Purchasing a vehicle for a business in California tends to involve a weigh up of price versus features and value. The price of the vehicle, along with the kinds of features it has will also affect your commercial auto insurance premium. This cost will linger every year when a business renews its commercial auto insurance. Factors such as the vehicle’s age, usage type and class will also have an effect on the commercial auto insurance premium. Having the knowledge about how a commercial insurance premium is calculated will allow a business owner to evaluate the most cost effective option for his or her company.
Some basics before investing in a business vehicle
With that in mind, consider some basics before investing in a business vehicle such as a car or truck. The most obvious influence on a commercial auto policy will be the initial price of the vehicle. The more expensive the vehicle, the higher the insurance premium tends to be. In order to keep this cost down, business owners could consider purchasing a used vehicle rather than a new one. Commercial auto insurance takes into account three classes of vehicle: passenger cars, trailers and “trucks”. The logic is simple, a passenger car is likely to cost less to insure than a larger truck. Drilling down into the passenger car category, a basic used car will again cost less than a shiny feature filled SUV.
A commercial trailer is classified as any kind of small service trailer, refrigerated trailer, flat trailer or any trailer used for business purposes. The size and weight of the trailer in question will always affect the cost of the insurance premium.
The classification group of “truck” can be broken into other categories for insurance purposes. Light trucks weigh up to 10,000 pounds. This category tends to include pick-up trucks, flatbed trucks and refrigerated trucks. Medium trucks weigh 10,001 to 20,000 pounds, and are usually larger versions of light trucks. A heavy-duty truck can weigh anything from 20,001+ pounds. Trucks like beverage trucks and farm trucks fall into this category.
How will your vehicle be used for the business?
Consider how a vehicle will be used for the business. Depending on the activity type, the insurance premium will vary. The most effective way to clarify commercial auto insurance costs is to get a prospective quote before investing in a vehicle.