Insurance is our business, commercial insurance that is. Having personal autos on your commercial policy may be costing you more than you think. Sure it seems convenient to place family members and their vehicles on your commercial policy, but this adds additional exposure and increased risk to your company.

Because most commercial policies are experience rated (based on loss history), controlling losses is the best way to keep premiums down. Two ways to control losses are risk control and risk avoidance. Risk controls are measures such as training, checking MVRs, and driver screening. These controls will help reduce, but never eliminate, the exposure. Risk avoidance is to eliminate the exposure, thereby eliminating the risk. This is hard to do in most cases but not this one. You can eliminate personal autos from your commercial policy and place them where they belong – on a personal policy.

A few reasons why personal autos increase the risk to your business:
•Youthful drivers: these are the drivers 16 to 25 years old. Statistics show that this group of drivers causes the most auto accidents. In fact, an estimated 48% of all vehicle accidents involve drivers under age 24. Why? Inexperience and unsafe acts are the primary reasons.
•Time and control: personal vehicles can be used any time day or night with very little control.
•Separation of assets: having a serious accident could put your company at risk.
•Overall, this is not an exposure that any insurance company wants to insure on a commercial business policy.

The benefits of a personal policy for personal vehicles
Here are a few benefits of placing personal vehicles under a personal policy. These policies are designed for the family and are separate from your business. Personal policies have many discounts available to policy holders such as:

•Driver education discounts (very important for youthful drivers)
•Seat belt and air bag discounts
•Good student discounts
•Good driving record discounts
•Multiple vehicle discounts

The cost
Commercial policy premiums increase more quickly for auto accidents than a personal policy. This is due to the coverage cost. Because you pay a lot more for commercial coverage, the cost for insurance rises accordingly. For example, let’s assume that one of your children is involved in multiple “at-fault” accidents under your commercial policy. As a result, your insurance company then passes along a 10% increase on a $100,000 policy; this would equate to a $10,000 increase. On the other hand, assuming that same 10% increase for accidents occurring under a $2,000 personal policy, the premium would go up by only about $200.

Don’t forget the umbrella
One final thought on personal auto policies. Youthful drivers do expose you, the business owner and parent, to financial loss. We recommend that you purchase a good personal umbrella policy (with sufficient limits) to protect you against catastrophic loss. Your Universal Underwriters representative is a resource for all of your insurance needs. He or she has access to additional markets for your personal autos through our internal insurance agency – UUISI – and can assist you in finding suitable coverage. There is a place for everything. Put personal vehicles in their rightful place – on a personal policy.