Insuring Your LLC-Owned Vehicle
In this step, we explain how to obtain insurance for a vehicle owned by a Montana LLC.
American Auto Insurance Basics
Your insurance steps in to pay for some or all of the injured party’s expenses, rather than you paying out of pocket for another person’s medical costs or repair their property.
Auto liability insurance is legally required everywhere.
In the United States, auto property insurance is divided into two separate coverages: collision and comprehensive.
Collision coverage can pay to repair or replace your vehicle if it's involved in an accident with either a stationary object or another vehicle.
Comprehensive coverage can pay to repair or replace your vehicle if it's damaged by non-collision events that are outside of your control. This includes theft, vandalism, fire, weather, or other acts of nature.
Property insurance is optional.
Liability coverage is usually broken into three separate numbers that indicate your liability limits for bodily injury and property damage. For example, the minimum limits for auto liability in Montana are $25,000/$50,000/$20,000. Here’s what those numbers mean:
- Bodily injury per person: $25,000 is the maximum amount your insurance company will pay out for injuries per person.
- Bodily injury per accident: $50,000 is the maximum amount your insurer will pay out for injuries per accident.
- Property damage per accident: $20,000 is the maximum amount your insurer will pay out for damage to someone else’s vehicle or property per accident.
If you cause more bodily injury or property damage than your insurance policy's limit, you're responsible for the cost above your liability limit.
The limits you choose for your insurance policy are up to you, but visitor.us recommends selecting limits of $100,000/$300,000/$100,000. The cost difference between minimum coverage and 100/300/100 coverage is often less than $100 for a six-month policy.
(The deductible is called the "excess" in other parts of the world.)
The standard deductible is $500, but raising it (to $1,000, for example) will lower the up-front cost of your insurance policy.
Coverage under a personal auto policy automatically stops when a vehicle is used for making deliveries, driving for a ride-sharing platform, or used for other commercial purposes.
Notice that the distinction between a personal and commercial policy has nothing to do with the vehicle's ownership.
An individual still needs a commercial auto policy to drive for Uber or Lyft, even if the vehicle is owned by, and registered to, the individual.
Similarly, a vehicle owned by, and registered to, a legal entity such as a Montana Limited Liability Company does not necessarily require a commercial auto policy.
If the vehicle is only being used for non-commercial purposes, a personal auto policy is appropriate.
The Named Insureds don't necessarily have to own the vehicle (or own the LLC that owns the vehicle).
If a Named Insured gives permission to someone to drive, their insurance automatically extends to that person.
The best way to estimate the cost of an insurance policy is to visit a couple of insurance websites and follow their process to get quotes.
Before you get quotes, you should understand a few peculiarities about America that might cause our auto insurance to be more expensive than it is in your home country.
The government does not automatically pay for healthcare costs in the United States, so the cost of auto insurance is higher than it would be if we had public healthcare.
Insurers that don't require a US driver's license
However, a handful of American insurers don't require a US driver's license.
Its customer service consistently ranks highly among large insurance companies.
Start with Progressive if you're buying car, truck, van, or motorcycle.
Good Sam is America's most popular recreational vehicle membership club, and their policies are underwritten by National General.
Start with National General (via Good Sam) if you're buying an RV.
While we move through that process, we've found that it's fastest and easiest for visitor.us customers to contact Progressive or National General directly to secure their own policies.
Where to book your policy
If you book your policy at an address where your vehicle never spends any time (at your LLC's address, for example), and you get into an accident in a part of the US where a lot of accidents happen, your insurance company may think that you lied on your application to get cheaper insurance - and they may not pay your claim.
You should use the address where your vehicle will spend the most nights during your visit. Preferably, this will be the address of a friend or family member who wouldn't mind receiving mail that the insurance company might spend.
This doesn't impact the driving history of your friend or family member - it's your policy.
In the end, it's most important to take out an auto policy at an address where your vehicle will spend at least one night. For most vehicles registered to an LLC, that is usually not the address of the LLC.
How to document your LLC on your insurance policy
You simply record your LLC as an "Additional Insured Interest" on the insurance policy.
What is an Additional Insured Interest? In short, it's a lender.
Let's say that you took out a loan from Bank of America to buy a vehicle. Your insurance policy would list you as the Named Insured (the driver), and Bank of America as the Additional Insured Interest.
Bank of America technically owns the vehicle, and they're letting you use it.
The same is true when your vehicle is owned by an LLC. The LLC owns the vehicle, and is letting you use it.
When you take out an insurance policy, you'll be asked how you own your vehicle: outright, leased, or financed.
Select the "financed" option, and provide your LLC's name and address as the lender.
That's it - easy!
Making sure that your insurer knows that your LLC owns your vehicle will help prevent unpleasant surprises if you ever need to make a claim.
Insurance policy lengths and refunds
You can cancel your policy at any time, and you'll receive a refund of your unused premium, less a fee (usually 10% of the unused premium).
Insurance companies usually offer multiple payment plans: paid-in-full and installments. Insurers usually offer a paid-in-full discount (usually 10%), and charge installment fees ($5-20) for each installment.
As a rule of thumb, if you are visiting the US for longer than half of the term offered (i.e., if you're offered a six-month term, and you're staying for four months), you're better off paying in full and getting a refund when you cancel at the end of your visit.