Commercial Auto Insurance
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Commercial Auto Insurance Information
Do you need Commercial Auto Insurance or are you covered with Personal Auto Insurance?
When you use your personal vehicle for work, the question arises whether you need a commercial auto insurance policy. The short answer is yes, you do. While sometimes a personal automobile is covered if it is primarily for personal use, some businesses prefer to be safe rather than sorry and have a commercial insurance policy written to cover the car when it is being used for a business purpose.
One reason for adding a commercial policy to the personal auto policy is to avoid disputes with one's insurance carrier should an accident occur when a vehicle is being used for a business purpose. Coverage could be denied if the insurance company concludes that the vehicle is being used primarily for business. There are Business exclusions on personal auto policies.
Another reason for a commercial auto policy is to cover the possibility of law suits against the business in the event of an accident. If you get into an accident using your vehicle to make a bank deposit, your insurance carrier may well cover costs if the car is primarily for personal use. However if the accident involves another party, he or she might choose to sue the business for further damages. A law suit that is not covered by a commercial auto insurance policy could wipe out the business.
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A commercial auto insurance policy does much the same thing for a vehicle when being used for a business purpose as a personal auto insurance policy does for an individual’s car. It covers medical expenses, the repair or replacement of the vehicle and settling any third party claims. However, higher limits are available (standard is $1,000,000) when you have a commercial auto policy.
If you have employees that use their own personal cars in business, you should also purchase the "Hired/Non Owned" coverage that would cover your employees while they were running an errand for your business.
As a business owner, you need the same kinds of insurance coverages for the car you use in your business as you do for a car used for personal travel -- liability, collision and comprehensive, medical payments (known as personal injury protection in some states) and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the "principal insured" rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you.
Whether you need to buy a business auto insurance policy will depend on the kind of driving you do. A good insurance agent will ask you many details about how you use vehicles in your business, who will be driving them and whether employees, if you have them, are likely to be driving their own cars for your business.
While the major coverages are the same, a business auto policy differs from a personal auto policy in many technical respects. Ask your insurance agent to explain all the differences and options.
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