What is Commercial Auto Insurance
Many people today are starting home base small businesses. The reasons are many. Some for supplemental income, unemployed, or may be just fulfilling a lifelong dream of owning a business. Whatever the reason, many small business people own commercial auto policies to cover vehicles that are in the name of the business. If you are having difficulty obtaining 20 down payment car insurance in your area, consider a commercial auto policy. There are many benefits of having a commercial auto insurance policy and the expense is comparable to personal auto insurance depending on your needs and driving record.
Benefits of Commercial Auto Insurance
Here is an example of some of the benefits:
1. The premiums on your commercial vehicle policy can be tax deductible. There are also many other tax benefits since you now have a small business. You should consult your accountant or CPA (certified public accountant). I will list some of those tax benefits later in this section.
2. You can have multiple drivers on the policy who do not live in your household. For example, suppose your license is suspended for driving without auto insurance. You can obtain a commercial vehicle policy and list a family member or friend with a valid driver’s license on the policy. This can be done until your driver’s license is restored.
3. Some companies selling commercial vehicle policies do not check credit of the individuals or the business credit to determine the premiums. If you have real bad credit you will have higher auto insurance premiums with many personal auto insurance companies. Another thing you could do is list drivers with good credit on the policy and add yourself later to the policy. Companies like Goodtogoinsurance only check the credit of the initial driver, even with personal auto policies.
4. You can use a business address in an area with no money down car insurance. For example, you and your cousin started part time business selling health products (vitamin and herbs). You live in Texas and your cousin lives in the suburbs were the rates are lower. The insurance company will base the rates on the location of the business. Most companies will also inquire where the vehicles will be garaged most of the time. If you are honest you will say one car in the suburbs and one in Texas. If you are not honest you will say both in the suburbs. If you are honest there is usually a small surcharge for the Texas vehicle. So, be honest.
5. You can have multiple vehicles on the policy without a match with the drivers. For example, with a commercial policy you can have 6 vehicles on the policy with only two drivers. Goodtogoinsurance.org consider this a red flag. They believe too many cars and not enough drivers means you are not listing all drivers in your household. With a commercial policy you must list all potential drivers of the vehicles. Goodtogoinsurance company do not run Clue Reports (Comprehensive Loss Underwriting Exchange – it is a claims history data base) to find out who is a licensed driver in your household. But be careful, some commercial companies will not cover drivers not listed on the policy. So, have your Legal Plan attorney review your policy.
After considering the benefits and if you want a commercial policy, there are a few things you must do.
Things you need to consider while obtaining Commercial Auto Insurance
You must have or be willing to start a small business
There are many ways to start a small business. From multi-level marketing, such as Prepaid Legal and Primamerica, to converting a hobby like photography and landscaping into a part time small business. In order to get a commercial auto policy, you must have the following:
- Your vehicles should be registered in the name of
your business. Some vehicles because of their size and use are considered commercial. An example could be a 15-passenger van or a large pickup truck. - A federal tax identification number. Most
companies selling commercial vehicle policy do
require a tax ID. Some will accept your social
security number if you are a sole proprietor. You
can obtain a federal tax identification number in one day from the Internal Revenue Service. Call your regional Internal Revenue office or consult your tax advisor.
prerequisites required before getting commercial auto insurance
After obtaining these things you can start shopping around for the best rates for commercial auto insurance. Below are some questions you will be asked:
- Business Address and Phone Number. You can use your cell phone with a message answering function.
- Tax ID Number
- What type of business?
- Are any of the vehicles used for personal driving?
- Where are the vehicles garaged?
Discounts you can receive under a commercial vehicle policy
The other questions that will be asked are similar to a regular personal auto application. Also similar to personal auto insurance are the discounts you can receive under a commercial vehicle policy. Some of the discounts are:
- Prior insurance or transfer credit
- Higher liability limits
- No judgements, liens, or bankruptcy
- No moving violations
- Being in business more than a year
- All drivers more than 21 years of age
- Air bags and alarm systems
Ask the agent or broker for a list of all their discounts. Depending on the area of the country where you live, the rates for commercial vehicle insurance will vary.
With two people paying one bill both individuals should trust each other and have the resources to pay the premium on time every month. The best policy in the buddy system would be a six-month plan, so if one party cannot keep their end of the deal, the other party can terminate the policy at renewal. So, remember to choose your Buddy wisely!
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