Businesses need insurance – it’s a given, right? A total no-brainer. But some businesses, especially those that are just starting out, skimp on insurance to keep their overheads down. This might save a couple of hundred bucks every month, but if equipment breaks down or is stolen then business owners suddenly have to find a couple of thousand bucks to replace or repair it.
Sometimes owners insure the contents of their office and any products or goods that they have in stock, but they forget to insure their cars.
Personal cars for business use
It often doesn’t occur to small business owners to ensure their personal vehicles for business purposes. They don’t realize that their insurance won’t cover any goods damaged if they happen to be involved in a collision. Insurance also won’t cover goods stolen from a car or goods that are stolen with a car. In fact, you might have a battle on your hands getting any money out of the company because your claim could amount to fraud. You might not have intentionally misled your insurer about the purpose of your vehicle but you could still be in violation of the terms and conditions.
You also need to consider if anyone else is going to use your car for business purposes. For example, will your cousin (who you are helping out with a temporary job) be doing some deliveries for you? You could have serious problems if something nasty happens during one of his trips. Chances are that he hasn’t been listed as a driver on your personal insurance policy, and because the event occurred while he was conducting business on your behalf, you fall foul of two insurance clauses. What’s more, your insurance won’t pay for any injuries that your cousin may sustain.
All of which results in a very expensive lesson.
If you are going to use your personal vehicle for business purposes then you should talk to your insurer to see if you need to extend your current insurance policy or if you need to switch to commercial vehicle insurance.
Commercial vehicle insurance is more expensive than personal car insurance, but it covers a wider range of risks and allows you to cover several other drivers. It will also cover all the goods that you have to transport, which is essential for all businesses but is especially important for businesses that are just getting started and that might not be able to cope with the loss. Commercial insurance will also cover any injuries sustained by you and your drivers.
It’s never a good idea to ignore insurance. It’s also never a good idea to operate outside of the restrictions of your current insurance policies. Do your research to stay within the parameters of your policy or to find out if you need to purchase additional insurance. It will save you endless pain in the long run.