YOU ASK:

Do you need additional insurance coverage if you drive a private vehicle for business?

WE ANSWER:

If you are driving your private car for business use, it is highly advised that you get commercial auto insurance for that matter. You see, personal and commercial auto insurance offer different policy coverage. Commercial auto insurance can cover multiple vehicles. It also covers the drivers and employees using the company vehicles.

On the other hand, personal auto insurance can only cover you from damages and accidents that happened while you driving your personal car for personal purposes. It does not cover any damages or accidents caused while driving your car for business purposes. Thus, if you use your car to make deliveries and you get involved in a car accident, your personal car insurance may deny you your claim because the event is excluded in the policy.

Personal auto insurance is mainly to provide insurance for personal use - driving to and from work, driving the kids to school, etc. Using the car for commercial purposes exposes the car to more risks.

The drawback to this is that a small business owner may find himself with huge liability claims that may cripple him financially. To prevent this, you need to make sure that your personal vehicle is covered by the policy. You can apply to have private vehicles covered.

There are usually three kinds of coverages:

  • Commercial coverage. This covers the private vehicle, as it is considered an intrinsic part of the business operations. The driver has to be named.
  • Private and business use. This provides insurance protection the regular use of the private car for the business operations - whether by the owner or by another driver.
  • Private and sporadic use. This provides insurance protection for occasional use of the private car. This is when the car is not an intrinsic part of the business.

There is also what we call the "non-owned auto" option you can add. This will cover cars that are not owned by the company but are used in the business operations. This means that you and your employers can use your private cars. Please note, though, that the non-owned auto cover usually does not include collision coverage.

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