According to state law, all cars on the road require basic car insurance, but being careful about the type of insurance you choose is almost as important to your safety as stopping at a red light or buckling up. As a business, having basic liability coverage protects not only your employees, but also your assets and livelihood as well.

There are many considerations when choosing coverage because it is important to maintain a reasonable overhead without putting yourself at risk. For example, will you opt for personal injury protection in the event that one of your employees is injured while driving on the job? Can you afford this expense?

The point of business car insurance, or interchangeably commercial auto insurance, is to give employers the option of insurance that more specifically meets the needs of your business. Spend some time assessing what kind of driving is done in your firm, such as cross-country, local delivery, or maybe just onsite service. Think about what kind of vehicles you are driving. Does your business have more than 3 axis vehicles?  Some states and insurance policies require that your employees obtain a commercial driver license so it’s important to check policies and local guidelines.

The premium for comparable coverage is often called a “quote” in insurance sales. When shopping around for insurance, you will get multiple quotes. While basic coverage can be similar from agency to agency, the quotes will often vary based on whether you are a target customer for the insurance company.

Basic commercial auto insurance will run a screen on your employees’ driving records to determine your premium. A premium is what your monthly payment will be to the insurance company. If you employ high-risk drivers, your premium could be high depending on a number of other factors. Generally, the lower your premium is and the higher your coverage payout, the better.

Other factors that will determine your premium are the value of the vehicles you own and the area in which your employees will be driving. For instance, urban areas tend to have a higher probability for collision than rural areas, so in order for coverage to still be cost-effective, the insurance company will charge a little more per month. If the Kelly Blue Book values of your company cars are high, then the payout for a car deemed “totalled” would have to be higher, so again the insurance company will charge more per month to compensate.

Another part of what you pay is the deductable. In the event of a collision, or anything that requires the insurance company to pay out of your policy, you will have to pay a portion of this amount or a deductable. Even though a plan might look good, having a high deductable can make a car accident into an even bigger financial burden. There isn’t much difference between a deductable of a personal plan and a commercial plan, but being aware of this is a big factor in choosing your policy.

A lot of business owners use personal insurance for their cars as long as the business is small enough for a basic family package. However, if your business has more than a few employees and more than a few cars, the advantages of a commercial policy become evident. In a personal plan, there has to be a list of approved primary and secondary drivers per car. The most obvious advantage of commercial insurance is that any approved employee listed in the policy can drive any car on the policy. In the event that one of your company cars is in the shop, this difference can greatly affect revenue for the period in which one of your cars is out of commission.

Another difference is that the policy is in the name of the company and has a collective payout rate which is generally higher than the average personal coverage payout. If you have one employee take out a personal plan on a company car, it’s a lot of paperwork if that employee moves on to a different job or vehicle, but having a plan in tied to the company itself allows for stable interchange-ability.

Finally, if you use specialized vehicle such as multi-axle vehicles or cherry-picker trucks, you’re more likely to find coverage appropriate to your vehicle. In some cases, vehicles transporting paying passengers or hazardous materials will require commercial insurance for liability purposes.

While the general functions of commercial and personal car insurance policies are quite similar, knowing how the differences will affect your business can save you a lot of grief down the road. Now that you do know, start making yourself a checklist of agencies, employees, and priorities to keep yourself on track during your search.