Becoming an Adult

Starting A Delivery Business? 3 Types Of Auto Insurance You May Need & How They Differ

1 March 2017

Robin King

If you have decided to become an entrepreneur and start your own delivery service, then you have likely been checking into state business laws and guidelines to help get your business off to a great start. It is important to have a well thought-out business plan, and one more aspect of operating a delivery business you need to learn about is business auto insurance. You likely have personal auto insurance now, and if you are involved in a collision while transporting goods for business purposes, your insurance company will not cover the damages that occur during the accident. If you plan to hire other drivers to deliver items for you in their own personal vehicles or purchase business-owned vehicles for them to drive, then you also need to learn about auto policies that you may need in the future. 

Read on to learn about three types of auto insurance policies that you may need now or in the future when operating a delivery business. 

1. Commercial Auto Insurance: Covers Your Vehicle While You are Making Deliveries Now

If you are currently a "one-man" or "one-woman" operation, then the only type of auto insurance you likely need right now is commercial auto insurance. It is very easy to make the switch from personal auto insurance to commercial auto insurance, because most auto insurance companies offer both types of coverage. 

The most important difference between commercial auto insurance and personal insurance is that your vehicle is fully covered by your policy any time you are driving it, including when you are driving it for business purposes. 

Just like when choosing personal auto insurance, you will be able to choose your coverage depending on your budget and needs. However, you will also be able to add additional options to your policy that are not available in personal auto insurance policies. One of these options is "any car" coverage, which means that any vehicle you are driving is fully insured when you are driving it; this can come in handy if your car is broken down and "in the shop," so you need to borrow a friend's car to run an important delivery or rent a car.

Most auto insurance companies also offer higher liability coverage limits on commercial policies than they do on personal policies. This can help protect your business from lawsuits that could occur if your liability coverage is lower than the damage your vehicle causes to the property of others during an accident. 

2. Non-Owned and Hired Auto Insurance: Needed if You Hire Other Delivery Drivers who Make Deliveries with Their Own Vehicles 

Once you begin attracting more clients to your delivery service than you can handle yourself, then you may consider hiring others to make deliveries for you in their personal vehicles. When/if this occurs, you will need a non-owned and hired auto insurance policy to protect your business from lawsuits that could stem from any damage your delivery drivers cause during a collision while making a delivery. 

In addition, a non-owned and hired, an auto insurance policy also protects you in full from any damages inflicted during an auto accident you cause while driving a vehicle you rent. This can save you money in the end when you rent vehicles and don't have to purchase the auto insurance offered by the rental company (which may offer a very low level of protection during an accident, anyway) and in the end when your policy covers the full cost of damages inflicted by your vehicle while you are driving it, while the policy offered by the auto rental company may not. 

3. Commercial Fleet Auto Insurance: One Policy That Covers Several Vehicles and Drivers

If your business plan works so well that you soon have a thriving delivery business and can afford to purchase company cars for your delivery drivers to use when they make deliveries, then fleet auto insurance will be the next type of insurance to look into. While the word "fleet" may lead you to think that this type of auto policy is only for businesses who have large numbers of automobiles, most auto insurance companies consider a commercial fleet to have just four or more automobiles. However, others allow business owners with just two or three vehicles to obtain fleet insurance. 

Fleet vehicle insurance opens up new coverage options, such as inland marine coverage, which covers the cost of items inside a vehicle that are lost, stolen, or damaged, and even higher liability coverage limits. You can keep the cost of fleet coverage down, while keeping its benefits high, by hiring delivery drivers with good driving histories. Every driver you hire will be added to your policy. 

If you are starting a delivery business, then it is important to switch from personal auto insurance to commercial auto insurance to make sure you and your vehicle are fully insured while making deliveries. Keep the additional two commercial insurance options in mind, so you understand the additional types of insurance you may need in the future as your business grows. Talk to a company like Crowel Agency, Inc. for more information. 

Share