If you drive a work van, delivery truck, part-time taxi or any other vehicle for business reasons other than your daily commute, you likely need business auto insurance. When your vehicle is essential to your income, this higher liability insurance can protect both company-owned vehicles or your own car if you use it for work.
What's in this guide?
- Do I need business car insurance?
- Will my personal auto policy cover business use?
- Compare auto insurance for business use
- What makes business auto insurance different?
- How much does business auto insurance cost?
- How can I get cheap business car insurance?
- What will a business auto insurance policy cover?
- How to find the right business auto insurance
- Bottom line
- Common questions about car insurance for business use
Do I need business car insurance?
You’ll face many problems when relying solely on a personal auto policy (PAP) for business use.
- Some personal auto policies exclude pickups or vans based on their weight and other factors.
- You might be driving more mileage on business than you reported to your insurer.
- If you rely on your personal policy and get into an accident while on business, damages and injuries might exceed your policy’s limit.
- If your vehicle is driven primarily for business, your claim could be rejected.
Will my personal auto policy cover business use?
In many cases, yes, your personal car insurance will provide coverage for some business use of your vehicle. It largely depends on the type of vehicle, how you use it and how often it’s used for business. 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 gap in your protection by picking up a business auto policy.
What’s usually covered
- Private passenger vehicle
- Pickup or a van
- Trailer used for farming or ranching
- Commuting to where you’re working
- Driving friends around for personal use
What’s not usually covered
- Personal vehicle used to transport people or goods for a fee, like Uber or Lyft drivers
- Vehicles driven primarily for business, like food delivery or hauling tools, work crews or customers
- Company cars available for occasional personal use
- Long drives to visit clients or worksites
- Commercial boxcar, tractor-trailer or any vehicle over a maximum weight limit set by the insurer
Compare auto insurance for business use
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 while working.
- You often use your personal vehicle for business. If you drive your personal car or a company-owned vehicle on business as either an employee or an independent contractor, business auto insurance can safeguard you and your property while driving on the job.
- You own a vehicle registered to a business. Your insurance provider will reject a claim for company cars, which should be covered under a company policy.
How much does business auto insurance cost?
Cars that are used for business purposes usually spend more time on the road, which means they’re more likely to be in an accident. Because of this higher liability, it generally costs more to insure a vehicle for business compared to personal use. There’s no typical cost for this coverage, with annual costs ranging from $450 to $2,750, and sometimes 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.
How can I get cheap business car insurance?
Business owners can find plenty of ways to save on commercial auto insurance.
- Shop around. Get multiple quotes and compare your options.
- Opt for a higher deductible. A higher deductible comes with lower premiums. But be sure that you can afford to pay the high deductible in the event of an accident.
- Combine policies for discounts. Bundling your commercial auto policy with other business insurance policies will bring savings.
- Trim your policy. Carefully review all coverage options and weigh the risks involved with eliminating any unneeded coverage.
- Hire safe drivers. If you’re the fleet manager, make sure any employee who will be driving the vehicles has a clean driving record.
What will a business auto insurance policy cover?
Commercial insurance has unique requirements compared to a personal auto policy, and these requirements can vary by state. The most common difference is the coverage minimums.
For example, California requires drivers to carry a minimum of $15,000 per person and $30,000 per accident in bodily injury liability for personal auto insurance. However, a business or commercial vehicle is required to carry a minimum of $300,000 liability for vehicles less than 10,000 pounds and $750,000 for vehicles over 10,000 pounds.
Like personal auto policies, business auto insurance provides a wide range of coverage options to protect you and your vehicle after an accident.
- Bodily injury liability. Pays costs that result from injuries you cause to another person. Bodily injury liability coverage doesn’t pay for your own medical costs.
- Property damage liability. Covers costs that result from damages you cause to someone else’s property. Property damage liability doesn’t pay for your own car repair costs.
- 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, fire or vandalism. And, if you haul around pricey tools or work equipment for your business you’ll want the extra theft protection.
- Medical payments. Helps with the medical costs of you and your passengers resulting from a car accident — no matter who’s at fault.
- Collision. 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 loan or lease.
- Personal injury protection (PIP). If you’re involved in a car accident, PIP pays for the medical services you may need afterward. PIP applies no matter who’s at fault in an accident.
- Uninsured motorist. If another driver doesn’t have insurance, your own insurance will cover your expenses. You can choose from bodily injury or property damage coverage.
What are the different types of business auto insurance?
You can typically find policies that cover you or your employees based on how much business driving you do.
- Business use for a personal car. Consultants or salespeople might use their own car to drive to clients.
- Business use for all drivers. A team of consultants for a service business might share a few cars to drive to customers.
- Commercial travel. Frequent business travel can be covered for deliveries and shipments.
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 three main needs:
- It’s affordable for your budget.
- It adequately covers you and any potential drivers.
- It 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 carry daily and the risks they could post.
- The type of vehicle you’re insuring and how many more need coverage.
What if 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 more options than ever before. Big-name insurance providers like Geico, Allstate and MetLife are working to meet the demand with insurance that bridges the gap between a personal auto policy and coverage provided by 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 you for accidents that occur before, during and after a ride request.
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. Compare all your business auto insurance options to find the best insurance for your business-use vehicle.
Common questions about car insurance for business use
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