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Do homework before choosing commercial auto coverage

At a time when it seems all the news about insurance is bad, there is good news when it comes to commercial automobile insurance. Competition is healthy, which translates into attractive rates. Affordability is not an issue.

However, price is not the only consideration when choosing insurance for business vehicles. In fact, one of the biggest mistakes consumers can make is letting cost be the overriding consideration when purchasing a policy.

Winds of change

A couple of years ago, the commercial auto insurance industry was relatively tight. It was not a great buyer’s market. But that changed August 29, 2005, when Hurricane Katrina made landfall.

While Katrina left the homeowner’s insurance market in shambles, it actually brought more competition to the business auto insurance market. Suddenly, the commercial auto insurance market became much more attractive to insurers.

Charlotte Presley, commercial lines CSR with The Insurance Mart Inc. of Jackson, said before Katrina the market would not entertain standalone commercial auto insurance policies. After Katrina, insurers saw auto products as a profit center, and that opened the door for more policy writing.

“The market is very competitive, and that has everything to do with Katrina,” Presley said.

On the road again

Presley emphasized that the least expensive policy is not always the best. A catastrophic accident, particularly one that involves a serious injury or fatality, can be devastating to a company. She said there are many issues to look at when determining the proper policy and coverage, but she has one rule that she holds true to no matter the client — never sell a company a policy that only cover’s the state’s minimum requirement.

“I never do it. That’s irresponsible,” she said.

While cost is obviously a factor in buying commercial auto insurance, there are many other considerations to take into account before writing the check. Certainly what the policy covers in the case of injury or damage to the policyholder and his vehicle as well as to the other party is important. What about vehicle theft? If there is an accident, are injuries or damages covered regardless of who is at fault?

Other questions abound. But perhaps the most critical factor is time.

“I think the most important thing to know is if the company is going to be there when you need them,” said Chris Homewood, commercial auto product manager with Progressive Commercial Insurance. “What is their response time?”

Homewood pointed out that service is important even beyond claim-filing times. “Does the company allow you to pay a bill after hours? The answers to that kind of question is just as important, even more so, than what the policy will cost,” he said.

Contact MBJ staff writer Wally Northway at northway@msbusiness.com.


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