Understanding the Fine Line Between Commercial and Personal Auto Insurance

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You’ve got auto insurance. You’re covered in the event of an accident. Or are you?

Your personal auto coverage may not be enough to protect you if you’re using your car for business purposes. You don’t need to own a fleet of delivery vans to need commercial auto coverage, either.

The line defining business use is actually finer than you’d think.

Look at the subtle differences between vehicles usage that is typically covered by a personal policy, and usage that generally need commercial insurance to cover:

Personal Auto

  • Driving friends to a concert
  • Picking up coffee for the team before Monday’s work meeting
  • Commuting to your job every day with your laptop

Commercial Auto

  • Driving people to a concert and charging them for a ride
  • Picking up inventory or delivering goods to a client
  • Transporting or hauling construction tools and equipment to a jobsite daily

Do You Need Commercial Auto Insurance?

Personal auto insurance generally won’t cover damages or injuries resulting from an accident that occurs while you’re transporting people or goods for money.

As you can see, you don’t necessarily need to be a delivery driver to need commercial coverage for your auto. You could be a construction professional who transports tools to a job site, an area manager who drives from location to location, a salon owner who regularly picks up haircare products from the wholesale supplier, or a tailor who delivers completed alterations to your clients’ homes and offices.

Or you might just be trying to earn some extra cash driving people to the airport on weekends as part of a rideshare program like Lyft or Uber. To you, it’s a side gig. To your insurance company, it’s driving-for-hire… and that’s definitely considered business activity.

Does Distance Matter?

You can take an epic road trip with the family and drive from California to Maine and back again and still be covered with your personal auto insurance. There’s typically no milage limit to a personal policy.

But if you’re an area manager or sales representative who spends most of the day driving from one distant location to another, you may not be covered for the long days of driving for work unless you have a commercial policy.

When trying to determine if you fall on the commercial or personal side of the line, there’s one question to ask yourself:

Why Are You Driving?

You’re generally going to need commercial auto coverage if you use your vehicle primarily or frequently for work purposes. You’ll also need commercial coverage if you transport people or goods for money, let employees use your vehicles, or if you own, rent, or lease autos in the name of your business.

If you simply drive your own vehicle to work and back each day without transporting any work-related equipment and tools, then a personal auto insurance policy is likely to provide all the coverage you need.

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