Everything You Need to Know

If you use a vehicle for your business, whether to transport supplies, deliver goods, or provide service to customers, consider having commercial car insurance. Car insurance business use covers you and your employees when using a company car or a personal car for business purposes.

What Is Commercial Car Insurance?

Commercial vehicle insurance provides extra coverage when the car, truck, or van you’re driving is used exclusively for commercial or business use and does not include commuting to and from work.

What Does Commercial Car Insurance Cover?

While most states require drivers to have personal car insurance and for businesses to have commercial auto insurance, there are differences in the types of policies.

According to Coverage.com, key features in a commercial auto policy include:

  • Non-owner coverage: When a business owner owns a vehicle that they use for their business and lets employees drive it, the owner will have non-owner coverage in their business car insurance policy.
  • Equipment and supplies: Depending on the insurance policy you get and the carrier, a business owner can get coverage for damaged or stolen equipment and supplies within a covered vehicle.
  • Loading and unloading liability: If an employee gets hurt when loading or unloading the content of a covered vehicle, most commercial auto insurance policies will help to cover any doctor or medical bills incurred.

    When your business has commercial car insurance, the policy will cover you or your employees during the time that the business vehicle is being used. While you have car insurance on your personal vehicle as required by the majority of states, you’ll need business car insurance as well.

    The policies for these two separate types of car insurance have significantly different payouts in the event of an auto accident. Personal car insurance policies generally have a maximum limit of $500,000 while many business car insurance policies may max out at $1,000,000. NerdWallet suggests that, as a business owner, it’s important to consider having an umbrella insurance policy to help protect personal assets in case you get sued.

    How Much Does Commercial Auto Insurance Cost?

    While there’s no flat rate for commercial auto insurance or small business auto insurance, keep in mind that in general, if you use a car for business or commercial use, expect to pay higher premiums than you would for personal car insurance. The main reason that commercial car insurance is more expensive is that the business owner has more coverage for their work vehicle than their personal car insurance policy. In general, commercial car insurance policies will have a minimum of $500,000 coverage and can often exceed over $1,000,000.

    Why Is Commercial Car Insurance More Expensive Than Personal Car Insurance?

    Commercial car insurance is higher to help protect you, your employees, and your business. If you happen to be driving your personal car while doing business meeting a client or delivering goods to a vendor and you cause an accident, you’re responsible to pay for damages and bodily injury. If your personal car insurance doesn’t cover the cost of damage or personal harm, the person can file a lawsuit against your business which can put a financial strain on your business.

    The Insurance Information Institute, Inc. says that a business owner who drives their own car for work-oriented tasks, or who lets employees drive their persona vehicle for business errands, should consider getting a Non-owned Auto Liability Endorsement addendum to their commercial auto insurance policy. This coverage generally exceeds the amount of payout that a personal car insurance policy covers protecting the employee and the business owner.

    Who Needs Commercial Auto Insurance?

    No matter if you deliver pizza using your employer’s car or your own vehicle, you’re a taxi driver, or you drive a commercial van to provide services to customers or other businesses, you need commercial auto insurance. Nearly all personal car insurance policies specify that their insurance policies exclude “livery” or for-hire vehicles. If you use your personal car for business use and you get in an accident, your personal car insurance may not cover damages or bodily injury.

    You may be unsure of whether or not you need commercial car insurance. If your business falls under any of these situations, consider getting sufficient business car insurance.

    • Pick up or delivery service: If you pick up or deliver food, supplies, equipment, or passengers, you should have commercial car insurance.
    • Taxi, ride-sharing, or ride-hailing services: Because you’re carrying passengers in these services, you want sufficient commercial vehicle insurance to cover bodily injury.
    • Corporate vehicles: If any of the vehicles in your corporate fleet are being used for business purposes, ask your insurance agent for a group rate on commercial car insurance.
    • Gross vehicle weight and payload considerations: In general, if your business truck, car, or van has a payload capacity that exceeds 2000 pounds and the vehicle has a gross vehicle weight over 10,000 pounds, make sure you have the right kind of commercial car insurance coverage for these larger vehicles.

      How Does Business Car Insurance Work?

      Most personal car insurance policies won’t cover you, the vehicle, other vehicles, or other people if there’s an accident while driving the car for business use. If an accident were to happen, you as the business owner are responsible to pay out of pocket for damage or bodily injury. A commercial car insurance policy will cover you.

      When you or your employees use their car or the business vehicle to conduct work, it’s important that the business has a commercial car insurance policy. Because personal car insurance doesn’t pay medical expenses if there is an accident while driving for business purposes, the commercial policy will help to cover bodily injury costs, medical bills, and in the event of a fatal accident, help to cover the cost associated with the event.

      Whether you’re a business owner driving a vehicle for commercial purposes or have employees using the car strictly for business use, talk with your car insurance carrier to help find the policy and coverage to protect yourself, your employees, and your business.

      Check this out if you need additional information, resources, or guidance on car insurance.


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