But just “why” do you need a commercial auto policy for a business vehicle? Here are a few reasons:

• Coverage limits are generally higher. And you need them to be higher. Monetary/liability-wise, your personal policy protects your personal life (your house/etc.), but if everything goes as planned, your business should be worth more. People also love to sue businesses. So there’s that.

• Coverage for employees driving. This is important – your personal policy likely will not cover employees driving the vehicle. A commercial policy should (note: all of these are general statements and suggestions – your insurance professional has the final word). 

• Last post, I mentioned my friend’s trailer accident had a lot of gas spillage. Luckily there was no issue with that, but what if there was? What about other cargo you may be carrying? Is any of it toxic? What happens in the event of an accident? A commercial policy can (and should) include coverage for this.

• On the subject of business cargo, either yours or someone else’s… who covers that in the event of an accident? I promise you your personal auto policy won’t. 

• Let’s say you and your employees go to a convention on business. You rent a car. There’s an accident. The rental company’s policy is bare bones and woefully inadequate. Your personal auto insurance policy says “well, you folks were there on business… talk to the company that sent you there”. A commercial auto policy for your business can cover this (again, talk to your agent regarding the details.) 

There are a lot of other reasons why a commercial business vehicle policy makes sense. But the proceeding should give you a good idea on the basics. 

Happy driving!

Let’s back up about 15 years – my buddy decided to start a landscaping business, and like many others, basically went the DBA route. One day he was a regular guy with a regular job, and the next he was a business owner. He already had a pickup truck, he borrowed a small trailer from his father, bought a mower and some other equipment from a big box retailer, and went on his way.

Later that summer, he was doing decent, and took on a part-time helper. One day, he sends the helper to the store to get something they needed… and there was an accident. Someone ran into the trailer, gasoline (two 5-gallon containers worth) was everywhere, and some of the hand tools were destroyed (luckily the mower was not on the trailer.)

Turns out it was the other driver’s fault, and the insurance companies worked it all out, but then he got a call from his insurance agent. Basically, they told my friend he was super-lucky. Since the other driver was at fault, their company ended up paying, but if the tables were turned and my friend’s helper was the one at fault… well, that could be an issue. 

See, my friend, like tons of other small DBA-type companies, used his personal vehicle for business. But, unknown to him, he was taking a massive risk – he never got a commercial / business vehicle policy. And the insurance company has little interest in paying out when a personal vehicle is used for business and there’s an incident (never mind the employee driving it). And honestly, you cannot blame them.

For any business vehicle, there are two things that are almost non-negotiable: the vehicle should be registered in the company name, and it must be insured with a commercial policy.  For the record, Crest Capital ONLY works with companies in business for at least two years and will finance the business vehicle in the company name, as well as register and insure it that way as well. This way there are no issues or surprises.

Remember: you don’t get to buy insurance after the fact. When there’s an incident, you either have it or you don’t. No do-overs.        

In the next post I’ll discuss a few details about business vehicle insurance that companies should know about. But for now, just know that you must have it. Anything less is taking too big a risk. 

Have you ever financed or leased a car or truck? Most of you probably have – they are easily the most popular ways for many people to acquire vehicles these days. Let’s talk about the differences between the two in an overall sense.

When you finance a vehicle, somebody else loans you the full amount to “buy” the vehicle. Typically, the bank does this through an auto loan, but also many vehicle manufacturers have their own financing companies as well.

Either way, it’s the same – the dealership gets paid the full amount by the lender, and you pay the lender back, usually over a term of 4-7 years, with 5 years (60 months) being the most common. The lender keeps a lien against the vehicle (this is noted on the title). And when the term is over, you “own” the vehicle and the lien on the vehicle’s title is released.

With leasing, it’s a little different. You still make monthly payments to a leasing company, but the end goal is usually NOT to own the vehicle (at least on the consumer end – we’ll get to that in another post). What happens with a vehicle lease is you pay for the value of the vehicle that you use. So if you lease a new vehicle for three years, the dealership / leasing company will calculate what that vehicle will be worth, with normal wear and tear, three years from now. You make payments on the difference between today’s value, and the value three years from now, (when most consumers trade it in, and lease another car.)

The preceding is why there are mileage limits on leases – the leasing company needs to have a good idea what condition the car will come back in. They basically say “ok, return this in three years, with less than 36,000 miles, and assuming normal wear and tear, it’ll be worth $xyz”.

Technically, there is a buyout at the end of the lease, where you can own the vehicle if you really like it, but for most consumer vehicles, this doesn’t happen. The goal of leasing is to always have a “new” car every three years or so. Mrs. Fletch does this – she’s always driving a new leased car. Yes, we always have payments on her car, but we never have an 8 year-old clunker in the driveway (well, she doesn’t. Me on the other hand…)

Note the above is a broad based description of the two. And the above is also based on the consumer end of the spectrum – I’ll talk about equipment financing companies and leasing vehicles (financing too) in the next few posts. Maybe even some Section 179 stuff, too!

Seriously, I do this every other year or so, because I find the trends interesting – typically, equipment financing is one of the first things an industry will start (or curtail) when business starts going well (or poor.) So here are a few industries that I see as not going through growth right now:

Retail – No big surprise here, but as a whole, retailers are really shying away from investing in their businesses right now. The entire industry has been in a downward trend as online sales have exploded. In short, these industries don’t really know where they fit in. I do think some of the stronger, more innovative ones will survive if they adapt, but the days of being profitable selling DVD’s and toasters are probably over.

Trucking – Without question, this is related to retail. But long-haul, over the road trucking remains slow. We’re getting less equipment financing applications from these companies as they try and survive without huge shipments going to the mall (have you even been in your local mall lately? It’s kind of sad.)

However, these are bright spots here – in terms of trucking, your smaller “package carriers” have not fallen behind like their over-the-road brethren.

This is likely all related – for every “point-click-buy” you do, retailer and large trucking companies feel it, whilst a smaller carrier brings you your item. It’s interesting how this all plays out, isn’t it?

Ok, we’ll do one more post on what’s “not hot” in equipment financing, and it’s the biggest surprise of all.