Determining if Your Business Needs a Company Vehicle

(Credit: Mike B from Pexels) Determining if Your Business Needs a Company Vehicle
May 20
3:56 PM 2022

Starting your own company is one of the most rewarding and exciting ventures any aspiring entrepreneur could dream of. Some people are just born to sell. Think about how you started your lemonade stand in second grade, or how you sold candy bars door-to-door for sixth-grade camp.

Overzealous business practices can run rampant when you are just starting, and you forget to consider some of the more logistical bullet points on the agenda. You must decide whether you will need to drive around quite a bit for business-related ventures. If so, you need to think about buying a company car, which is a vehicle designated for business only. 

Business auto insurance is also vital for you when you are driving for any reason during your company time. If you get into a car accident while driving in your car for business reasons, your policy will usually not cover the expenses of the wreck.

We'll examine the pros and cons of buying a company car, when you need to get insurance for that car, and what types of business practices or activities are most likely to lead to an investment in a company car. 

What businesses require a lot of driving?

Think hard about what type of business you are running. Will it require you to drive or send another person to drive somewhere only for business-related supplies? 

If you are shipping items online because all your sales are direct to consumers, you will probably go through Amazon or another outlet to do the delivery for you. It is inefficient to drive around town hand-delivering products to your customers. 

On the other hand, if you are starting a ridesharing app like Uber or Lyft, you will need to rent or buy several vehicles for your drivers. You will also need to get some good business insurance for your cars if they are in use every day that you go to work. 

You need to think about the different ways you can cut down on drive times related to your company. This will save money on gas and reduce the risk of getting into an accident -  something that will increase your insurance rates and make it harder to increase your sales. 

Don't Buy a Company Car if You Don't Need One

Vehicle maintenance is expensive. Between the monthly premiums on the car and the risk of something breaking down, investing in something to drive is a long-term expense that has to be taken care of. 

This is where it gets tricky: deciding whether you need a company car. The more you drive a car, the more maintenance it needs in the long run. If you decide to use your personal vehicle to run errands, you are putting more strain than you originally intended to on the car, and repair money will need to be used when something problematic crops up.

On the other hand, having to keep track of the fixes on a personal car and a professional car will possibly get confusing. It may also lead to a lot of repair costs compared to sharing the expenses on one vehicle. 

The insurance costs are a huge factor to take into consideration. If you drive your personal car and get into an accident while doing company business, your insurance company probably won't pay the claim. 

It should be obvious if you are using a vehicle for your business frequently. Delivering products or driving door to door to sell a product is a clear sign that you may need a company car, if not a corporate fleet

The Verdict on Buying a Company Car

Evaluate all of your options and figure out whether you are going to be driving a lot for your business before you decide on buying a company car. Cheap full-coverage insurance plays a huge factor in this decision because private insurance won't cover your car wrecks while on business errands. 

If you feel you are only going to be driving for your job once in a while, then stay with your personal car and take the chance of needing an insurance break on potential fender-benders. 

The biggest issue is that young entrepreneurs hardly ever think about these topics. Evaluating the small details before you get too far into your business ventures will lead to fewer problems down the road. 

(Photo : Shawn Laib)

Shawn Laib writes and researches for the auto insurance comparison site, He enjoys helping inexperienced drivers understand the financial pitfalls of taking out insurance at high rates or on the wrong type of vehicle.

© 2022 VCPOST, All rights reserved. Do not reproduce without permission.


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