Does My Personal Auto Insurance Cover Business Use ?

When you drive your personal car for work purposes, you might wonder “Does my personal auto insurance cover business use?” Your personal auto insurance does not cover business use. So, getting a commercial car insurance policy would be ideal if you regularly use your personal vehicle for work-related tasks. Today, in this article, we will extensively discuss whether your auto insurance can cover you if you use your vehicle for commercial purposes. Now let’s get started.

Does My Personal Auto Insurance Cover Business Use: Detailed Answer 

Generally, your personal auto insurance policy won’t work for the vehicles you own or use for commercial purposes. Because personal policies are made to cover all the risks that come with everyday driving, like going to work or running errands. An auto policy can only cover some small business tasks like “incidental” delivery to the insured’s business. 
 
However, using your private car for business purposes involves different risks that personal insurance doesn’t cover. Business drivers often face higher risks than personal drivers. They tend to drive more frequently and over longer distances. According to Road Safe company drivers driving over 80% of their annual mileage on work-related trips are 50% more likely to have an accident, with collision rates 30-40% higher than private drivers. This shows a higher probability of accidents occurring with commercial vehicles. Besides, business driving may include transporting goods, and clients, which increases complexity and risks. Also, they may face pressure to meet deadlines which can lead to more aggressive driving behaviors. 
 
Besides, if you drive for commercial purposes, having only a personal car insurance policy means you’re in fact an uninsured motorist. In this case, if an accident occurs, you might have to pay a lump sum out of your pocket and your personal auto policy will be useless. 

Reasons Why Your Personal Auto Insurance Won’t Cover Business Use 

Personal auto insurance and business vehicle insurance are different in terms of policy and what they cover. Your personal car insurance is only designed to cover personal driving activities. When you use your personal vehicle for work-related purposes, the risks and liabilities increase, which your regular car insurance policy may not cover. 
 
Here are some reasons why: 

1. Increased Risk Exposure: As we said before, business driving often involves more frequent and longer trips which increases the likelihood of accidents. So, insurance companies see business drivers as higher risk compared to personal drivers.
2. Commercial Activities: Transporting goods and passengers for business purposes increases the potential for claims. Personal policies usually exclude coverage for commercial activities.
3. Higher Liability: Business use of a vehicle can lead to higher claims. If an accident occurs during business use, the financial impact could be significant. In this case, your auto insurance coverage limit might not be sufficient.
4. Policy Exclusions: Most personal auto insurance policies have specific exclusions for business use. If you make a claim for an incident that occurred while using your car for business, there is a higher chance your claim will be denied.
5. Regulatory Requirements: Some states and municipalities have regulations that require commercial auto insurance for business vehicles. Personal auto insurance doesn’t meet these regulatory conditions. 

Auto Insurance Vs. Commercial Auto Insurance 

Although both auto insurance and commercial auto insurance cover vehicle-related risks, they are not the same. So, if you understand both these policies and their distinct coverages, it will help you better understand why you can’t use a personal car for business purposes.

Personal auto insurance is designed to protect individual drivers and their private vehicles. It usually covers repair bills, medical bills, property damage, personal injury protection, and uninsured and underinsured motorists. 
 
Commercial auto insurance, on the other hand, is made for business use. When compared to personal car insurance, this insurance covers a wider range of situations and has higher liability limits. Also, commercial policies cover various drivers. Types of users covered include: 

• Named Insured: Covers the business owners who own the policy. They will be covered even if they weren’t involved in the accident.
• Permissive Users: Employees who aren’t covered by the name but are permitted to drive the business vehicles.
• Omnibus Users: Those who use vehicles with implicit or explicit permission from the insured. 

Unfortunately, if an accident occurs, commercial auto insurance will cover your business car repair costs, medical bills, lost wages, legal fees, pending lease payments, funeral expenses, cargo, equipment, and so on. These coverages are applicable for a variety of vehicles including cars, trucks, vans, box trucks, food trucks, service utility trucks, semi-trucks, dump trucks, trailers, buses, limos, SUVs, and more. 

What Policy Covers Use of a Personal Vehicle for Commercial Purposes? 

If you use a personal car for work, Hired and Non-Owned Auto Insurance (HNOA) can help you get insurance for it. This is a special kind of liability insurance that covers vehicles that are used for business and are not owned by the policyholder. This includes rental cars, leased cars, and personal vehicles that they use for company tasks. HNOA protects you by paying for third-party liabilities like damage to other people's cars and property, medical bills for people who get hurt, and legal fees if the company is sued due to an accident. 
 
Since personal auto insurance usually doesn't cover cars that are used for work, this puts both employees and employers at great risk. With the HNOA policy, your business won't have to worry about the costs of crashes involving borrowed cars used for work. Although it doesn't pay for the employee's medical bills or damage to their car, it does cover their liability damages (e.g., settlements, judgments, attorney fees, and other court costs). This makes it an important addition for businesses that depend on employees’ personal vehicles for business operations. 

Do I Need to Insure My Personal Car and Business Vehicle Separately? 

Using a personal vehicle for work-related activities without proper insurance can leave you unprotected in the event of an accident. So, you should have two different insurance policies for your personal and business vehicles. It's better to have business auto insurance if you own a business.  
 
On the flip side, in the USA, auto insurance is mandatory in most states, especially auto liability insurance. So, it would be best if you simply get a affordable full coverage auto insurance policy. L.A. Insurance has been delivering the most reliable insurance services at the cheapest rate for both personal and business vehicles for over 32 years. Consequently, this has made us the most trustworthy and affordable insurance agency in the United States so far. 
 
However, before selecting a policy, consult with one of our local insurance agents. They can help you get a cheap insurance quote based on your needs. Whether you need insurance for your personal or commercial cars, you can get a customized auto insurance coverage plan for you. 

How Do I Know Whether I Need Commercial Auto Insurance or Not? 

If you feel confused about whether you should register your vehicle under commercial auto policy or not, you should consider: 

• What type of vehicle is it? Regular car or designed for commercial use?
• Is the car owned by you personally or by your business?
• Are business trips occasional or frequent?
• Are you riding vehicles for rideshare services, delivering goods, or transporting clients?
• Do you visit clients or job sites?
• Does your employer require you to have a certain type of insurance, or do they provide coverage for business use of your personal vehicle?
• What risks are involved? 

The Bottom Line 

Personal auto insurance typically doesn’t cover business use. However, if you use your car for work-related tasks more frequently, you might need commercial auto insurance or Hired Non-Owned Auto Insurance (HNOA) depending on your situation, and business type. Remember you’re not covered by regular auto policies because business driving poses higher risks. Check with your insurance provider. If you’re unsure, it’s best to discuss your situation with an auto insurance agent to make sure you have the right coverage. 
 
Read Related Articles: 

• How to Find Out If Someone Has Auto Insurance?
• Can You Cancel an Auto Insurance Claim After Filing It? 

Frequently Asked Questions 

# Do I Need Both Commercial and Personal Auto Insurance? 

You might need both if you use your vehicle for both personal and business purposes. Personal auto insurance covers regular driving, while commercial auto insurance is necessary for business activities. Based on your uses, you can insure either one or both types of insurance for the highest level of protection. 

# Can I Put My Business Vehicle on My Personal Insurance? 

Typically, no. Personal insurance won’t cover business vehicles. In the case of a business vehicle, you’ll need commercial auto insurance due to higher risks and different usage patterns. Consult with an insurance agent to check coverage options. 

# How To Register a Commercial Vehicle for Personal Use? 

To register a commercial vehicle for personal use, verify with your local Department of Motor Vehicles (DMV) for specific rules and regulations. Then modify your commercial insurance to reflect personal use, or switch to a personal auto policy if appropriate. Lastly, update registration. You can change the vehicle’s registration status to personal use at the DMV and make sure all paperwork reflects this change. 

# Can I Drive a Company Car Without My Own Insurance? 

If employers' commercial auto insurance policy is covering the company car, you can certainly drive it without having insurance. However, you need to verify coverage details with your employer to make sure you are adequately protected while driving the car.