Is Business Vehicle Insurance More Expensive Than Personal Vehicle Insurance?

If you have a standard personal vehicle insurance policy it covers you to use your vehicle for social or domestic purposes. Personal vehicle insurance should also cover you to travel to and from your regular place of work each day. 

However, personal vehicle insurance may not cover you if you are using a vehicle for business purposes on a regular basis. In this situation, you would usually need to be covered by business vehicle insurance. 

What is business vehicle insurance?

In simple terms, business vehicle insurance is the type of policy you need if you are going to be using a vehicle as part of a business-related activity on a regular basis. This could include driving to different business premises or driving a vehicle to meet clients. In these situations you need to make sure you have a business automobile policy (BAP) in place. 

Higher cost of a BAP 

The answer to the question posed at the start of this article is yes, business vehicle insurance is more expensive than personal vehicle insurance. 

There are several reasons why insurers normally charge more for a BAP then they do for personal vehicle insurance. 

  • People who drive for business purposes normally cover more miles, providing more opportunity for incidents to occur. 
  • Many business journeys involve time spent in heavy traffic where accidents are more likely to happen.
  • Driving for business purposes often involves the use of unfamiliar roads which makes it more likely the driver will experience problems. 

Given the higher cost of a BAP in comparison with a personal vehicle insurance policy, you may be tempted to risk only purchasing the latter. However, if you do this, you are potentially putting yourself, your employees and your business at risk. 

Why you should always have a BAP in place when necessary 

The fact is, if you do not have a BAP, vehicles which are driven by you and your employees in the course of business, may not be covered should accidents occur. This means the business, or drivers, are liable for any damage or personal injury costs that occur from the result of an accident. You can see how this could be financially damaging to a business or an individual business traveler. 

There are several excellent BAP insurance providers who can provide coverage for property damage and personal injury liability. You may also need to invest in collision coverage, comprehensive coverage and specified perils coverage depending on the nature of your business. 

It’s important to note that a business vehicle insurance policy may need to be in place even if a business does not own any vehicles. This is because any employees who drive their own vehicle for business purposes need to be covered. 

Understanding what is needed from a policy 

Given that a business vehicle insurance policy is more expensive than personal vehicle insurance, it’s important to ensure you get value for money. This is why it’s essential you are able to answer the questions the insurance company will ask when determining what sort of policy you need. 

For example, you will need to be able to provide details of what type of work is being carried out, how many miles are likely to be covered and how many hours of business use will be required. You should provide estimated figures that are as accurate as possible.

You can see it’s more expensive to purchase a business vehicle insurance policy than it is to buy a personal vehicle insurance policy. However, it’s essential to have a BAP in place for any vehicle being used for business purposes. If coverage is not in place the driver or business may be liable for damage and personal injury costs resulting from an accident. 

Adam Torkildson