The automotive industry is enormous with millions of cars driven around the world every day. Along with these cars, there is a need for a car insurance policy. Just in the US, there are over 6 million car accidents every year, followed by almost 6 million commercial vehicle accidents. This makes the roads far from safe. And this is why auto insurance companies exist.
But since the vehicle insurance industry is so massive, complications will arise no matter what. Some parts are easy to understand. For example, driving under the influence will get your insurance claim rejected, or if the accident is your fault, then your liability will pay for the medical bills and repair costs.
But then some parts sit in the gray area, where there’s less explanation and more confusion. For example, does your auto insurance cover the business use of a personal vehicle? An answer with just a “yes” or “no” would not suffice. In this article, we’ll describe in detail using a personal vehicle for business use and getting an insurance claim if needed.
What’s Personal and What’s Business?
Before we get into the topic, it is important to clarify what’s personal use and what’s business use. When you get a personal auto insurance policy that may include liability coverage, collision coverage, comprehensive coverage, etc, you need to specify the use of your car to get the relevant prices.
Personal use includes using your car for day-to-day personal use, such as going shopping, or to work, dropping your kids at school, recreational driving, etc. Using the car in any way that does not directly connect to work or business is personal use. Using your car for these purposes will not generate revenue.
Business use is when you use your car for making money or aid in it. So if you use your car as a cab for Uber or Lyft, then that is considered business use. Not just that, but even if you use your car for going on business trips, work sites, client meetings, etc, all of these are considered business use. A major part of deciding what is “business” use and “personal” use also comes down to the auto insurance company.
Does Personal Auto Insurance Cover Business Use?
Absolutely not! Your personal auto insurance coverage will not cover any business use of the car. Your insurance company will reject any claims if they find out the accident occurred while you were using the car for any business purpose. Not just that, they might even drop you from the policy.
Now one or two trips to the office or worksite are allowed, or even a few meetings with a client, but there’s still no guarantee that your auto insurer will be as considerate as you’d expect them to be. It also depends on what the business was while the accident occurred. So what is to be done?
Getting Commercial Car Insurance
If you use your personal car for business purposes regularly, then the best way to avoid any financial disaster would be to get a commercial auto insurance policy. Almost every insurer that provides a personal auto insurance policy also provides a commercial auto insurance policy. Look for commercial car insurance online and you can find great, affordable options.
If you drive for Uber or Lyft, but also use the same car for personal use, getting a commercial policy would not be the best move. The best option for this situation would be getting rideshare auto insurance. Rideshare auto insurance lets you switch from business to personal auto insurance coverage when you are not using the car for commercial purposes.
If you use the car for solely business purposes such as meeting clients, going to worksites, driving clients around, the car being used by employees, etc., then you are better off with a commercial auto insurance policy.
Apart from minor differences in coverage, the main difference between commercial auto insurance and personal auto insurance is the price. Business auto insurance is slightly more expensive than their personal counterparts. This is because of the higher risk of accidents involved in the commercial use of cars and the higher coverage that comes with commercial auto insurance policies.
Business Auto Insurance Policies to Have
Here are the most important commercial auto insurance policies to have. While you can get others as well, these are absolutely necessary to prevent yourself from getting in big trouble.
Liability Coverage: Liability coverage is not only necessary to have but mandatory as well. In all the states (except Virginia and New Hampshire), you are legally required to own liability coverage to drive a car. Commercial liability coverage is important as if you crash your car and the accident is your fault, the other driver can sue you and your company, resulting in an insurance payout that could touch a million dollars.
This is the reason why commercial liability coverage usually comes with a coverage limit of around a million dollars. Do not drive your car for business purposes with personal liability coverage.
Collision coverage: Commercial collision coverage will pay for the repairs due to accidental damage during commercial use of the car. Having a commercial version of collision coverage is necessary. Your auto insurer can reject your claim of personal collision coverage if the car was being used for commercial purposes, even going on a meeting with a client.
Personal Injury Protection: No one wants to be in an accident, sustain serious injuries, and then pay hundreds of thousands of dollars for medical treatment. This is why you should have a personal injury protection plan for yourself and your employees to avoid paying a fortune on medical bills for car accidents and potentially getting sued.
The conclusive lines would be, that if you use your car for any business use regularly or often, it is better to stay safe and get commercial auto insurance. Do not take the risk of getting your claim rejected.