Many business owners wonder whether their personal auto insurance provides protection when operating a vehicle for business purposes. Unfortunately, it usually doesn’t, except under particular circumstances. Here’s what you should consider to ensure you properly protect your business.
Do You Understand Insurance Carrier Guidelines?
Whether you need a commercial auto insurance policy or you can rely on your personal auto insurance policy depends on your insurance carrier. They have their own guidelines. Don’t assume your personal policy protects you – ask your insurance agent for clarification, especially if you’re driving for Uber or Lyft.
Do You Have a Business Use Endorsement?
Many owners fail to notify their insurance company that they use their personal vehicle for business, because they believe it will cost substantially more.
However, some insurers allow owners to add an endorsement to their personal policy to extend coverage to their business at a very reasonable cost.
Of course, if you don’t ask for the endorsement you’re not covered for business use and you’re at risk.
Do You Employ Others?
If you have ANY employees, volunteers, or relatives driving their vehicle on behalf of the business or for business purposes, “Non-Owned” coverage in a commercial policy is a must. This could include and employee running to the bank or post office for the business while driving their own vehicle, or even an employee driving out to a jobsite with their vehicle.
If one of these individuals gets in an accident while operating their vehicle on business time, you need protection.
Is Your Vehicle Excluded Under Your Personal Policy?
The Insurance Information Institute states a personal auto policy is unlikely to provide coverage if the vehicle in question is used primarily for business. Additionally, it will not provide coverage for any business-owned vehicle.
However, in some very specific cases your auto policy may offer protection, but many conditions apply. These are a few of the restrictions that may appear in a personal auto policy:
- Vehicle Type – must be a private passenger vehicle or pickup rated greater than 1 ton – vans and utility type vehicles used only as a private passenger vehicles
- Household Ownership – owned or leased by an individual, partner, or relative within the same household
- Activities Permitted – vehicle used solely for carrying tools and supplies between the named insured’s residence and a job site
- Occupation, Profession, or Business – some policies only allow business use for sales or ranching
- Number of Vehicles Within Category – many policies only allow one personal vehicle for business use
- Maximum Number of Visits to Job Sites in a Day – many policies limit coverage to 3 daily visits to job sites
- Vehicle Signs or Logos – many policies exclude coverage if your personal vehicle bears a logo or business sign
Why Risk It?
Your insurance company may not know you’re using your vehicle for business purposes, but it can certainly cause problems if you ever need to file a claim.
They’re within their rights to back charge you the difference in premiums usage since you did not provide them with truthful information. More likely, they will cancel your insurance due to your fraudulent application making it difficult to re-insure. It really isn’t worth the risk.
Discuss your needs with an independent insurance agency like ours, especially if you’re self-employed or operate a home-based business. We will review your existing coverage and tailor a commercial auto policy so you have the protection you need at the best possible cost.