Why Personal Car Insurance Won’t Cover Commercial Vehicles
by Arina Smith Insurance 30 January 2019
For many small businesses, the line between personal life and business is blurred, sometimes. This will lead to various complicated matters at times, and car insurance is one of those topics where business owners must pay extra attention. This is when most business owners ask themselves if they have to shop for a personal car insurance policy or do they have to invest in commercial car insurance policies.
The answer to this particular question depends on the type of vehicle used for commercial purposes. Some personal auto policies might offer some coverage for business use. However, it generally isn’t enough if you use a certain vehicle for business purposes mainly and you may want to shop around for commercial insurance policies. Below is more information on why dedicated insurance policies are necessary for business vehicles.
Personal Car Insurance Policies Have Certain Exclusions You Must Know About:
There are certain exclusions on personal car insurance policies that require the holder to avoid using that particular insurance policy for business purposes. This demands commercial insurance policies to be issued for the vehicle.
For instance, personal auto policies exclude coverage for certain businesses like delivery or passenger transportation (see Uber cars). If you’re involved in a car accident while transporting passengers or goods for your business, you will have no coverage.
Personal auto insurance policies also don’t offer coverage for certain types of vehicles. Those vehicles that are designed for commercial use in the most obvious way can’t enjoy any sort of coverage in the case of personal auto insurance policies. Also, business owned vehicles won’t be covered in personal car insurance policies’ case.
What Types of Businesses Generally Need Commercial Auto Insurance Policies?
There are certain types of businesses that require commercial auto insurance policies, no matter what. For instance, restaurants, bakeries, florists, taxi services, catering services contractors that need to constantly travel between job sites and limousine service providers. These are mainly risk factors that insurance companies consider when tailoring commercial policies and that aren’t necessary when personal insurance policies are issued.
So, Why Doesn’t Your Personal Insurance Policy Cover Business Driving?
If you still don’t understand why most insurance policies for personal driving won’t cover commercial driving, the information below will clarity some key aspects.
First of all, commercial driving is far riskier than personal driving. If you spend 8+ hours daily behind the wheel, driving, as part of your job, you are more prone to get involved in car accidents.
Second, when using a personal insurance policy for commercial driving, it violates the terms of your personal auto policy. Your insurance provider is only covering personal use and your policy is also priced accordingly. When using a personal vehicle for work, you are involved in riskier driving and your insurance company didn’t agree on covering it when your policy was issued. Some insurers might also deny a claim if it results that the holder was using the vehicle for commercial purposes. Some insurers might even increase your policy pricing or even drop you as a client, so the risk is not worth it. If you did so in the past and you’re now wondering yourself “Why is my insurance so high?” this might be the answer that you’re searching for, besides a series of other, unrelated motives.
Consider purchasing a commercial auto insurance policy if you frequently use your vehicle for business purposes.
What Do Commercial Car Insurance Policies Cover?
Although your personal car insurance policy might cover some types of commercial driving, such as driving to meet a client, it’s always better to inform your insurer before making assumptions. In some cases, your insurer may be able to add a designation to your personal policy to make it cover this type of driving. To get a clear idea on what might a dedicated insurance policy cover in case of business vehicles, keep reading below.
If your business owns the vehicle or you frequently use your personal vehicle for work (which is fairly common when it comes to small businesses), you have to get commercial auto insurance. These policies will cover any type of accident that you have while using the said vehicle during your business activity. In case you still run on your personal insurance policy, you might have to get out of your pocket the costs involved by repairs.
If your business doesn’t own the vehicle used in the process, hired and non-owned auto insurance policies will offer enough coverage. These offer coverage in the following instances:
- Employee-owned vehicles used to run business-related errands.
- Rental vehicles that you use for business purposes.
Generally, it’s a great idea to invest in such insurance products if you want to be safe in the following circumstances:
- Potential injury to you, your employees or passengers. This usually covers medical expenses and lost wages as well.
- Loading and unloading liability coverage. This is applied in case you transport various products to various destinations.
- Replacement vehicle coverage. When your business vehicle is being repaired, this coverage will offer you a replacement vehicle to continue your work duties. In some cases, personal insurance policies include this type of coverage as well.
- Coverage for those commercial vehicles that travel between states can be also purchased as an additional perk of these types of insurance policies.
Research Before You Buy:
No matter the type of insurance policy that you need, it is a great idea to research your options well before purchasing one. This is an aspect that you must consider since packages and policies vary so much from insurer to insurer and plan-to-plan. Plus, doing so will help you skip any sort of legal or financial troubles. Use insurance comparison tools that are generally available online to figure out exactly what type of insurance policy is best for your own circumstances. Try to get quotes from as many companies as possible and compare everything from costs to the coverage offered.
These are only some of the reasons why not so many personal insurance policies won’t offer coverage for commercial vehicles.