DMV.org defines a commercial vehicle as any vehicle “used primarily for business and commercial purposes.” Most states require that commercial vehicles be covered with a commercial auto insurance policy with liability coverage, at the very least. You cannot cover a business vehicle with a personal policy because insurers set premiums based on the risk carried by the vehicle, and business vehicles carry higher risk. Determining whether you need to insure a vehicle with a commercial policy depends on whether you use the vehicle occasionally or frequently for business, the type of vehicle and the primary driver. If you use a car only occasionally for business purposes, and you are the sole driver, a personal auto policy may suffice.
Determine which of your vehicles are used primarily for business. If you have several vehicles in your name, and only some are used mainly for commercial purposes, a personal auto insurance policy may be adequate for those vehicles that are not used mainly for business. Because insuring a vehicle with a personal policy is cheaper, you should only consider buying commercial insurance for vehicles that qualify as commercial vehicles.
Determine who drives the vehicles. If the vehicles are mainly operated by employees, you will need a commercial insurance policy for each vehicle. Vehicles that are not routinely used in your business, nor driven by employees, may be covered with a personal policy.
Determine your state’s minimum requirements. Depending on where your business operates, you may be required to purchase the minimum liability coverage that includes protection for personal injuries and property damages suffered by the other party involved in a collision, or additional coverage for underinsured or uninsured motorists, or protection for personal injuries suffered by your employees, including drivers and passengers. Understandably, the greater the scope of protection, the higher the cost.
Approach your current insurer. Most insurance companies offer discounts to their customers for purchasing multiple insurance lines, and if you have a personal auto policy or business insurance from a specific insurer, you should contact them first to see what they can offer you. Talk to the agent who manages your current insurance and discuss your situation by providing information about the number and types of vehicles, how the vehicles are used and the primary drivers.
Compare quotes from several other providers. Purchasing commercial insurance may be tedious, but thoroughly researching policies offered from several insurers may save you a sizable amount. Once you determine how much it would cost to add commercial insurance with your current insurer, do a price comparison by talking to another agent or visiting online comparison sites, such as NetQuote, InsuranceQuoteOnline and USInsuranceOnline.
Take steps to reduce costs, if possible. Insurance companies set premiums based on the driving history of the primary driver, and understandably, insuring a commercial vehicle operated by a “safe” driver is cheaper than for a “risky” driver. You may legally screen your employees' driving records with their consent. You may obtain records from your local DMV or use websites that provide driver records for a fee. Another cost-cutting option for premiums, although not always feasible, is to replace your current vehicles with ones that are considered safer by insurance companies.
Purchase the policy. Once you determine your insurance needs and the most cost-effective coverage that meets these needs, you can finalize the purchase of the policy. Make sure you understand and agree to the terms in the agreement before signing the contract.