Buying Extra Insurance for a Company Car

When you drive a company car, it is important to remember that the same rules of the road apply. You must have the car inspected, registered and insured before you get behind the wheel for your morning commute. Fortunately, you will probably save money on car insurance if you're driving a company car.

Business Use Versus Personal Use

Driving to work in the morning, driving home at night and hitting the road for a business trip all constitute business use of a company car. Taking your family to the frozen yogurt restaurant and giving your kid a ride to school constitute personal use.

In most cases, company vehicles are insured through the business. However, this does not necessarily mean that employees are free to drive the cars wherever-and for whatever purpose-they wish. If the insurance policy purchased by the business restricts the use of the car, extra insurance is required to drive the car for personal use.

This can be avoided if the employee only uses the car for business purposes. However, this is a rare occurrence, because one of the perks of driving a company vehicle is eliminating the need for a personal car. Why would you buy or lease a vehicle when you have the use of one for free?

Any employee who drives a company car should take a good look at the insurance policy carried by the business to see what restrictions apply. It is also a good idea to talk with your boss or HR manager to see what rules the company imposes on employees driving company cars. Chances are, your boss will not take kindly to footing the bill for a fender-bender you caused while on vacation with your family.

My dad drove a company car for years, and his only restriction was that no one but him could get behind the wheel. He was free to use the vehicle for both business and personal use, but this is not always the case. It is important to ask questions and to consider extra insurance before heading out on the road.

Buying Extra Insurance

Many employers require employees to provide proof of extra insurance coverage when they take the keys to a company car. Secondary coverage is used for "weekend driving," when the employee is using the vehicle for personal errands and trips.

In most cases, extra insurance coverage for a company car will not be as expensive as a typical personal car insurance policy. However, it does add an extra expense to your budget, so you'll need to factor it in.

Talk to your insurance agent about your extra insurance needs, and bring the commercial insurance policy with you so he or she can look it over. This will help your agent determine what gaps need to be filled, and will help him or her draft an appropriate policy to cover your "weekend driving" needs.

The Fine Print

Driving a company car is not the same as it used to be. Business owners are realizing the risks of handing over keys to company vehicles and are more stringent about rules. For example, many employers require employees to abstain from using cell phones in these vehicles, even if the law doesn't prohibit it.

Furthermore, most companies have policies regarding traffic citations, accidents and other hazards of the road, and an extra insurance policy will ensure you are never responsible for damages out of pocket.

Sources:

BusinessInsurance.com.