Many entrepreneurs and small business owners like to use their personal vehicles when doing business. There’s nothing inherently wrong with mixing business and personal modes of transportation — it’s a tradition dating back to paper carriers on bikes. But that doesn’t mean your personal auto insurance policy covers your liability for business use — nor does your business owner’s policy (BOP) necessarily cover business vehicles, unless you’ve purchased a commercial auto add-on.
If you use a personal vehicle for business and are unsure whether you need to upgrade to commercial auto coverage, ask yourself the following questions:
- Are any of your vehicles registered to a business? If yes, you need commercial auto insurance. If your vehicle is registered or titled to a business, partnership, or doing business as (DBA) entity, your personal auto insurance won’t suffice.
- Are you using your personal vehicle to transport goods or conduct a service? Whether you are delivering construction materials, cleaning supplies, or ingredients, are traveling from one client’s office to another, or are visiting your different locations, it’s a pretty safe bet that you’ll need a commercial auto account to fully cover your vehicle and your business in the event of an accident, theft, or damage.
- Do you earn money by transporting people or property? If your line of work involves taxiing individuals or timed package delivery, you will need a commercial auto policy, as most personal auto policies exclude these types of activities. Due to the significant on-the-road exposure, many insurers do not cover these types of businesses, so speak with your independent insurance agent to learn more about your options.
- Is your vehicle built for working or hauling? Typically, if your vehicle has a gross weight of more than 10,000 pounds and is used for business operations, you should have a commercial auto policy. In addition, if you equip your vehicle with specialized equipment related to your business, such as a snowplow, compartments for keeping food hot or cold, permanent tool boxes, ladder racks, and other kinds of storage and utility fixtures, your insurer will likely require business coverage. Requirements vary by state and insurer, so check with your agent to find out more.
- Are you driving the vehicle regularly for business use? In general, this means you’re using the vehicle, on average, more than three times a month for your business (other than commuting to work), even if those uses are very different in each instance — for example, once delivering inventory, another time picking up supplies. As long as you’re consistently using the vehicle for business, you likely need commercial auto coverage.
- Do employees drive your vehicles on a regular basis? If employees drive as part of their job responsibilities, commercial auto coverage can help protect your business in the event of an accident.
- Does your business use non-owned or hired vehicles? If employees use personal vehicles (non-owned by your business) or you use rented or borrowed vehicles (hired) to conduct business, commercial auto coverage can provide important liability protection. Say an employee uses his car to pick up supplies for a job and hits another car. The employee’s personal insurer should respond to the claim. However, depending on the amount of damage, the employee’s policy may not be adequate, as most personal policy limits are significantly lower than commercial policy limits. As another example, if you are in a rental car during a business trip and get into a fender bender, your commercial auto policy will help protect you if your business is sued.
The above questions are a good guide to get you started, but certain professions and situations may be covered under a personal auto policy. For example, professionals like real estate agents, lawyers, and consultants who transport clients in their personal vehicles may not need commercial coverage. Because insurer guidelines and business exposures vary, contact your independent agent so he or she can recommend the right option to best fit your needs.
Policies come in many varieties — as do business uses of vehicles. If you’re still not sure whether you need commercial auto coverage or how much coverage you might need, have a conversation with an independent insurance agent today. Learn more about how Liberty Mutual’s commercial auto insurance can help protect your vehicles, drivers, and business for the road ahead.
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