While the majority of Americans use their vehicle to travel to work, fewer use their vehicle for work. If you fall into the latter category, you may have additional car insurance questions.
Here, we’ll address when your personal car insurance might not cover the business use of a personal vehicle, and the options available for those who do drive their car for business purposes.
What does Personal Car Insurance Cover?
Personal car insurance helps pay for damages related to the use of your personal vehicle for non-work-related activities. Coverage details vary by insurer and by policy, but the overall purpose of personal car insurance is to protect you or others financially in the case of an accident with your car.
Common personal car insurance policies include personal liability, comprehensive, and collision, though there are a number of other policy options as well. Personal car insurance is the type of insurance you are most likely already familiar with as most states legally require some form of personal liability insurance.
Will Personal Car Insurance Cover Business Use of Car?
Personal car insurance will not typically cover the business use of cars you own.
Why? Because while insurers know that all driving comes with some risk, people using their vehicle for work are considered to be at a higher financial risk. There may be additional people, assets, or property involved in work-related accidents that may be very expensive for the insurer to reimburse.
If you are using your personal car for business, even occasionally, you should explore other coverage options. Don’t risk having to pay out of pocket for financial liabilities that result from an accident during business use of your car.
What Are the Insurance Types for Business Use of Cars You Own?
When it comes to choosing policies for the business use of your car, you have a few options available to you. Depending on how you use your vehicle for work-related activities, you can choose between:
- Commercial auto insurance
- Hired and non-owned auto insurance
Both of these options provide you with coverage, though the extent of that coverage varies based on the policy you select.
What is Commercial Auto Insurance?
Commercial auto insurance covers the business use of a personal vehicle or of a vehicle owned by the company. Most policies will allow you to choose between liability insurance only or liability insurance with comprehensive and collision coverage. This is a great option for many business owners because it will cover incidents that occur when you or your employees use a business vehicle.
Like personal liability insurance, many states require commercial auto insurance. This is especially the case when a vehicle is owned and titled by a business and used for business purposes. However, commercial auto insurance is also commonly purchased by individuals who are self-employed.
When Should I Get Commercial Auto Insurance?
You may want to purchase a commercial auto policy if you frequently use your personal car for business activities, like:
- Work-related travel
- Commuting to client meetings
- Transporting clients or other people
- Moving expensive equipment
- Keeping equipment required for work in your vehicle
- Using specialty or heavy vehicles
- Making deliveries
In addition, if you own vehicles in your company’s name, be sure to check state requirements for insurance coverage. Ultimately, commercial auto insurance can help protect you from significant financial loss in the case of an accident.
What is Hired & Non-Owned Auto Insurance?
Depending on your situation, hired and non-owned auto insurance might be the best option for you. This type of insurance is generally cheaper than commercial auto insurance because it does not cover the vehicle to the same extent as commercial auto insurance. Hired and non-owned auto insurance can protect you from litigation and pay for damages incurred by employees driving personal vehicles or rental vehicles.
When Should I Get Hired & Non-Owned Auto Insurance?
You may want to purchase hired and non-owned insurance coverage if you:
- Use your personal vehicle for work very occasionally
- Have employees who drive their personal vehicles
- Rent vehicles for work-related activities
This policy can help protect your financial interests regardless of who is behind the wheel of a vehicle operating on behalf of your company.
How Do I Get Insurance Coverage on a Vehicle I Use for Work?
If you still have questions or would like to find the right car insurance coverage for vehicles you use for work, contact one of our local agents today! We’re here to help.