Looking to insure your car for business use? Here’s what you should consider before applying.
If you drive a work van, delivery truck, part-time taxi or any other vehicle for business, your consumer car insurance policy may not be enough to cover all damages or injuries that result from an accident while you’re on the clock. If you’re the business owner, even your typical business owners policy can exclude business vehicles, leaving you on the hook for damages.
When your vehicle is essential to your income, for reasons other than just driving to work, you likely need business auto insurance. This higher-liability insurance can protect both company-owned vehicles and your own, if you use it for work.
Will my personal auto policy cover business use?
Yes, your personal auto policy (PAP) will provide coverage for some business use of your vehicles. For example, many PAPs will cover business use of a vehicle that’s:
- A private passenger vehicle.
- A pickup or van.
- A trailer when used for farming or ranching.
But you face many problems when relying solely on a PAP for business use. For one, some PAPs exclude pickups or vans based on their weight and other factors. And if a vehicle is driven primarily for business, your claim could be rejected altogether.
If you rely on your personal policy and get into an accident while on business, your insurance provider will likely pay for damages and injuries up to your policy’s limit. This situation could expose your business to a lawsuit in an effort to collect on costs beyond this limit.
What makes business auto insurance different?
A business auto insurance policy can be your strongest protection if you:
- Own a business that requires regular driving. A business auto insurance policy can protect you and your employees against the costs of damages and injuries that are the result of a car accident.
- Frequently use your personal vehicle for business. If you drive your personal car or a company-owned vehicle on business as either an employee or independent contractor, business auto insurance can safeguard you while driving on the job.
- Own a vehicle registered to a business. Your insurance provider will reject a claim for company cars.
Most personal car insurance policies automatically exclude coverage for:
- Vehicles driven primarily for business.
- Commercial-type vehicles, like tractor-trailers, shuttle buses, limousines and box trucks.
- Cars owned by a company and available for occasional use.
Carefully review your current personal auto policy and speak to an insurance professional to determine whether your specific use is covered. If not, you can easily close any potentially disastrous gap by picking up a business auto policy.
What I drive for Uber or Lyft?
If you drive for Uber, Lyft or any of the other growing number of rideshare companies out there, you have options. Big-name insurance providers like Geico, Allstate and MetLife are working to meet the demand with insurance that bridges any gap between a personal auto policy and coverage provided the rideshare company’s insurance.
Rideshare insurance policies aren’t yet available in all states. If it’s not yet available in your state, consider picking up a business auto policy that fully covers for accidents that occur before, during and after a ride request.
How much does business auto insurance cost?
Cars that are used for business purposes will also tend to be on the road a lot more, which makes them more likely to be involved in an accident. Because of this higher liability, it generally costs more to insure a vehicle for business use than it does to insure it for personal use alone. There’s no typical cost for this coverage, with average annual costs ranging from $450 to $2,750 and more.
The cost of your business auto insurance depends on factors that include:
- The type of vehicle you’re insuring — make, model, year and even weight.
- Coverage limits and deductibles.
- How the vehicle is used — for instance, for office travel, to deliver supplies or to visit client or job sites.
- The number of drivers using your car.
- Each driver’s ticket and accident history.
What will a business auto insurance policy cover?
Like personal auto policies, business auto insurance provides a wide range of coverage to protect you and your vehicle after an accident:
- Bodily injury liability. Pay costs that result from injuries you cause to another person, including medical aid, legal help, health care, funerals and pain and suffering. Bodily injury liability coverage doesn’t pay for your own medical costs. For that, you’ll use your own health insurance, medical payments coverage or personal injury protection.
- Property damage liability. Helps you pay costs that result from damages you cause to someone else’s property, including vehicle repairs, repairs to buildings or other property, lost income from business closures and legal fees from property damage claims. Property damage liability doesn’t pay for your own car repair costs. For that, you’ll need collision coverage.
- Combined single limit (CSL). Provides the same amount of coverage per incident, regardless of whether for bodily injury, property coverage or multiple people.
- Comprehensive. Insures you against damages that aren’t in your control, such as natural disasters, terrorism, explosions and fire, glass damage, falling objects, vandalism, damage from animals and theft.
- Medical payments. Helps with the medical costs resulting from a car accident — no matter who’s at fault. It covers you and your passengers for such expenses as ambulance fees, surgery, funerals, dental care, prosthetic limbs and hospital visits.
- Collision. If you’re at fault in an accident, your liability insurance kicks in and pays for the other driver’s costs. For your own vehicle repairs, you’ll need collision coverage. Collision coverage pays for costs if your vehicle is damaged.
- Gap insurance. If you total your car in an accident and you still owe money on it, this coverage pays the difference between what your insurer will cover and the remainder of your existing loan or lease.
- Minimum coverage. Your state likely requires you to have liability coverage to legally drive a vehicle. To save money, you can purchase minimum coverage, which insures you just enough to meet your state’s requirements.
- Personal injury protection (PIP). If you’re involved in a car accident, PIP pays for the medical services you may need afterward, including ambulance rides, nursing care, prosthetics, lost income, child care and funeral services. PIP applies no matter who’s at fault in an accident.
- Uninsured motorist. If another driver doesn’t have insurance, you won’t have to work with them to receive compensation. Instead, your own insurance will cover your expenses. You can choose from bodily injury (UMBI) or property damage (UMPD) coverage.
How to find the right business auto insurance
When looking for business auto insurance, it’s better to err on the side of caution. Overall, the right policy will meet your three main needs:
- It’s affordable for your budget.
- It adequately covers you and any potential drivers.
- It effectively meets the specific needs of your business driving.
When looking for the right coverage for your needs, ask yourself about:
- The types of damage or hazards you’re likely to encounter while driving for business.
- Whether other employees will also drive your car for business.
- The level of liability you’re comfortable with.
- The types of goods, equipment or passengers you tend to carry daily and the risks they could post.
- The type of vehicle you’re insuring and how many more need coverage.
It’s possible that your standard car insurance policy is adequate for your needs, but confirm any exclusions to learn when you’re still covered while driving for business purposes. And if you’re a business owner, consider this: Even if you or an employee are covered under a personal policy, after an accident most insurers will defend the owner of the car — not the business itself.