Do I need business auto insurance? | finder.com

Car insurance for business use

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How to insure your car for your business

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 and your own car if you use it for work.

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Will my personal auto policy cover business use?

In many cases, yes, your personal auto policy (PAP) will provide coverage for some business use of your vehicle. It largely depends on the type of vehicle and what specific business use it’s used for.

What’s usually covered

  • Private passenger vehicle
  • Pickup or a van
  • Trailer used for farming or ranching

What’s usually not covered

  • Personal vehicle used to transport people for a fee
  • Commercial boxcar, tractor trailer or any vehicle over a certain weight limit

Compare commercial car insurance

Name Product Available states Roadside assistance AM Best financial rating
Allstate commercial car insurance
All 50 states
Optional
A+
Thanks to customizable coverage and speedy claims, this big-name insurer can help protect you, your employees and your assets.
Liberty Mutual commercial car insurance
All 50 states
Optional
A
Reduce the risk of fleet accidents with Liberty Mutual’s driver safety training and monitoring.
Esurance commercial car insurance
All states except AK, DE, HI, MT, NH, VT, WY
Optional
A+
Esurance offers a modern online and mobile experience that helps you take your insurance on the go. Available in 43 states.
Insurance321 commercial car insurance
All 50 states
Optional
Not rated
Insurance321 matches you with an agent or broker who can find the best commercial car insurance coverage for your business.
CoverWallet commercial car insurance
All 50 states
Optional
Not rated
Your customized business vehicle insurance starts with a quick expert assessment to find the best coverage for your company.

Compare up to 4 providers

Why do I need business car insurance?

You’ll 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.

Compare commercial car insurance

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.

How can I get cheap business car 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 that high deductible in the even 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 coverages.
  • Hire safe drivers. Make sure any employee who will be driving the vehicle(s) 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 / $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 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 within your control, such as natural disasters, fire or vandalism.
  • Medical payments. Helps with the medical costs resulting from a car accident — no matter who’s at fault. It covers you and your passengers.
  • 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 existing loan or lease.
  • Minimum coverage. To save money, you can purchase minimum coverage, which insures you have 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. 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 (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.

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 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.

Bottom line

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 options to find the best insurance for your business-use vehicle.

Compare commercial car insurance

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