If you are a business owner, with a business vehicle, you may be unsure if you need to purchase a commercial auto insurance policy for your vehicle. Many people are hesitant to purchase a commercial auto policy because they assume they need to register the vehicle commercially and that it is going to be more expensive. Both of these are not always the case. A commercial auto policy can often times be cheaper than a personal auto policy and can provide additional coverage that is applicable for your business.
Besides talking it over with your agent to determine what type of policy is best for you, here are a few things to consider when deciding if you need a commercial auto insurance policy or not:
Registration: Who’s Name is the vehicle registered in? When the vehicle is registered in the name of the business then you automatically need a commercial auto insurance policy. If the vehicle is registered in your personal name, it does not mean the vehicle should automatically get personal auto insurance on it. A lot of times a solely owned business will have a vehicle registered in the name of the owner. There are a lot of things to consider, such as the vehicle’s drivers and usage, that will help determine if the vehicle can go on a personal auto policy or needs a commercial auto policy.
Who Drives?: Another sign that you need a commercial auto insurance policy is if other employees at your company are driving the vehicle. Commercial policies allow you to list the employees as drivers and allows them to drive the company vehicle, as well as be covered if an accident occurs. Just because you do not have any employees that drive the vehicle, doesn’t mean that you do not need commercial auto insurance though. All it means is that if you do have employees that drive the vehicle, you absolutely need a commercial policy!
Business Use: Before we discuss what is business use, let’s discuss what isn’t business use. Driving to and from your principal place of work is considered commuting and does not constitute as business use and does not require a commercial auto policy. Similarly, just using the vehicle to drive to the store, run errands, drop the kids off at activities, etc. is considered pleasure use and also does not require a commercial auto policy. Some examples of business use include driving to visit different clients, job sites, making deliveries, etc. If you use your vehicle for commercial purposes, on average, more than 3 times a month, then you need to classify your vehicle as having business use and may need to purchase a commercial auto policy. Not to make matters confusing, but some “low risk” business use classifications can be insured on a personal policy with a business usage. It is important to discuss these situations with your agent to make sure you are getting the policy that is best for you.
If you do any of the following or if your vehicle has any of the following “GET A COMMERCIAL AUTO POLICY!”:
- Carrying equipment (tools, supplies, etc.)
- Delivery of Goods (including but not limited to flowers, pizza, retail & wholesale)
- Carrying hazardous (or flammable) material
- Equipped with cranes, winches, snowplows (not used for private property only) and other attached equipment
- Messenger and/or Chauffeur
- Towing for Hire
- Taxi Driver
- Rural Newspaper Delivery
- Trucking – Local and Long Haul
- Towing a trailer for business or commercial purposes
If you are a business owner or even an employee who may use their own vehicle for their job, it is important to make sure you are insuring your vehicle correctly. Failure to insure your vehicle properly could result in issues at the time of a loss or lack of necessary coverage. Once again, it is important to discuss with your agent if a commercial auto policy is right or necessary for you.