May 19, 2011

Why Commercial Car Insurance Can Be More Expensive Than A Personal Policy

When shopping for a commercial car insurance policy, you might be surprised to learn that it can be more expensive than a personal car insurance policy. There are many reasons for this, including the inclusion of multiple vehicles that are sometimes for specialty uses, the need for multiple and changing drivers in these vehicles, and the need to fully cover liability risks. Commercial vehicles are often different, and commercial driving habits differ from personal driving habits. The amount of risk an insurance company assumes when insuring a business is greater than the amount of risk involved when insuring an individual driver.

Commercial car insurance typically covers multiple vehicles, some of which serve special purposes. Policies become more expensive in relation to the increasing number of vehicles that need to be covered. Commercial vehicles are often more expensive than personal vehicles as well. Most commercial vehicles are late-model versions that must carry full-coverage insurance, whereas personal vehicles might be older, making liability coverage a sensible option. Special-use vehicles can also make commercial car insurance more expensive. Some businesses require work trucks, trailers, refrigeration or modifications that can make them expensive to insure. Depending on the business you might need to take into consideration the transportation of hazardous materials or extremely high weekly mileage rates. All of these factors contribute to the higher price of commercial car insurance.

Commercial car insurance must also cover multiple, and often unspecified, drivers. Unlike your personal car insurance policy, which is set by your personal driving history and habits, a commercial policy must take into consideration the multiple drivers that need to be covered under the policy — some of whom might not have a spotless driving record. Other factors such as the age and experience of drivers are also unknowns to the insurance policy, and add to the cost of commercial coverage. The fact that multiple drivers might be driving various vehicles also adds an amount of risk because of the adjustments that must be made when driving a different or unfamiliar vehicle.

Business owners must also take into account the amount of liability coverage they may need to carry. The public is more likely to sue a business than a person, so a business must be very careful to protect its assets from the litigation that might result from a driving mishap. While this may result in an increased cost, it also brings increased protection.

A commercial car insurance policy does cost more than a personal car insurance policy; however, it is still a good value because it covers multiple vehicles, multiple drivers per vehicle and the increased liability that a business can face.