Signs You Need to Insure Your Car with Business Auto Insurance

Car insurance can be confusing enough on its own, but this is even truer when you drag business into it. Commercial auto insurance provides a lot of the same coverages as personal auto insurance but is used primarily for vehicles owned or used by a business.

Differences Between Commercial Auto and Personal Auto Insurance 

These two types of auto insurance policies share a lot of the same coverages, such as:

A large difference between commercial auto insurance and personal auto insurance is the liability coverage. While operating a vehicle for a business, especially if it is not your business, you face a lot of liability risks that you wouldn’t driving your own vehicle. Liability coverage for commercial auto insurance policies is geared to cover these unique risks with higher limits than personal auto insurance policies. In fact, many states have higher liability requirements for commercial vehicles. These requirements vary depending on the weight of the vehicle, how far it will travel (intrastate vs interstate) and the type of cargo. Vehicles carrying hazardous material generally need the highest amount of liability coverage. 

Maybe you don’t carry hazardous material or have a significantly heavy vehicle. How do you know if you need commercial auto insurance?

You Frequently Transport Items or People for Work 

Commercial auto insurance is not for people who simply commute to and from work. That is covered under your personal auto insurance policy. But if you frequently transport goods, equipment or people (such as clients) in your vehicle for work, you may need commercial auto insurance.

You Drive for Money 

There are many ridesharing services and delivery services that pay you to use your personal vehicle to give others rides or deliver food. Some ridesharing services offer limited coverage, but this is typically only while you are operating the app. This coverage also usually only covers liability, leaving you to cover the damage to your personal vehicle. Unfortunately, a personal auto insurance policy won’t cover you if the accident occurred while you were using the vehicle for work purposes.

Basic but Far Travel 

If you travel hundreds or thousands of miles in your vehicle for work, you may need commercial auto insurance. This is not the same as commuting. Say you are traveling to a demonstration out of town and decide to drive, bringing your laptop and pamphlets with you. On the way, you get into an accident. A commercial auto insurance policy will step in since you were traveling specifically for work to cover the damages. 

Be careful when it comes to choosing your policy. If your vehicle is frequently used for work but is insured with a personal auto insurance policy, an accident may not be covered. Commercial auto insurance can cover personal use, but insuring a non-work vehicle with this policy can lead to an insurance provider cancelling the policy or even dropping the policyholder.