If you’re a growing small business that relies on your vehicle, your personal auto insurance probably doesn’t provide all the of the coverages that business insurance encompasses. Especially if you don’t tell your insurance company that your personal auto is used for some business use, they could deny potential claims if the situation was for business use or if someone else was driving. The most common situation we encounter is contractors using their trucks which involve delivering supplies and landscapers with trailers of equipment. If accidents happen damaging the things they are carrying or harm others around them, personal auto insurance probably won’t cover those claims.
So, when do you need to make the switch to get business auto insurance?
6 Reasons You Need Commercial Auto Insurance for your Small Business
1. The vehicle is titled under the business name
Frequently, business owners change ownership of their vehicles so that the title is in the business name and the expense can help with their taxes.
2 An employee is driving the vehicle
If you ask an employee to drive your vehicle, chances are any potential claim won’t be covered. Even that run to the post office or hardware store may seem small to you, but the insurance company now sees that as increased liability if more people are driving that car/truck.
3. Use of vehicle for work-related activities
If you drive your truck to a jobsite where you’re taking down a tree and the tree falls on your car, it probably won’t be covered. That risk is outside the normal parameters of your personal auto insurance since it’s your job that brought you there and put you in that risk.
4. Transporting goods or people for hire
If you’re earning a living shuttling people or things around, you have an increased exposure to accidents and liability claims.
5. Carrying around work equipment or customer products
A contractor having appliances and supplies in the bed of his truck wouldn’t be covered under your personal insurance. Likewise, the landscaper with a trailer of equipment that damages a nearby parked vehicle won’t be covered unless he has commercial auto coverage.
6. If you want to shift the liability of potential accidents to the business instead of your personal wealth
Personal auto insurance usually carries much lower limits than commercial auto insurance. If there’s an accident that exhausts the limits of the policy, any potential lawsuits would be directed at your personal funds. Especially if businesses are involved, claim amounts can skyrocket. By switching the insurance over to your business, your personal assets would be secure.
Some examples of businesses that typically need commercial auto insurance are:
- Electricians, plumbers, and HVAC professionals
- Carpenters, painters, and other contractors
- Landscapers and plow services
- Caterers and food vendors
- Other business types, like real estate and sales
Commercial auto insurance offers additional coverages including higher limits, broader drivers and use type, and vehicle type. For example, personal auto policies may not cover trailers, trucks over a certain weight, or vehicles with modifications. Commercial auto insurance pricing and coverage vary depending on several factors. Depending on many factors including vehicle type, use, driver, and coverage, your premiums could vary widely. They are generally more than personal auto insurance but offer much greater protection and amounts for claims. If you’re not sure if you should get this type of coverage, talk to your insurance agent. Sometimes, you can simply tell your personal auto insurance company that you also use the vehicle for minor business purposes, and they’ll be fine with keeping your coverage.
If ever in doubt about your insurance coverage, just call your local insurance agent at 850-244-1574 and we’ll help you navigate the coverages you need for your personal and business life.