When Does a Personal Vehicle Need Commercial Auto Insurance?

Many business owners make a potentially costly mistake concerning their personal vehicle; they do not get commercial auto insurance. Whether you are a small enterprise with 20 employees or a single-person operation working out of your own home, this provides more benefits and protection than you may be aware of. Do not fall into the trap thinking that your personal policy will cover your commercial needs.

When You May Need Commercial Auto Insurance

There are a number of situations where you will need to get commercial vehicle insurance. If you conduct any of the following work-related tasks by using a personal vehicle, you should reconsider your policy arrangements.

  • As a construction contractor your truck includes ladder racks or permanent tool boxes or specialized work-related installed equipment.
  • You use a specialty ‘cube’ or ‘box’ van or other vehicle that has a gross weight over 10,000 pounds or a load capacity over 2,000 pounds.
  • Employees use your personal vehicle even on an occasional basis to do errands for the business.
  • Vehicles are rented or leased by your partnership or corporation.
  • The vehicle is used for pick up or delivery of any items, materials or product associated with the business, even occasionally.
  • Your vehicle is used as a taxi, livery or limousine service, including ride-sharing such as Lyft or Uber.
  • The vehicle in question is owned by a partnership or corporation.
  • The vehicle is modified with special equipment to perform functions only related to the business such as a snowplow, cooking and catering equipment, altered suspensions for extra capacity or hydraulic lifts.

If you and your business fit any of the situations described above you should have commercial vehicle insurance coverage on personally owned automobile or the vehicle owned, rented or leased by the company. Commercial vs personal auto insurance cost may be a little bit more but at least you are insured for the proper use.

Difference between Personal and Commercial Automobile Insurance

There are many situations under your personal coverage where specific circumstances are not covered. In a commercial policy, you are covered for any vehicle that you own, rent or lease. A personal policy only covers the vehicle listed in the policy. The flexibility of a commercial policy also includes covered auto symbols and endorsements, whereas a personal policy does not. Under a personal policy it generally will cover a spouse and direct family members in the same household but does not cover third-party drivers like employees; a commercial policy can be set up to cover any number of employees.

Furthermore, a commercial policy generally has much higher possible coverage limits because of the increased risks businesses face compared to personal coverage maximum limits. Often a personal policy will allow a maximum of $300,000 liability coverage, whereas a commercial policy can often start at $500,000. If you travel across state lines for your business, you will also require commercial insurance as mandated by federal legislation for the vehicle being used.

Do Not Fall Into the “Denied Claim” Situation

Many people wrongly think that their personal auto insurance will automatically cover business errands in their personal vehicle as long as it happens infrequently. However, in almost all insurance policies there is a ‘Business Clause’ that generally states, any activities related to a business function, will not be covered under the personal portion of the policy by discretion of the insurer. Of course, there is a possibility that the claim is approved, but there is a greater chance that for an accident with a significant claim you will not be covered under the policy.

Do not put you and your business at risk for a few dollars a day that a commercial policy will cost in comparison to a personal policy. Protect yourself and your business by getting quality commercial quotes from multiple national auto insurers conveniently and easily on our site.

Individual State Rules on Business Use

Depending on where you live some work related activities may be allowed under your private car insurance policy. This may be because of the insurance legislation in your state or court rulings. Your insurer or agent will be able to tell you if certain work related activities are covered by your private policy.

There may be different interpretation of work and business as well. Running a business is understandably different from working for a wage. For example, you may be covered to do jobs like pizza delivery with your personal car insurance in certain states while it may be unacceptable in another state.

Also, you may be able to include certain uses in your private policy with a special “business use” endorsement. It is a special agreement made between you and the insurer that leaves no room for doubt in your mind if you are covered or not. There are so many things can be done with an automobile. Likewise, there are so many different state rules and court judgements concerning the matter that you should check your individual situation with your insurer.

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