Like most types of insurance, a business auto policy is one of the costs of doing business in Texas that seems to go up every year.
Yet a policy from an agency familiar with business auto insurance is essential if your company owns vehicles that are used for business reasons.
Are there any ways to reduce the premium paid for a commercial auto coverage policy?
Understand how business auto agents calculate premiums to see whether it is possible to reduce risk to get a lower rate!
1. Vehicle Details
Like all vehicle coverage policies, determining business auto insurance rates starts with details about the vehicle details, such as repair costs, replacement value, and other factors that include:
- Make, model, and year of the vehicle
- Price when it was new and current value
- Safety features
- Gross vehicle weight
2. Where The Vehicle is Used and Parked
Driving and parking locations can affect the premium rates quoted by a business auto agency since risk is higher or lower depending on the location.
Vehicles used within busy cities might be more at risk for minor accidents like fender benders, while vehicles driven mostly on the highway could have a higher risk of serious accidents.
High theft areas present other risks, especially if the vehicles are parked there, as parking security is another consideration.
Vehicles driven more miles have a higher risk than those driven shorter distances.
These and other factors are used to determine the likelihood of an accident happening in order to estimate risk to come up with a premium rate.
3. How The Vehicle Will Be Used
Auto insurance agents must know what the vehicle is being used for, as liability risk, repair costs, and many other variables differ based on usage.
Vehicles used to make standard deliveries like general supplies and merchandise or food usually have lower liability and accident risk than those used to transport hazardous materials or construction materials, move other peoples belongings like moving vans, and more.
Vehicles used to transport people like employees will have different rates than those used to transport public passengers like shuttle vans, limos, and taxis.
4. Driver Details
The next major factor that will affect a commercial auto rate is who will drive the company vehicles.
Auto insurance agencies must take individual driver details into consideration when calculating risk.
These details include driver age and driving record, claims details, when and where they are permitted to drive the company vehicle, and other driver demographics used to rate driver risk.
5. Type and Amount of Coverage Required
Naturally, every business auto insurance policy should cover things like collision and comprehensive damage to the vehicle and are fairly easy to calculate the premium.
The amount of liability coverage carried will depend on the level of risk your vehicle and drivers are exposed to every day and whether your company requires any supplemental policies to cover things not covered in the standard policies.
Added protection like uninsured/underinsured motorist and medical payments must also be factored in.
Coverage limits also affect premium rates, with higher limitations that provide more and broader coverage costing more than a policy with the bare minimum in coverage.
Choosing higher deductibles also affects rates and can be one way to reduce premium costs.
Is Your Company Carrying the Right Business Auto Insurance?
Calculating the cost of a Texas business auto insurance can be complex due to the number of factors that agents must take into account.
It is important to have enough auto coverage to protect the business based on the role of driving a business-owned vehicle and the degree of risk involved; however, there are also ways to reduce costs for such coverage.
Buy a policy from an auto insurance agency that has experience with commercial insurance policies to be sure of getting a policy that is suitably protective without costing more than it should!