In What Situations Do You Need Commercial Auto Insurance?
Last Updated on November 15, 2020
Many drivers are unaware of whether or not they need commercial auto insurance. What is commercial car insurance? Do you need it? Are you protected while driving your vehicle? Today, we’re explaining everything you need to know about commercial car insurance.
What is Commercial Auto Insurance?
Commercial auto insurance is car insurance for any vehicle designated for business use. Commercial car insurance, like ordinary car insurance, protects against both property damage and liability. If you hit someone else’s vehicle, for example, or injure another driver in a collision with your work vehicle, then commercial auto insurance will protect you.
What’s Covered Under Commercial Auto Insurance?
Commercial auto insurance, for the most part, covers the same things as ordinary car insurance. Specific coverage varies between plans and companies. In general, however, here’s what’s covered:
- Property damage liability
- Liability for bodily injury to others
- Personal injuries to you, your employed drivers, or passengers, including medical expenses and lost wages
- Collision coverage for costs associated with an accident, regardless of who is at fault
- Comprehensive coverage for things like vandalism, theft, and other non-collision-related incidents
- Uninsured and underinsured motorist coverage
- Rental vehicle coverage (say, for when you or your employees drive a rental vehicle or a borrowed vehicle)
- Loading and unloading liability
- Towing and labor costs
Essentially, commercial car insurance protects any vehicle you use for business purposes, and it also covers all commercial drivers of that vehicle.
A business owner would buy commercial auto insurance for a single vehicle or fleet of vehicles. Once the commercial auto insurance is in effect, all vehicles, drivers, and passengers are covered based on the terms of that policy.
Do I Need Commercial Auto Insurance?
You require commercial auto insurance for any vehicle that your company uses for business purposes. Commercial auto insurance is also required on any vehicle with a commercial license plate or tag and any vehicle registered as a commercial vehicle.
In other words, you need commercial auto insurance on all business vehicles (if you want to drive those vehicles legally on the road).
That part is obvious: you probably already know that you need commercial car insurance on commercial vehicles.
The real question is whether or not you need commercial car insurance in certain situations – say, if you deliver pizzas, drive your car for work purposes during the day, or haul equipment in your vehicle.
You may require commercial auto insurance if you meet any of the following conditions:
- You’re using your vehicle to carry equipment
- You’re carrying flammable, toxic, or hazardous material in your vehicle
- You use your vehicle to perform a service – like towing another vehicle – and receive payment for that service
- You provide trucking and freight transportation using your vehicle (such as car shipping)
- You use your vehicle to drive people around in return for payment, like as a chauffeur, a taxi driver, or a limousine service
- You use your vehicle to deliver newspapers
Ultimately, if you work in a business that requires the use of your own vehicle – or a company vehicle – for commercial purposes, then you require commercial auto insurance. However, someone who drives to work as a normal commute will not need commercial auto insurance.
Questions to Ask Yourself to Determine If you Need Commercial Car Insurance
Who Owns and Operates the Vehicle? If your company owns and operates the vehicle, and you use your vehicle for business purposes, then you require commercial car insurance. However, if you’re a sole proprietor who operates the business out of your home and you do not need to travel between clients or make deliveries to clients, then your personal car insurance policy is probably enough.
How is the Vehicle Used on a Daily Basis? Is your vehicle used for commercial purposes on a daily basis? If so, then your personal insurance policy might not cover you in the event of an incident. A contractor might drive between job sites with expensive tools in the bed of the truck. In the event of a collision, and your tools are damaged, then your personal car insurance policy will not cover any tool repairs or replacements. If you use your vehicle to transport goods or merchandise, if you transport equipment or tools, if you provide a service with your vehicle, or if your vehicle is used for driver training, then you may require commercial car insurance.
Conclusion: Talk to your Car Insurance Company to Decide If You Need Insurance
Ultimately, ordinary vehicle insurance provides complete coverage for the personal use of your vehicle. This coverage does not extend to business vehicles. If you use your vehicle for business purposes – even just for a few hours per day or week – then you may require commercial auto insurance to ensure complete coverage.
To determine whether or not you need commercial auto insurance, talk to your car insurance company. They’ll be able to identify any gaps in your insurance coverage and ensure you stay protected at all times.