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Will my personal car insurance cover my vehicle for business use?

Driving a car can seem like the most routine part of a new business. After all, you’ve probably been comfortable behind the wheel since you were a teenager. Driving is one area you’ve likely got on cruise control. But now that you’re visiting clients and hauling supplies for your business, did you know your personal car insurance may not be covering you at all?

Because driving is one of the biggest risks we take, an accident while you’re carrying out business activities can present one of the biggest financial risks to your venture. Want to learn how to safeguard your new company while you’re out taking care of business? The first step is learning about commercial vehicle insurance. Read on.

Why won’t my personal car insurance cover my business use of my own vehicle?

Driving for work means more time behind the wheel. You could be meeting clients at their offices, taking produce from farm to market, or delivering pizzas. Regardless of your business activities, you’re likely racking up lots of miles on your vehicle.

Personal car insurance was never meant to cover the added risk of those trips. It covers only limited work-related driving, like a daily commute, picking up muffins for the office breakfast, or taking coworkers out for a drink after work.

Insurers rate commercial activities differently than personal ones. So if your vehicle takes on commercial activities, it needs commercial insurance.

Types of car insurance for businesses: An overview

Personal car insurance

Personal car insurance can work for some business owners. For example, sole proprietors with no employees who commute once a day likely don’t need a commercial policy. Carpooling? You do not need commercial auto insurance coverage.

Your profession, type of vehicle, and how many sites you visit are all part of determining whether it’s time to graduate to commercial auto insurance.

If you’re not sure whether you need commercial auto insurance, you should consider:

  • Do you deliver goods?
  • Do you drive people for a fee?
  • Do you transport employees to sites?
  • Do you travel to clients or work sites?
  • Do you haul tools or equipment to job sites?
  • Did you title your car in the name of your corporation or LLC?

Personal auto insurance policies typically cover only small business tasks, like deliveries that are “incidental” to an insured’s business. Following an accident, an adjuster may wind up deciding whether your vehicle has coverage. Commercial auto insurance eliminates the confusion. It typically comes with added coverage, too, for better peace of mind.

Commercial auto insurance

Commercial auto insurance policies can protect your business in 4 ways:

  • Liability: It provides for damages to another party’s car when you or your employees are at fault.
  • Uninsured/underinsured motorist coverage: Commercial policies come with coverage to cover your loss when you’re not at fault, but the other party does not have enough coverage for the damages.
  • Medical bills: The policy provides for another driver’s hospital bills and lost wages when you or an employee cause a crash.
  • Physical damage: If you lease a vehicle, you’re likely required to carry collision and comprehensive coverage to repair your vehicle from crashes or after a theft, flood, or another disaster.

Endorsements, providing additional coverage for needs like towing or rental cars, can be added to help your business keep running.

If someone other than you uses a business vehicle, you’ll almost certainly need a commercial policy. Think of it as an extension of your general liability coverage. It covers any harm you or your employees might cause, this time on the road.

Imagine this: One day, on the way to a job site for your electrical company, an employee driving your van fails to see a stop sign and hits another driver. The driver is badly hurt. Your employee’s insurance cannot cover the damages, and the driver sues your company to pay their mounting medical bills. Now is the time for commercial auto insurance.

Commercial coverage also offers added benefits like coverage for loading and unloading your vehicle. You’ll typically also carry higher coverage amounts.

Hired and non-owned auto insurance

Commercial car insurance covers vehicles your company owns. But what about if your employees regularly use their cars for your business?

If they’re driving to do errands for your business, their personal auto insurance may not cover them. If they cause an accident, your company could be liable for damages. Hired and non-owned auto insurance handles this scenario.

“Hired” auto coverage helps business owners when they rent, lease, or borrow a vehicle for work. “Non-owned” auto insurance helps protect you as a business owner by covering vehicles your employees own.

This insurance includes liability coverage to help pay for damage to another person’s car, medical, and legal expenses if your business is sued. However, it won’t cover damages to your employee’s vehicle.

Rideshare insurance

Drivers for rideshare companies use their personal auto policy when they’re not logged into an app and accepting rides. Sign onto the app, and the rideshare company’s commercial insurance kicks in, right? Nope. Rideshare company insurance likely doesn’t start until a driver accepts a new ride. That can mean gaps throughout a driver’s shift with limited coverage.

Rideshare companies’ commercial insurance may cover liability, including medical expenses. Still, the driver might have no insurance at all for their vehicle and medical expenses. Rideshare insurance fills this gap. It protects drivers and even lets them drive for multiple services.

This insurance works for drivers of all kinds of delivery services, like Uber Eats, Postmates, and DoorDash.

Rideshare insurance can be an add-on endorsement or a standalone policy for drivers with coverage gaps. (However, you can’t get rideshare insurance from Huckleberry.)

Safety first: Risks that face your commercial vehicle

Company vehicles come with obvious risks: Your employee could back into a loading dock, for instance. They also have some risks that are harder to see. Luckily, you can help protect your business with some foresight. If you’re going to have drivers in company cars, consider:

  • Checking driving records: If workers are using your vehicles, check whether their driver’s licenses are current and valid for the types of cars they’ll be driving. Review their driving histories. Consider drug testing. Give experienced drivers new routes and help drivers safely gain experience driving company vehicles.
  • Making company rules: Institute policies around distracted driving and educate workers on the expectations. For example, companies can make a “no phones” policy for drivers and instruct drivers not to answer even hands-free calls while behind the wheel.
  • Embracing technology: Research new vehicle technologies that make your company cars safer for drivers, like lane departure warning sensors and 360-degree cameras. Not only will drivers be safer, but vehicles that avoid accidents aren’t out of service facing costly repairs and lost business.

Conclusion: How to get commercial auto insurance with Huckleberry

Unless your business relies on a fleet of commercial vehicles, you’ve probably given more thought to your small business insurance than commercial auto insurance. But commercial vehicle insurance should be part of the holistic coverage business owners have to protect their business.

Even if your fleet is a single car, a personal policy might not cover your business activities. And there is no backup from your other insurance–a standard Business Owner’s Policy only covers liability for harms your business might cause in the course of your work, not on the way to it.

Still not sure if you need commercial auto insurance? You get a quote in less time than it takes to sit through a red light from Huckleberry, and get business insurance coverage for your other business activities, too. It helps your business navigate the blind corners so that you can get back to smooth driving.


Disclaimer

All content on this page is for general informational purposes only and does not apply to any specific case, is not legal, tax or insurance advice and should not be relied upon. If you have any questions about the situation for your small business or the latest information in your state, you should contact an attorney for legal advice, an insurance agent or broker, and/or your state's labor or industry agency, board, commission or department. Please note that the information provided on this page may change at any time as a result of legislative action, court decisions or rules adopted or amended by any state or the federal government.

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