When You Should Change Your Auto Insurance From Personal To Commercial

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Do I Need Commercial Auto Insurance For My Small Business?

If you have a vehicle registered to your business entity (LLC, S Corp, C Corp), then, yes you should have Commercial Auto Insurance in place. This will separate your company’s legal liability from your personal liability. Having the right type of insurance on your vehicle is especially important if you have employees that drive your company vehicles. If by some chance you had a vehicle insured as a personal auto policy that should have been insured under a commercial auto insurance policy, you not only place yourself, your business and your employees in jeopardy for making this crucial yet avoidable mistake.

We are in no way generalizing the need for commercial auto insurance strictly for registered businesses. If you are a sole proprietor or single member LLC (disregarded entity) and the primary use of the vehicle is business-related then you probably want to have a conversation with an insurance expert about how to properly insure that vehicle. If a vehicle you own and use for business is wrapped with your company’s logo or has signage around the vehicle advertising your product or service, then you more than likely will want to insure that vehicle under a commercial auto policy.

Does Commercial Auto Insurance Cover Personal Use?

While personal use of a business vehicle can be covered, the reverse may not be true. If you are using a personal vehicle for business use you could risk having your claim denied. Always err on the side of caution and if you believe that most of your vehicle’s usage is business related, it’s best to consult with an insurance expert to properly cover the vehicle under a commercial insurance policy. Unlike personal insurance, liability limits on business use vehicles are often recommended in increments of $1M. Other common coverages that you may be used to having on your personal insurance may be modified for your commercial vehicle. Schedule a call with one of our local agents today for more details!

What Is the difference between Commercial Auto Insurance and Personal Auto Insurance Coverage?

Your personal auto policy automatically transfers the most broad coverage when renting a personal vehicle for leisure or business use through a rental car agency. In simpler terms, if you carry comprehensive and collision coverage at a $500 deductible on your personal auto policy and rent a car at the airport while on vacation, you do not need to purchase insurance through the rental car agency because that same coverage ($500 deductible for comprehensive and collision coverage) will extend to your rented vehicle. (Fun fact: the rental car agency can still charge you for loss of use if you total the vehicle which is the equivalent of what they would have been able to rent the car out for on a daily basis)

With commercial auto insurance, coverage does not automatically extend to rented or non-owned vehicles in the way that it does on personal auto insurance. To properly insure yourself your insurance agent will need to endorse your policy with hired & non-owned auto coverage.

Your personal auto insurance will also cover other drivers (if they are not full-time household residents living with you with regular access to the car)  that occasionally might drive your car. With commercial auto insurance the guidelines are much different and if you have a full-time employee that regularly drives your business vehicle but is not listed as a driver on your commercial auto insurance policy, you may find your claim being denied or have your policy non-renewed for misrepresentation

How Do I Learn More About Commercial Auto Insurance vs Personal Auto Insurance?

Navigating the confusing world of commercial auto insurance can be a difficult journey!

Learn more about Commercial Auto Insurance by calling us at 703-430-1200 and speaking with an insurance expert!

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