What Insurance Coverage Does a Company Car Need?

Like private car owners, companies that have their own cars must have insurance coverage on both the car and on the people who are driving the car on a regular basis. The amount of coverage required varies from state to state, but it always contains the same basic elements.

Bodily Injury Liability (BI) and Property Damage Liability (PD)

Liability coverage of all kinds is designed to pay for damages done to another party by a policyholder. Bodily Injury Liability insurance covers the cost of bodily injury or death to another driver or passengers when the policyholder is at fault in the accident. Property Damage Liability covers the cost of the damage to the other person’s property, including their car. Both BI and PD insurance also provide for a legal defense in the event that the injured party sues the owner of the vehicle that hit them, which in this case is the company which owns the vehicle.

Collision Coverage

Collision Coverage on a company car pays for damage to the vehicle when the vehicle hits or is hit by another vehicle or object. The coverage pays the costs of repairing the company car up the limits of the policy after the company has paid the deductible. Collision coverage can be considered to be protecting the company’s investment in a vehicle and making sure that the vehicle can be up and running quickly. This type of insurance is not required by law and may be dropped for older vehicles because it isn’t cost-effective.

Comprehensive Coverage

Another type of cheap car insurance that companies often get for their cars is comprehensive coverage. This type of insurance covers damages to the company’s vehicles caused by things other than accidents. These events may include floods, fires, theft, animals, and others. This type of coverage is also not required by law, but again is a good way for the company to protect their investment and to make sure that all losses are covered. Often, companies choose to have a higher deductible on this type of insurance to keep premiums low.

Uninsured and Under-insured Motorist Coverage

There are a lot of uninsured drivers on the road today, so it is also a good idea to have insurance that covers company cars in case of an accident with one of these drivers. Uninsured motorist coverage covers bodily injuries, deaths, and damages to the vehicle when in an accident caused by an uninsured motorist. Under-insured motorist coverage will cover damages in an accident caused by an under-insured motorist in excess of the limits of the under-insured motorist’s insurance policy.

Rental and Towing Insurance

Many businesses also opt for rental and towing insurance for their company cars. In the case of a company car breakdown or accident, towing insurance will make sure that the company does not have to pay out-of-pocket to have the car towed for repairs. Rental vehicle insurance provides a rental vehicle to take the place of the company car while repairs are being done so that the company has a working vehicle at all times. These are both very useful and practical pieces of coverage which businesses will find very beneficial.

Businesses that own company cars may be eligible for tax breaks and discounts based on the number of cars they own and what they use them for, so it is important to shop around for the best deal. Knowing what kinds of insurance are most important for the company car will help you do that effectively.

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