Personal Use: Commercial Auto Insurance

Commercial auto insurance covers personal use in certain circumstances. If a company owns a vehicle and has commercial auto coverage, personal use will be covered. If you're driving your own vehicle to work without using it for commercial purposes, it should be covered under your personal auto policy. However, if you use your personal vehicle for commercial purposes, even occasionally, you may need to purchase hired and non-owned auto insurance (HNOA) to ensure you're covered in the event of an accident.

Company-owned vehicles

If your company owns vehicles, you will need to insure them under your company's commercial auto insurance policy. Commercial auto insurance covers vehicles used for business purposes, and it is required by law for larger commercial vehicles. It is essential to have commercial auto insurance because your vehicle will not be covered under a personal auto insurance policy.

A commercial auto policy can also protect you if you have employees who drive their own vehicles for business purposes. It will cover all your company's business vehicles and your liabilities associated with them during work-related operations. This includes liability for bodily injuries or property damages caused by your company vehicle, physical damages to your company vehicle, and coverage if you are involved in a hit-and-run.

Commercial auto insurance typically covers employees who are given permission to drive the company vehicle. This policy will help pay the costs of accidents when an employee is driving, even if the vehicle was used for personal reasons. However, commercial auto insurance only provides coverage during work-related operations. Outside of work, it takes no responsibility.

If an employee uses the company vehicle for personal reasons, they will not have liability coverage under the commercial auto policy. However, they would be covered for any damages to the vehicle itself. For the employee to be covered for liability in this scenario, they would need their own personal auto liability coverage.

One option to ensure the employee has personal auto liability coverage is to have them get a named non-owner policy. The other option is to add drive-other-car coverage to your company auto policy. This endorsement on a commercial auto policy provides personal liability coverage to the driver of the commercial vehicle when driving for personal use.

Personal vehicles for business use

If you use your personal vehicle for business purposes, you will likely need a commercial auto insurance policy. This is especially true if you require specific commercial auto insurance coverages, high liability insurance limits, operate an unusual vehicle, haul special equipment, or transport goods or people.

If you are a sole proprietor who only travels to one or two job sites a day or uses your vehicle for commuting, you may only need a personal auto insurance policy. However, if you use your personal vehicle for any kind of business purpose, it is important to speak with an independent insurance agent to determine if you need commercial auto insurance.

When using a personal vehicle for business, you may be able to deduct car expenses on your tax return. If the vehicle is used for both business and personal purposes, you can only deduct the cost of its business use. There are two methods for figuring out car expenses: the standard mileage rate method and the actual expense method. The standard mileage rate method uses a standard rate per mile, while the actual expense method calculates the deduction based on the actual costs of operating the vehicle, such as gas, repairs, and insurance. It is important to keep detailed records of your business mileage and expenses to claim these deductions.

Commercial auto insurance costs

Commercial auto insurance is an essential coverage for businesses that rely on vehicles for work purposes. The cost of such insurance depends on a variety of factors, and it's important to understand these factors to help you plan for this often significant expense.

The cost of commercial auto insurance is influenced by the type of work you do, the number of vehicles you have, and how often and how far you drive. For example, a mortgage broker's insurance will be less than a roofing contractor because the nature of the work involves less driving. Similarly, a cleaning company with three cars will pay more than a single cleaner with one car. The make, model, and year of the vehicles also factor into the cost.

The state where your business operates will also affect the cost of commercial auto insurance. For example, a small business in Miami will likely pay more for insurance than one in a small town in Minnesota, due to factors such as the increased threat of natural disasters and higher property prices and crime rates.

The type of vehicle is another important consideration. Heavy-duty vehicles such as dump trucks, tow trucks, and semi-trucks can cause more damage if involved in an accident and may require special insurance coverages, making them more expensive to insure.

The cost of commercial auto insurance is also impacted by the number of drivers, their ages, and their driving records. A business with drivers who have a history of claims or incidents will pay more than one with drivers who have clean records.

The type of coverage you choose will also affect the cost. Comprehensive coverage, which includes theft, vandalism, and weather damage, costs more than basic auto liability coverage. Higher coverage limits will also increase the cost of your policy.

Commercial auto insurance is a necessity for businesses that use vehicles for work purposes, and by understanding the factors that influence the cost, businesses can better plan for and manage this expense.

Personal auto insurance exclusions

Personal auto insurance policies typically exclude coverage for vehicles used for business purposes. This exclusion includes any use of your vehicle for commercial purposes, even if it's only occasional or part-time. If you're a sole proprietor who only travels to one or two job sites a day or uses your vehicle for commuting, you might only need a personal auto insurance policy. However, if you're using your vehicle for business purposes, such as delivering pizzas or driving for a rideshare company, you'll likely need a commercial auto insurance policy.

Personal auto insurance policies also have specific exclusions listed in the policy, which may vary depending on the insurance provider and the level of coverage. Here are some common exclusions found in personal auto insurance policies:

• Liability exclusions: Liability coverage pays for damages caused by you to others, but it will not cover any damage to your own vehicle or any medical expenses you incur.
• Medical payments exclusions: Medical payments coverage pays for death and bodily injury of those in your vehicle, but it may not cover all situations. For example, it typically won't cover injuries to an employee, as those should be covered under worker's compensation. It also won't cover situations where the vehicle is being used as a residence.
• Damage to your vehicle: Even with collision and comprehensive coverage, your insurance won't cover certain damages to your vehicle, such as normal wear and tear, damage from pre-arranged racing, non-permanent electronics, or intentional damage.
• Theft of personal belongings: Comprehensive coverage usually pays for theft or vandalism of the vehicle, but it typically doesn't cover the loss of personal items inside the vehicle. Those would be covered under a renters or homeowners policy.
• Custom parts and equipment: If you've added custom items to your vehicle, such as a high-end stereo or custom interior parts, your standard policy may not cover them. You may need to add a policy for custom parts or equipment.
• Unlisted drivers: Some policies only cover named drivers. If an incident is caused by a driver not listed on the policy, your claim may be denied, even if you gave them permission to drive your vehicle.
• Geographic restrictions: Most policies are only valid within the United States. If you drive your vehicle to another country, your coverage may be void.
• Intentional misuse or risky behaviours: If you damage your vehicle or someone else's property, or injure yourself or others due to risky behaviours such as drag racing, excessive speeding, or off-roading, your claim can be denied.
• Specific catastrophic events: Auto insurance policies typically exclude coverage for specific catastrophic events beyond the policyholder's control, such as war, terrorism, nuclear events, sinkholes, hurricanes, floods, and tornadoes.

Business decals on a personal vehicle

When considering business decals for your personal vehicle, it's important to ensure that the decals comply with local regulations and do not obstruct your view while driving. You can choose from a variety of decal types, including vehicle lettering, clear decals, opaque decals, perforated decals, and permanent decals. These decals can be cut to shape and applied to windows, doors, or the body of your vehicle.

Online platforms like Etsy offer a wide range of custom business decal options, allowing you to personalise your design with your company logo, contact information, or any other relevant details. You can also find decal templates on websites like signs.com, which provide customisable designs that you can easily adjust to your preferences.

It's worth noting that if you use your personal vehicle for business purposes, you may need to consider commercial auto insurance. This type of insurance covers any vehicle used for business purposes and offers higher liability limits than personal auto insurance policies. However, if you only use your vehicle occasionally for commercial purposes, your personal auto insurance policy may provide sufficient coverage.

Frequently asked questions