If you're operating a business that uses a car or truck, skimping on insurance is the last thing you want to do. This is just common sense, says Loretta Worters, vice president of the Insurance Information Institute. "Business vehicles are targets," she warns. "We've seen accidents where a physician was targeted because he had 'MD' license plates, and people assumed he was rich."
But the biggest oversight Worters sees is the assumption that a personal insurance policy covers liability in an accident that occurs while using the vehicle for business. It usually doesn't, as most policies explicitly exclude coverage for business use. Instead, you'll need a separate commercial vehicle policy to cover your vehicle.
We asked Worters to steer us toward more tips for business vehicle coverage.
Make sure your policy covers any potential driver or passenger, and keep in mind that business coverage may cost more than a policy on a personal vehicle. Real-estate agents are especially at risk, as they often don't carry enough insurance to cover the clients they transport around town.
Check the driving record of everyone who may get behind the wheel. For a small fee, state DMVs will provide a copy of an employee's record.
Consider the cargo. There are regulations governing what you may be transporting, and your policy must be written to cover all liability associated with that cargo.
Consider the route. If your fleet regularly passes through crime-ridden areas, you may want to up your coverage for theft.
Car financier Mark French of Crest Capital in Atlanta explains that there's one section of the federal tax code--Section 179--that's particularly salient to the discussion of commercial vehicles. In some years Section 179 has allowed business owners to write off up to $250,000 of the cost of an asset in the same year as its purchase (instead of writing it down over several years of depreciation).
Unfortunately, this year's max break is only $25,000. Why? French believes federal politicians allow the tax breaks to expire down to the lower amount so they can jack them back up around election time to spur economic growth. And it works: Such shenanigans nearly always lead to sizable jumps in fourth-quarter spending on assets such as commercial vehicles.