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Reply to Insurance on Company Leased Vehicle     
Old 02-06-2017, 12:05 PM   #1
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Insurance on Company Leased Vehicle Insurance on Company Leased Vehicle
Hi,

I have a small business, an LLC, and leased my new car on the name of the LLC. But the auto insurance is still on my name and added the business name as an additional insured. Would like to know a bit more for clarity and avoid potential issues:

Is it ok to have auto insurance on the my personal name and LLC as an additional insured?

Or the LLC should be the main insured? Does the policy cost more to buy on business name?

Appreciate your inputs and experiences. Thanks in advance.

Sai
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  Reply With Quote to Insurance on Company Leased Vehicle
Old 02-06-2017, 03:24 PM   #2
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State: togatown is an Insurance Agent from Undisclosed Location
Insurance on Company Leased Vehicle Re: Insurance on Company Leased Vehicle
Originally Posted by sykumar View Post
Hi,

I have a small business, an LLC, and leased my new car on the name of the LLC. But the auto insurance is still on my name and added the business name as an additional insured. Would like to know a bit more for clarity and avoid potential issues:

Is it ok to have auto insurance on the my personal name and LLC as an additional insured?

Or the LLC should be the main insured? Does the policy cost more to buy on business name?

Appreciate your inputs and experiences. Thanks in advance.

Sai
I'm no attorney so this is not legal advice. But IMHO, the insurance should match the registration, and most importantly you want to make sure your insurance company knows exactly what you are doing with the vehicle, and is OK with the way your insurance policy is written. Make sure your vehicle is classified for business usage, and yes, it will most likely cost you more than just work/school/pleasure usage.

Also consider carrying higher liability limits and perhaps a commercial umbrella. While an LLC limits the amount of capital you have at risk in the business itself, there is no guarantee that you won't be personally sued for bodily injury.
YMMV.
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Last edited by togatown; 02-06-2017 at 03:29 PM.
  Reply With Quote to Insurance on Company Leased Vehicle
Old 02-07-2017, 11:13 AM   #3
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Insurance on Company Leased Vehicle Re: Insurance on Company Leased Vehicle
It depends on what you mean by "additional insured." There is no industry standard AI endorsement. In general (though I hate generalizations), a business owned auto should be insured under a business policy (you can add "personal"/family coverage by a couple of endorsements) and a personally owned auto on a personal policy.

A personal auto policy may provide physical damage coverage on owned or acquired to "you" which is the NAMED insured, not an AI...depends again on the language applicable to the AI. The insuring agreements usually refer to "you" and "family members" or something like that, along with permissive users, which may create a problem for AIs without knowing the precise language in the AI endorsement.
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  Reply With Quote to Insurance on Company Leased Vehicle
Old 02-07-2017, 12:41 PM   #4
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Insurance on Company Leased Vehicle Re: Insurance on Company Leased Vehicle
I'm not an attorney, but I played one once on a website.....

You effectively eliminate the protections of the corporation by having your car insured personally when the car is registered to the corporation. You may also not have insurance coverage when you have an accident if you don't have business usage endorsed on your personal policy.

The business needs to insure the car. It owns the car, not you (even though you might be the business, it is 2 separate entities). A business auto policy is usually about the same as a personal auto policy classified for business use (thinking realtor, insurance agent, traveling sales type of use).

Higher liability limits for a commercial policy is a good idea. An umbrella is a great idea.

Dan
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  Reply With Quote to Insurance on Company Leased Vehicle
Old 02-07-2017, 01:39 PM   #5
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Insurance on Company Leased Vehicle Re: Insurance on Company Leased Vehicle
The corporation provides no protection against a personal injury lawsuit against an individual. If it did, everybody in America would incorporate as a corporation with no assets so they couldn't get sued hiding behind that corporate veil.

Years ago, I worked for a company where an employee rear-ended a vehicle with a pregnant woman driver who went into labor and miscarried. She sued both the corporation and him as an individual. If the corporate insurance had been insufficient, she would have gone after his insurance or assets. That could have been problematic because he had no auto insurance of his own.
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Old 02-07-2017, 01:57 PM   #6
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Insurance on Company Leased Vehicle Re: Insurance on Company Leased Vehicle
Originally Posted by InsCommentary View Post
The corporation provides no protection against a personal injury lawsuit against an individual. If it did, everybody in America would incorporate as a corporation with no assets so they couldn't get sued hiding behind that corporate veil.

Years ago, I worked for a company where an employee rear-ended a vehicle with a pregnant woman driver who went into labor and miscarried. She sued both the corporation and him as an individual. If the corporate insurance had been insufficient, she would have gone after his insurance or assets. That could have been problematic because he had no auto insurance of his own.
I have a lot of respect for you, but I believe you completely missed what Dan is saying.

Assuming this is a genuine business, properly formed and current on all state filings, taxes, etc., then the business should insure the car. For the owner to personally insure a vehicle owned by the business co-mingles assets and voids all protection of having a corporation.

Now I understand what you are saying, by driving the vehicle the owner is still personally liable for his actions. And that is why Dan recommended high limits and an umbrella. It helps to avoid the very situation you are suggesting.

From a liability standpoint, this is why I am not a huge fan of sole-proprietors forming any type of limited liability entity. They cannot escape personal liability for their actions and there are no employees to behave badly cause liability for the business and owner. It may or may not help with taxes, depending upon the situation and state.

And of course, I'm not an attorney either.

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You can pay the premium or you can own the loss.
  Reply With Quote to Insurance on Company Leased Vehicle
Old 02-07-2017, 02:11 PM   #7
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Insurance on Company Leased Vehicle Re: Insurance on Company Leased Vehicle
Ah, thanks for clarifying that. I missed that point. As Roseanne Rossannadanna would say, "Nevermind."
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