Can I insure my car through my business? – The 3 Hidden Business Auto Insurance Principles to Think about.
Principle # 1 – Business Insurance Poorly Protects Your Personal Interests.
Principle # 2 – Personal Insurance Policies Are Better suited to insure Personal Vehicles.
Principle # 3 – Peace of Mind, when or if the loss occurs, “Will I be covered.”
Principle # 1 – Business Insurance Poorly Protects Your Personal Interests.
Gaps in coverage occur when insuring your Personal vehicle in a Business Auto Policy. These gaps can be somewhat overcome by adding endorsements, which add cost and complexity to the policy. Here are some examples;
- The cost of coverage may end up more by adding endorsements to fill in gaps. Therefore, endorsements, such as DOC-Drive Other Car and adding personally owned trailers to your Business Auto Policy, should be considered.
- There is no automatic coverage when you purchase a new Personal Vehicle. For coverage to apply, personally owned vehicles must be scheduled on a Commercial Vehicle Policy. Gaps in coverage could result.
- Towing of trailers, your boat or RV trailer, for example, is not covered. Suppose your trailer comes unhooked and crosses the centerline into another vehicle. In that case, neither your business nor personal interests will be insured for this liability loss.
Principle # 2 – Personal Insurance Policies are Better Suited to Insure Personal Vehicles
- Family members are better protected when riding in or driving non-owned vehicles.
- The towing of trailers is provided automatic Liability Insurance in many cases.
- Lienholders and Banks are much more accepting of this method of insuring Personal Vehicles.
- Many policies automatically insure a new vehicle purchase for 30 days, which allows you to drive the vehicle home and call your insurance agent the next day.
- You may avoid buying insurance coverage at the rental counter when renting a car on vacation.
Principle # 3 – Peace of Mind, when or If the Loss occurs, will it be covered?
- One of the ideas of an LLC or Corporation is to separate your business and personal interests. Therefore, you may wish to check with your legal advisor to determine if that separation is being eroded by adding a personal auto to your business policy.
- Is a tax advantage one of the draws for adding a personal auto to your business policy? In that case, you may wish to check with your financial advisor to determine how great an advantage that is.
- Having your business pay for your personal auto insurance costs may also be one of the reasons for adding a personal auto to your Business Insurance Policy. You may wish to ask your financial advisor for ideas on how to accomplish this in other ways.
Conclusions:
- Business policies are best for business-owned vehicles, and Personal Insurance Policies are best for personally-owned vehicles.
- What is Peace of Mind worth? A perceived short-term gain may be costly in the long run.
Disclaimers – The concepts and ideas expressed are for educational purposes only. In all cases, your specific insurance needs should be reviewed with your insurance agent.
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For questions or discussion of these concepts, contact Marcus Wegmeyer, an insurance agency owner at Michigan Insurance Services Agency. E-mail marcus@mi-insurance.com or by phone at (989) 732-7548 ext 4. |
