As a small business owner, it is likely that you already own personal car insurance. In the United States, it is illegal to drive a car without at least a minimum amount of insurance coverage. However, you may not be aware of the reasons that you should also have commercial vehicle insurance for your business.
One way to think about it is to treat commercial car insurance like you treat other business insurance. Vehicles that belong to the business should be insured with commercial vehicle insurance.
Other Reasons for Commercial Insurance
There are several situations in which you need to buy commercial vehicle insurance. These instances include:
- Your vehicles are owned and registered in the business name.
- Vehicles are used by and driven by your staff and employees.
- Vehicles are used for business purposes.
If the carrier finds the car was driven for company purposes, they can violate coverage for a claim. Unfortunately, some figure if they get caught, they’ll just pay the difference – but in the matter of a claims, if the reason for the driving is primary for the purpose of transacting business, could be a flat denial.
Ownership and Registration
If your vehicles are owned by your business and/or registered in the name of the business, then you need to have commercial insurance covering them. However, even if the car is in the driver’s name, but is used primarily for business, it should be insurance with commercial auto insurance.
If business owners are trying to protect their interests, a claims denial can leave them very vulnerable. Not only do plaintiff attorneys assume a business has deeper pockets, but if the person was willfully withholding the business use of a car, it could be something an attorney would use against the owner.
Employees as Drivers
A commercial auto insurance policy allows you to insure your employees as drivers of your business vehicle. The commercial policy can underwrite all the drivers that are using the car.
In most cases, if your vehicle is being used primarily for business purposes, it should be insured with a commercial policy. Driving to and from work each day doesn’t qualify as business use. However, other business-related uses such as the following do qualify:
- Carrying equipment such as tools, ladders
- Carrying cleaning equipment to clean homes and offices
- Carrying any hazardous materials
- Used for towing for hire
- Use for plowing or other commercial use which requires an add-on unit
- Delivery service or courier service, messenger service
- Taxi driver
- Trucking for short- or long-haul
- Using as a limousine or chauffeur
All of these business uses should be insured with commercial auto insurance.
There are some cases in which you can run a business using your personal car, and insure it under your personal auto policy. These include:
- Part-time sales for a company such as Tupperware, Wildtree or other multi-level marketing firms. Note that full-time sales consultants should use commercial insurance.
- Consultants, lawyers, real estate agents, clergy and physicians can use a personal car to ferry their clients.
- Social workers or home health care workers can use their personal car to travel to clients, but must not use the vehicle to transport them.
Anyone in the above situations should consult with their insurance agent to make sure they are properly covered for these uses. Contact Spickelmier Insurance to discuss a commercial vehicle insurance policy that would fit your needs.