Small Business Brief

Safety & Loss Prevention

7 Examples of When You Probably Need Commercial Auto Insurance

There are almost 300 million vehicles on American roads today. Many of those vehicles are cars that are used for personal purposes. A good portion of them, however, are considered “commercial vehicles”.

Being able to tell the difference between what constitutes a personal versus a commercial vehicle has been a point of contention among drivers and insurers for a long time. Knowing what’s what can mean the difference between your insurance claims getting paid or denied.

To make sure you’re not left footing the bill for loss of property or injuries in the event of an accident, our team shares with you 7 examples of when you’d probably need commercial auto insurance.

While our advice isn’t true in all situations and across all states, using it as a baseline to decide whether or not you should discuss your situation with your insurance company can be helpful.

1. You Make a Living Ride Sharing

This is one of the most contentious commercial auto insurance questions people ask today…

“Do ride sharing professionals need commercial insurance?”

Many ride sharers contend that giving rides to people for money is the equivalent to giving a friend a ride for gas which in the past never warranted a commercial policy. Still, the systematized nature of ride sharing with companies like Uber or Lyft have given insurance providers ammunition to ask that rideshare professionals upgrade their policies.

If you’re driving with Uber or Lyft on your personal insurance policy, we recommend you call your insurer and make sure you’re covered. If you don’t, you could end up getting denied future claims.

2. You Transport Goods for a Fee

If you’re moving goods from point A to point B for a fee, you probably need commercial auto insurance. While this is a no-brainer if you operate an obvious commercial vehicle like a freight truck, when you look at not so obvious examples of goods transportation things can get a little tricky.

For example, if you’re making a living transporting goods via a service like TaskRabbit, are you considered a commercial driver in the same way that a rideshare professional is?

By definition, you would be. You’re using your vehicle to make income on at least a part-time basis.

For that reason, if your car is being used to move objects regularly for a profit, you should get in touch with your insurance company to make sure your personal policy has you covered.

3. You Require Ultra-High Insurance Limits

Most car insurance companies will give drivers the option to opt into policies that cover them up to a million dollars’ worth of damages and losses.

Is your vehicle regularly moving items that would need to get insured in excess of that amount? If it is, chances are insurers will want you to opt into a commercial auto insurance policy.

Even if your personal insurance policy limit covers the property you’re transporting, know that if you make a claim for an exorbitant amount of property lost in the event of vehicle theft, your insurance provider is going to conduct an investigation to determine if your vehicle was being operated commercially.

If they determine that it was, your lost property claim may be denied.

4. You Haul Tools That You Use for Business

If you’re a gardener, you might haul a small trailer that allows you to transport your gardening equipment. Doing that constitutes the need for commercial insurance.

The same is true for IT professionals who carry computer repair equipment, cleaning professionals that are moving vacuums and similar trades.

Bottom line, if your business relies on your vehicle to help you get equipment to clients, you’ll likely need commercial coverage.

5. Your Vehicle Is in the Name of Your Company

If your vehicle is listed as a company asset for tax purposes or otherwise, it’s a commercial vehicle. Chances are your insurance company would have already made you opt into a commercial policy when they saw your car was under corporate ownership.

If they missed that detail, you’ll want to get your policy changed. If you don’t, you’re almost certain to run into claims trouble.

6. Employees Get Asked to Drive Your Vehicle

Maybe you run a small business that doesn’t rely heavily on a vehicle but you still ask employees to use your car to run tasks every now and again.

If that’s the case for you and you’re not covered by a commercial policy, you either have to A) Stop asking your employees to operate your vehicle or B) Get commercial coverage and have your employees listed on the policy.

Having your employees operate your car from time to time is not the same as letting your friend occasionally borrow your car. Intent matters in this case and can mean a lot if legal proceedings were to come out of a car accident.

7. The Vehicle You Own Is Typically Used for Commercial Purposes

If you’re asking whether or not your dump truck needs a special insurance policy (read more here about dump truck policies) or if your tractor needs a particular kind of coverage, chances are they do.

As a general rule, personal auto insurance policies are meant to cover the average Jane or Joe that uses their car to get to and from work, pick up their kids, and do some occasional recreation.

If your vehicle is not the kind of vehicle one would typically use to accomplish those everyday tasks, you’ll probably need a commercial auto insurance policy to get on the road.

Wrapping up Examples of When You’d Probably Need Commercial Auto Insurance

There are a number of reasons why you’ll want a commercial auto insurance policy as opposed to a personal one. If you find yourself in a situation similar to those described above, do yourself a favor and call your insurance company today!

For more information on how to keep your business running its best, check out more of our articles on Small Business Brief Today!