You get in a wreck and find your car insurance won’t cover you. What happened? If you were conducting business and you were not carrying a commercial policy, you could be in danger.
So, if you are a business owner, following up with the type of auto insurance you have is critical as you and your business could end up being liable. To start, you need the same kinds of insurance coverage for the car you use in your business as you do for a car used for personal travel — liability, collision and comprehensive, medical payments (known as personal injury protection in some states) and coverage for uninsured motorists. In fact, many business people use the same vehicle for both business and pleasure. If the vehicle is owned by the business, make sure the name of the business appears on the policy as the “principal insured” rather than your name. This will avoid possible confusion in the event that you need to file a claim or a claim is filed against you.
Whether or not you need to buy a business auto insurance policy will depend on the kind of driving you do. A good insurance agent will ask you many questions about how you use vehicles in your business, who will be driving them and whether employees, if you have them, are likely to be driving their own cars for your business.
While major auto coverage is the same, a business auto policy differs in many technical respects. For instance, if you have a personal umbrella liability policy, there’s generally an exclusion for business-related liability. So are you safe?
Here are some examples of ways you may get into trouble without a commercial policy:
• Pizza and newspaper delivery;
• Door-to-door consulting services;
• Landscaping or snowplowing services
• Day care/church van services.
• Real Estate Agents
If your business uses a vehicle, or many vehicles, you will want to ask your insurance professional some important questions such as:
• What are my liability limits? In general, a commercial auto policy can offer higher liability limits. Larger vehicles, such as delivery vans, can cause more damage than passenger cars.
• Does my personal policy cover me for issues specific to my business? For example, if you have a trailer that damages another vehicle while on a job, a personal liability policy may not cover the repairs. A commercial policy will.
• Do I have employees who drive my vehicles? In general, if other people drive your vehicles for work, you need a commercial auto policy.
You also need a commercial auto policy if your vehicle hauls tools or equipment weighing more than 500 pounds, makes deliveries or requires filings for interstate for for-hire trucking businesses.
Once you have taken all of the above into account, you can rest better at night knowing you are fully protected and no assumptions have been made.