When do you need a commercial auto policy for your homebased business or part-time venture?
Many people are embarking on new ventures to increase their income that involve their personal vehicles. Some as drivers for restaurants, grocery or floral delivery service, or perhaps as part-time work for the winter adding a snowplow to their truck.
Even if you use your vehicle for mostly personal use with occasional business use, you may be required to have a commercial policy. This does vary from state to state depending on the Department of Transportation laws. Let’s explore some of these questions about a commercial auto policy below.
Who needs commercial auto insurance?
In general, if a vehicle is used in tasks related to the operator’s occupation, profession, or business (other than commuting), a commercial policy is probably necessary.
You May Need a Commercial Auto Insurance Policy If You:
- Transport goods or people for a fee in your vehicle
- Conduct a service with your vehicle
- Need higher limits of liability because of the nature of your work
- Haul a considerable weight in tools or equipment or towing a trailer used to conduct your business in your vehicle
- Have employees operate the vehicle or if ownership is in the name of a corporation or partnership
Do I need a commercial auto insurance policy to deliver food, groceries or flowers?
You may need a commercial auto insurance policy if you’re a delivery driver. This is because delivery is “business use” of the vehicle, not personal use.
Car insurance companies see business use as a higher risk than personal use. Delivery drivers are more likely to get into accidents and file car insurance claims. Commercial auto insurance policies aren’t only for food delivery, but also any type of work could fall under business use, like delivering packages and driving customers.
If you start driving as a job (whether full-time or as a side hustle) and don’t tell your auto insurance company, you could face a claim denial in the future if you cause an accident.
Does the Delivery Company I work for and/or contracted with cover me?
Depending on your car insurance company and your employer/contractor’s insurance, there may be a gap between both insurance policies. For example, you might have coverage through your employer while driving a takeout order to a customer, but not while driving to the restaurant to pick up the order.
If you’re in a car accident with a gap in coverage, your personal car insurance company could deny coverage, meaning you could be stuck with property damage and medical bills.
I have a plow on my truck, is that covered under my personal auto policy?
That depends on what type of insurance policy you have and where you are using your plow.
- If you’re only using your plow for personal use: For example, you’re plowing your own driveway or driving over to plow your neighbor’s driveway as a favor. Coverage is usually automatically extended to your plow, as long as you have those coverages purchased for your pickup truck.
- If you’re making an income with full or part-time plow work – you would most likely need to purchase a commercial auto policy. Operating a business – or even a side hustle – presents risks that are not covered by a vast majority or personal auto policies.
What does a commercial auto policy cover?
Commercial auto insurance usually includes:
- Collision loss, if purchased, which is damage from car accidents.
- Comprehensive loss, if purchased, which is damage from things like theft, vandalism, weather, natural disasters, and other causes that are not collision-related and out of your control.
- Bodily injury coverage, which is an accident-related injury to another person when you’re at fault.
- Property damage coverage, which is damage caused to someone else’s property and you’re at fault.
- Medical payments coverage, which includes things like hospital stays, treatment, rehab, and lost wages resulting from an accident, no matter who is at fault.
- Uninsured/Underinsured motorists coverage, which applies if another driver involved in an accident lacks sufficient insurance coverage to pay damages.
How much liability will be required?
If you’re using a vehicle in a business capacity, any general contractors you work with may mandate that you carry high liability limits on your auto insurance policy. You also may need higher liability limits to cover you as a sole proprietor using your vehicle for business purposes. In many instances, the limits that would be required to satisfy your coverage needs could be much higher than the maximum limits available through personal auto coverage. A commercial auto policy may offer higher liability amounts to satisfy such contractual demands and to be sure you have enough coverage.
If you have questions regarding your unique situation, a Bearingstar agent can help you ensure that you are properly covered. We offer coverage options for both personal auto insurance and commercial auto insurance with many highly rated carriers.
Contact one of our agents at Bearingstar today to talk about a commercial auto insurance policy that’s right for you.