There are some bargains for businesses this year. It’s a good time for businesses to purchase vehicle insurance whether it’s for company-owned autos and trucks or liability coverage for employees using their own automobiles.
“Today, business automobile insurance is very competitive,” says Ronnie Tubertini, president and CEO of SouthGroup Insurance and Financial Services, Mississippi’s largest privately-owned insurance agency with 180 employees in 17 locations across the state. “Property insurance is the problem. Where insurance companies most want to grow is in the casualty line for businesses.”
Pointing out that auto insurance pricing is cyclical, he said the inflation adjustment graph over the last 25-year period looks like a roller coaster.
“Generally, it has to do with capacity — availability — in the marketplace,” Tubertini said. “As insurance companies get more profitable they have more capital and that’s what they use to back their investments. When interest rates were rising, insurance companies enjoyed a greater return on investments and that provides more capital. Companies have been very profitable in auto casualty and all are adding lines.”
Tubertini and Debbie Shempert, senior vice president and operations manager for Renasant Insurance in Tupelo, find that businesses are realizing savings in auto insurance this year.
“The expense depends on the amount of liability and coverage, but auto insurance is not their biggest expense. Property insurance and workers’ compensation are more,” Shempert said. “Many companies want to write auto coverage and businesses won’t have any trouble getting it.”
Tubertini says businesses that aren’t saving on their auto coverage this year are at least looking at no increases. “The same is not necessarily the case in personal insurance,” he said. “Companies have not done well in Mississippi and lost a lot of claims in 2005 and ‘06, so we’re seeing increases in personal auto insurance.”
A business auto insurance policy covers the vehicle and liability of the owner regardless of the driver. While some businesses require drivers to have commercial licenses, many do not. Most businesses using vehicles are in the service industry with employees driving vans and pickup trucks. Companies with sales forces may have company-owned vehicles or not.
With any size business, an employee may use his or her own vehicle to run a company errand. Pizza delivery employees use their own vehicles but have non-owned coverage through the business. However, the employees’ personal auto insurance policies are the primary coverage for any damage to their automobiles.
A spokesman for AT&T in Mississippi said the large telecommunications company is self insured for its huge fleet of service trucks. With thousands of government vehicles in use in the state, there’s a myriad of coverage among the state, counties and cities. Within state government, each department handles its own insurance and they all don’t have the same coverage. But one thing is certain, there is insurance for all scenarios.
“We cover everything from 18-wheeler trucks down to a flower shop that has one van,” Shempert said. “Businesses don’t have any trouble finding insurance. It’s a good time to buy it. We always put in coverage for hired and non-owned vehicles. I tell all my clients to get it because they never know when an employee may run out on company business to make a deposit or pick up supplies.”
‘Everyone should have it’
She says that type of coverage is based on the number of employees and starts at only $25 per year. “Everyone should have it,” she added. “It varies greatly according to the age of the vehicle, limits of coverage and other factors.”
Shempert gives an example of insurance costs for a client with a business-owned vehicle. “One of my clients pays $1,700 per year on a company-owned pickup truck with limits of a half-million dollars,” she said.
Tubertini expects no problems for his business clients this year when it comes to auto insurance but he is expecting increases for personal auto insurance.
In addition to coverage for employees using their own autos for business, there is liability coverage for accidents involving company-owned autos, liability coverage for autos rented, loaned or leased and physical damage for collision and comprehensive. Among the factors to consider in determining which business auto insurance is right are whether or not the vehicle is owned, rented or leased and if anything is owed on a loan for the vehicle.
Contact MBJ contributing Lynn Lofton at email@example.com.