On the surface, canceling a seasonal business’ commercial auto insurance when the business’ season comes to a close may seem like a savvy financial move. If a seasonal business doesn’t need to use vehicles when it’s closed, why should it have to pay for commercial auto coverage? One may be led to believe that eliminating these premiums may help keep overhead low during the offseason.
Not insuring a seasonal business’ vehicles -- even if they aren’t in use -- can have two significant drawbacks, though. If you own a seasonal business in Massachusetts, here’s why you may not want to cancel its commercial auto policy when its season comes to an end.
Is Canceling My Seasonal Business’ Commercial Auto Insurance a Good Idea?
Not Having Continuous Commercial Auto Insurance Coverage Can Increase Rates
While your Massachusetts business might be able to save money for a few months by canceling its commercial auto insurance during the offseason, the business could easily end up paying a lot more in the long run.
Insurers prefer that policyholders maintain continuous coverage, and they often raise rates on policyholders who don’t. A lapse of just one day sometimes causes a business’ commercial auto premiums to go up. Canceling a policy for several months can have even bigger consequences, as insurers frequently take into account how long any coverage lapse was.
When a rate increase is assessed for a lapse in coverage, it frequently lasts for some time. Thus, while your business might save money for a few months by canceling a policy, it also could end up paying more for coverage next season -- and possibly for several seasons to come.
Without Business Auto Insurance Coverage, Vehicles Are Unprotected
Canceling business auto insurance can also leave your vehicles dangerously unprotected from potential perils like fire, theft, and vandalism. Many business auto policies include comprehensive coverage, which typically provides protection from dangers like these. Without a policy in effect, your business won’t have comprehensive protection. It’d likely have to pay out of pocket for any damage done to the vehicles.
(Precisely what risks a business auto policy’s comprehensive coverage protects against are determined by the policy’s terms and conditions, and they can vary.)
Comprehensive-Only Policies Are Available and Affordable
There is an alternative to canceling business auto insurance during the offseason. Instead, your business may be able to get a comprehensive-only policy for the offseason. Such a policy can still help your business save on its auto insurance premiums while addressing the two concerns that canceling a policy raises.
First, comprehensive-only policies are typically quite affordable. Because they include many fewer coverages, insurers are able to offer much lower rates. Often, comprehensive-only policies cost a fraction of what other business auto insurance policies cost.
Second, comprehensive-only policies are still business auto insurance policies, so switching to one doesn’t normally count as a lapse in coverage. Your business will still be able to maintain auto coverage year-round, so its rates won’t go up in the future because of a coverage gap.
Finally, comprehensive-only policies are specifically designed to protect against the risks that vehicles are still exposed to while they’re in storage. Comprehensive coverage is the main coverage that these policies offer.
Talk with a Massachusetts Agent About Getting a Comprehensive Only Policy
If you were considering canceling your seasonal business’ commercial auto insurance during an upcoming offseason, talk with an independent insurance agent about switching to a comprehensive-only policy instead. These policies come with restrictions, but they’re often a good choice if vehicles will be kept in storage and not used for an extended period of time. An independent agent can help you better understand these policies and their benefits, and an agent can request quotes for policies from many of Massachusetts’ insurers.