When do I need commercial auto insurance?
Commercial auto insurance is similar to personal auto insurance and includes such coverage as liability, medical payments, uninsured/underinsured motorists, comprehensive and collision coverage. However, the commercial auto insurance policy is designed to specifically cover loss or damage when using the vehicle for your business.
Having the right kind of automobile insurance is important to insure you have the appropriate coverage in the event of a claim. If your vehicle is used for business purposes, then commercial auto insurance is the right type of insurance for you.
However, insurance often has “gray areas” and sometimes it’s hard to figure out EXACTLY when you need to have commercial auto insurance vs. personal auto insurance. In those situations, it’s always best to contact your insurance agent or company. Our goal is to make sure you have the coverage, especially if a claim happens (God forbid a claim gets denied due to the wrong coverage!)
Below we’ve listed the top 7 common situations where you may need commercial auto insurance.
When you use your vehicle to transport food, people or merchandise
Personal auto insurance has always excluded “business” use of an automobile. And you don’t necessarily have to be paid for your services- it’s often the usage of the vehicle that makes the determination of business use.
What about services such as Door Dash, Grubhub, Uber, etc.? Insurance companies have been slowly adapting to these new services that blur the lines between personal auto and commercial auto. Some say “No Way”, while others have introduced endorsements that can be added to a personal auto insurance policy. Still others require commercial auto insurance. As mentioned before- ASK your insurance agent/company BEFORE you start, so you’re not taken by surprise!
When the vehicle is owned by a corporation or other business entity
A personal auto insurance policy often requires that an INDIVIDUAL be the Named Insured. So if the vehicle is in the name of a business, for example, JK Smith Investments Inc., then it makes sense that a commercial auto insurance policy is necessary.
When the vehicle requires special coverage, such as coverage to tow a trailer for business purposes
Think about it like this- if you have a 1 ton pickup that hauls a dump trailer, the chances are good that commercial auto insurance may be the way to go. When in doubt, ASK!
When the vehicle is driven by an employee or shared among multiple employees
When it looks like a business and smells like a business, well…. you get the point. If you have employees, and those employees drive your company vehicle(s), you have a business and need commercial auto insurance.
When it’s got graphics or signage plastered all over it advertising your business
This one causes more arguments than anything else. BUT, if nothing else, it’s a great place to start a conversation with your agent/insurance company. Because claim time is NOT the time to find out you have NO coverage!
When you buy a vehicle that is NOT a “private passenger auto
Some vehicles, by their very nature, are NOT private passenger vehicles and therefore can’t be covered on a personal auto policy. Think about a semi truck, or even a dump truck. We do have some customers who have a dump truck for their own use. But due to size, gross vehicle weight or other factors, it’s classified as a commercial vehicle, so it’s insured on a commercial auto policy.
When it’s used in any way for ongoing business operations
The examples here are plentiful- contractors picking up materials & taking to jobsites and hauling their equipment. Another example includes a repairman driving to customers houses. If you’re using it in the course of your business, then it needs be on a commercial auto insurance policy.
But isn’t commercial auto insurance super expensive?
Surprisingly, it’s more affordable than you think. Of course, premium depends on many things such as size of vehicle, type of business, etc. but it is often very possible to get a commercial auto insurance policy that is comparable in premium to a personal auto policy- and with excellent coverage.
Don’t fall into the trap of thinking “Oh, it’s going to be so expensive!” It depends on how big your operation is and what work you’re doing, but it’s not unmanageable. In fact, some recent 1 and 2 person operations (lawn care and masonry contractor) were able to get a policy that was VERY affordable. And they had the right coverage!
