Automobile Insurance

Even if it is totally unrelated to your business, an auto accident that leads to a large legal judgment against you can be hazardous to your personal economic health and to that of your business. Because of this, it's important that you have an adequate amount of coverage on your car to cover both business- and nonbusiness-related accidents and damage to your auto.

Auto insurance has two main components:

• liability insurance and
• insurance for property damage.

Liability insurance is the most important. It provides compensation to persons who would be able to sue you for personal injuries, medical payments, loss of earnings, or damage to their property arising out of an auto accident.

Property damage coverage includes such collision and comprehensive coverage, which compensate you for damage to your car, and assorted damage to it caused by such things as fire, theft, and vandalism.

Do you need auto insurance? In most states, all motorists are required to have a specified amount of liability insurance, although it's usually not enough to protect you or your home business.

If your auto is financed through a bank or other commercial lender, the lender will require you to carry both collision and comprehensive coverage. If your car is not financed, you don't have to carry this coverage, although most people do so if they have fairly new cars (or valuable older ones).

Impact on your business. If you use your car in connection with your business, it's important that you find out if your policy will cover business-related accidents. Considering the devastating effect that a large legal judgment could have on your personal and business finances, you don't want to find out after the fact that you were not covered. If your policy does not cover business travel, you usually can get coverage by way of a policy rider for a reasonable amount.

If you have employees drive your car on business, you should have what is known as "non-owned" coverage. This coverage pays for injury to people and property damage caused by the employee.

If you are wondering how much auto insurance is likely to cost you, or you would like more information on how to lower your auto insurance premiums, you could start with the Insurance News Network's coverage on this topic. In addition to a discussion of some basics, you'll find valuable links to the crash safety, theft, and state data that drives most insurance rates. For example, you can determine how likely it is that someone would steal your vehicle based on its model and year.