a lot that is covered under business auto insurance, and it’s important that you don’t let the price dictate your decision to click purchase. The cost, of course, should be a significant factor in your decision, but not the most prominent one.

Premium amounts vary from provider to provider, as well as what they offer and cover. It’s crucial to meticulously review all the details of the quotes you receive to understand what is and isn’t covered. This cautious approach ensures that the coverage justifies the costs, giving you the exact cover you need for the activities you will be carrying out in vehicles. 

Choosing the Most Basic Policy

Your commercial auto coverage must meet certain legal requirements, and choosing your coverage based on this alone without considering the bigger picture can be disastrous.

Auto accidents can be extremely costly, involving damage, lawsuits, compensation payments, etc. If you opt for the lowest legal coverage with low payout amounts to keep costs down, you will be liable for any payments required above these limits. Just because you’re covered for a certain amount, it doesn’t mean any claims against you will be within these limits, and often, they can and will exceed lower limits, meaning you need to pay for anything over this amount. If you can’t or don’t think you can cover these costs, then you need to increase the amount you are covered for.

Not Getting Adequate Coverage

One of the complexities of business auto insurance is ensuring you understand what you are covered for and that it suits your business needs exactly. For example, a mobile food truck will have vastly different requirements from a Lyft or Uber driver, and taxi services will need different levels of insurance from long-distance haulage companies. Your business activities and the use of your commercial vehicles need to be a huge factor in the type of policy you choose. This understanding is crucial as it ensures you don’t end up with a policy that doesn’t cover the specific activities that led to the claim.

Your business activities and the use of your commercial vehicles need to be a huge factor in the type of policy you choose. Sure, this might increase costs, but the alternative is that you need to make a claim only to find you weren’t covered at all for the type of activities conducted that led you to need to claim.

Choosing a Low Deductible

Low deductibles are enticing for any type of policy, and choosing a policy with a low deductible simply for the sake of it won’t always be worthwhile. Low deductibles equal higher premiums, and vice versa. Everyone knows this.

But you need to fully understand what type of deductible will be more suitable for your needs.It can be worthwhile talking to an insurance broker who understands your business needs, and what you do so they can suggest a more realistic deductible in the area you’re located in or areas you will be frequenting the most in your vehicles. This can help guide you towards the right decisions.

Not Covering Mobile Equipment

Mobile equipment is equipment such as cranes, forklifts, etc. All this equipment needs general liability coverage as standard. However, they might also benefit from additional auto insurance. Why? Because general liability insurance will cover a stage at a destination required or in the workplace, there won’t be any coverage while in transit. It’s crucial to check for additional coverage for your mobile equipment during transit to ensure you are entirely responsible for any issues related to your mobile equipment during transit.  

Neglecting Rentals or Non-Company Owned Vehicles

A really common auto insurance mistake is neglecting to cover rentals or vehicles not owned by the company. In some cases, they might already be included as standard, but this isn’t always the case. It is best to check the small details to ensure you have the right type for the cover so you can add it if required. 

It’s worth noting that there is a difference between covering temporary rentals you need for a short-term or single one-time use and long-term rentals, i.e., those you keep for a longer duration. They will need different coverage options, and it is important you know the type of rental you are covered for or what type of rental you need to cover.

Make it standard to check that your policy includes rental and mobile equipment, and make it non-negotiable if you use these items on a regular basis to avoid any issues should you be involved in an incident on the roads.

Not Understanding Policy Language

Any policy can look extremely alluring, especially if the pricing is appealing to you. However, these types of policies can often come with confusing wording and language you might skip past to sign on the dotted line. This could potentially leave your business out of pocket or paying for inadequate coverage that might not even be legal for your business. It’s crucial to understand the policy language to ensure you are not underinsured or paying for coverage you don’t need.

If there is anything you don’t understand, ask for it to be clarified so you can be sure you understand it. Talk to a lawyer if required or a broker who can break down more complex wording and phrases to ensure the policy is completely suitable for you.

One phrase it’s also important to look out for that might not be immediately obvious as to its meaning is “defense within limits.” This phrase mean the insurance company deducts the costs of defending claims from your claim settlement. As you can imagine, this will reduce the amount of the payout, potentially leaving you out of pocket if the claim exceeds what is left over.

The more you understand the words and terminology used in insurance premium documents, the more confident you will be in your coverage decisions. This knowledge will help you avoid potential mistakes when taking out the policy, ensuring you are fully covered.

Choosing the right business auto insurance shouldn’t be undertaken lightly or even in a rush. It’s a process that needs to be carefully considered so that you understand your needs, what type of coverage your business requires, what each policy offers you, the exclusions, if any, clauses, and payout limits. Avoid choosing your policy on price alone, and ensure you understand the benefits and terms and conditions before commuting to the policy.