Car insurance for business usage – do you need it?
If you’re running a private home-based business, chances are that you use your personal car for business. With business usage comes increased risk and more time spent driving, so it would make business sense to take out either a commercial insurance policy, or to upgrade your personal car insurance policy to cover your vehicle for business usage.
Commercial insurance vs personal insurance policies
If you are running a delivery business, for example, commercial car insurance makes a lot of sense, as you need to protect your commercial assets from loss or damage during an accident.
If you only use your personal vehicle for the occasional client visit, you may find that upgrading your personal car insurance policy will suffice. Consult an insurance broker or a direct insurance company to establish your exact needs as well as the exact extent of vehicle cover policies available to you.
In many cases, however, the premium costs between personal car insurance rates for business use and commercial insurance rates are minimal. Yet as the number of drivers for your vehicle increases, so will the cost.
It is critical that you name designated drivers, especially if they’ll be driving your personal vehicle for more than 50% of the time. Although any designated drivers are usually covered, insuring a primary driver costs more. Should an investigation by an insurance company find that the person driving the car on a regular basis was under-insured, i.e. he or she was only insured as an “occasional” driver, the car insurance company may well refuse to settle the car insurance claim.
As with most things relating to car insurance, the marginal savings associated with under-insuring a driver is never worth the trouble. Rather be over-insured than under-insured. If you are using your car for work purposes without insuring it for this, you are placing yourself at risk. Lower insurance limits are not to be recommended, as you may be sued in your business or personal capacity, should you seriously injure another party. Be sure that your personal liability is kept as low as possible.
A car insurance policy for business is similarly priced to a personal car insurance policy. South African car insurance companies tend to look at who drives the vehicle, how far they drive it per day or per year, etc. They also assess your driving record and your claims history to determine your premium. The liability limits on the car insurance policy also play a big role in determining the premium cost: the higher your limits, the higher the premium.