When Do I Need Commercial Auto Insurance?
Anyone who uses his or her vehicle primarily for work related purposes or who drives a vehicle actually owned by a business, needs to get covered by a commercial auto policy.
That means an ordinary passenger car could require commercial auto in some instances. Regular vehicles like pickups, SUVs, and more are sometimes true commercial vehicles.
If you drive a particular type of vehicle, like a big rig, limo, taxi, utility van, dump truck, catering truck, tow truck, and certain other classes, you will probably also be required to buy a commercial policy.
If your business already has a commercial auto policy, however, and you are only renting or hiring a vehicle, you normally don’t need a separate policy for that – your regular commercial policy will cover it.
Finally, if you use your vehicle to transport persons for a fee, move goods for a fee, provide a business service, haul heavy equipment, or tow items on a heavy duty trailer, you may need commercial auto.
And if the nature of how you use your vehicle means you need high liability limits, you might need commercial coverage to reach those limits. Most personal policies won’t go higher than $500,000, while commercial policies can provide $1 million or more in liability cover.
How Will A Commercial Policy Benefit Me?
First of all, a commercial policy may be necessary to keep you legal and to provide the necessary liability coverage. That can save you money and prevent embarrassing run-ins with the law.
But secondly, the exclusions typically on personal auto policies can be problematic for businesses.
Personal auto specifically exclude vehicles above 10,000 pounds, delivery vehicles, and vehicles used for any business purpose other than farming and ranching use.
Many times, auto repair or sales businesses and “livery” (transport) business use are specially emphasized as excluded. Thus, an Uber taxi, pizza delivery, or car repairs-and-sales style small business all need commercial auto insurance on their business vehicles. There is not “exception” here as is sometimes thought, that would allow personal auto to be legally sufficient.
The benefit of commercial auto is it lacks the exclusions of personal auto and thus gives you broader coverage.
Also, a commercial policy will automatically cover new vehicles your business obtains during the coverage period – not true of personal auto.
And commercial auto will apply to rented or hired vehicles, will be in effect when any employee drives a business vehicle, and will include loss of use coverage for when a vehicle is out of commission and you have to rent/hire.
In general, commercial policies are much more flexible and can be customized to your business’ exact needs. There are some situations where it’s difficult to tell if you need commercial coverage – even given what was said above – in that case, ask your insurance agent.
To learn more about personal vs. commercial auto insurance, or for a free quote, contact Flagler County (FL) Insurance Agency today!