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If you use a vehicle for your business, you’re probably wondering does my personal auto insurance cover business use.
If something goes wrong while on the road and you’re in the car for work purposes–whether you run an on-demand business, need to travel to see clients, or use your car for some other job-related reason–you may think that your personal car insurance has you covered. And while we don’t want to burst your bubble, we have to this time.
More often than not, a personal auto insurance policy won’t cover incidentals that occur while you are on the clock. And this is even more true if you aren’t the one behind the wheel when the incident takes place.
Let’s break it down:
Does My Personal Auto Insurance Cover Business Use?
It’s a fact that most personal auto policies do not provide coverage for business-related accidents and incidents. So, if something goes awry while you or an employee is driving for business-related reasons, you’ll have to pay out-of-pocket for any legal, repair, and car rental costs.
So if you are still wondering: does my personal auto insurance cover business use? The answer is: no.
Essentially, if you are driving for commercial purposes and only have personal car insurance, you are driving as if you are uninsured altogether.
We know, it’s a scary thought. There is so much outside of one driver’s control that can lead to a costly incident. That’s one reason why insurance exists in the first place. And automobile accidents have varying degrees of severity, and if any bodily harm occurs, you should be focused on healing. In the case that you were driving for work without commercial auto insurance, you would now not only be injured, but also blindsided by the surmounting costs incurred because you were unaware that your personal insurance wasn’t going to matter.
What to Know About Commercial Car Insurance
So what’s the difference? What makes commercial car insurance so important? Is it just another cost of doing business or is there more to it?
Commercial Car Insurance Types
For starters, there are three categories of people that can be covered by commercial auto insurance compared to the typical one person per vehicle under personal policies.
- The named insured: This will most likely be the business owner, this person will usually be covered even if they didn’t participate in an accident directly.
- Permissive users: Individuals who are not specifically covered by name or as a household member, but who have permission to drive.
- Omnibus users: Also covers those who aren’t specifically covered and extends coverage to those who are vicariously liable, meaning they can be held liable for any accident or negligence committed by permissive users.
If you purchase coverage per permissive user and omnibus user in addition to coverage for the named insured–you’ll be started off in the right direction.
What Does Commercial Auto Insurance Cover Exactly?
Commercial auto insurance will cover business vehicles that are either owned by the business or the individual that is using the vehicle for business purposes–like for rideshare or food delivery drivers. Many kinds of everyday vehicles are covered including passenger cars, vans, pickups, and SUVs. Utilitarian vehicles like cement mixers, tractor-trailers, flatbeds, delivery vans, and even cranes can also be covered if you purchase insurance for larger commercial vehicles.
Generally speaking, commercial auto insurance options are very similar to other insurance policy types. There will be standard policies that you can add on to depending upon your business needs.
In a basic plan, third-party damages will be covered as well as your own care and repair in the circumstance that you or your driver is to blame. Your policy will pay for things like:
- Repair bills: All damages to your vehicle should be covered. Collision coverage provides repair costs in both accidents that involve other vehicles and collisions with objects.
- Medical bills: Medical expenses for you, your drivers, and any passengers that are injured will be covered.
- Lost wages: Insurance plans can cover money lost while the vehicle is out of commission.
- Legal fees: Policies will cover your legal fees and potentially the other side if you or your employee were at fault.
- Pending lease payments: If you are leasing the vehicle and it is damaged beyond repair, insurance may cover the money that you still owe on it, this is called Gap Insurance.
- Funeral expenses: While no one wants to think about a potential loss of life, it is important to know that a basic plan can cover such costs.
And when it comes to add-ons you may want to ask your broker about adding something like Common Endorsements Comprehensive to your plan. This will provide coverage for damage that doesn’t result from a collision, like in the case of vandalism or weather-related damages. You may also want to add on Uninsured Motorist coverage, Not-Owned Liability, and Roadside Assistance.
What’s Not Covered with Commercial Auto insurance?
Standard commercial auto insurance that’s been coupled with the appropriate add-ons will leave you as protected as any business can be. That being said, there are exclusions, as you tend to find with most policies. Some risks will be uninsurable or may require additional coverage by other types of insurance policies.
Talk to your broker about purchasing additional Employment Practices Liability insurance types like Contractual Liability or Employer’s liability. These kinds of insurances will protect your business in the circumstance that an employee sues you for damages or injury that happened while on the job, but before getting behind the wheel–like if they were loading a car or filling the gas tank. Further, you may even want to investigate something like Pollution Insurance which can cover injuries resulting from automotive pollution–this is an add-on that won’t be a part of a standard package, but could come in handy if you operate in an area with very poor air quality.
How Much Should I Expect to Pay?
Well, now that you understand the need for commercial specific auto insurance, the natural next question will likely be around the cost. Each commercial auto insurance policy will vary from person-to-person, and a few factors will determine your rate. Driver risk is a big one. You’ll want to be able to share a solid driving record with little to no past accidents for yourself and prospective drivers if possible. The provider will also want to have an idea of how much mileage you will plan to use over the course of the policy term. Location, vehicle size, age of your drivers, and the general profession of your business will all become factors in the evaluation process.
Have an on-demand business? Here’s some tips on how to secure the best policy for your needs.
We know that even with the basics covered, any business owner is bound to have more questions. Chat with us now. We’re dedicated to making the insurance process simple for everyone and we have the numbers to prove it. Embroker is the highest rated business insurance company in the market, with a Net Promoter Score of 89+. That’s because we’re making insurance radically simple, not needlessly complex.
To learn more about the best coverage for your business, check out Embroker’s digital insurance platform.
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