When Do You Need Commercial Auto Insurance For A Vehicle?

As businesses grow, they have to pay for various commercial insurance policies to protect their employees, assets and reputation. While some policies like worker’s compensation and business owner’s policy can cover many operating risks, business owners still have to insure that they own. These vehicles can be driven by company owner, executives and employees for varying reasons. Depending on the use and situation, you may be required to buy a commercial auto insurance policy. Below, we’ll show you some of the deciding factors if you need a business car insurance policy or not.

The Business Owns The Vehicle

If the business owns the vehicle, then business owners need to buy commercial auto insurance. Depending on the structure of the business entity and who drives the business cars, a commercial policy will be needed. When a business is set up as a corporation or separate legal entity and owns assets like cars, trucks or heavy vehicles, then a commercial policy is required. On the other hand, a sole proprietor and single owner may be able to operate with a personal auto insurance policy. Since the business and the owner can be considered one in the same, a commercial policy might not be necessary. Thus, a separate entity with vehicle ownership most likely requires commercial insurance.

Employees Drive The Vehicle For Business

When employees drive the vehicle, business owners need to have a commercial auto insurance policy. These policies are designed to cover the employees who are driving for business purposes. Employees might be driving to client sites, running errands for the business or dropping a co-worker to the airport. Whatever the purpose is, when employees drive the vehicle, you will probably need to have a commercial auto insurance policy in place. This will help protect the business and its employees in case there is an accident in the future.

Loading And Unloading Business Equipment

Businesses need equipment to complete their projects in various locations. Some of these tools and equipment might require heavy vehicles or trucks. When the required equipment are transported for loading and unloading, there is additional risk. Strictly commercial vehicles like these would need commercial auto insurance. It can help cover the expensive new equipment and tools that are being transported in the process. Generally, these policies require higher premiums with larger limits. However, it could be worthwhile for businesses that need to move heavy machinery or tools for major projects.

You Transport Goods Or People For Money

Business owners who transport goods or people for hire are required to carry commercial auto insurance. This is mainly because of the fact that you are using a vehicle to conduct a service. Thus, if you are making deliveries or driving for ride sharing apps, then your activities may not be covered by a personal auto insurance policy. Since you are driving to make money, there are greater risks to your policy. The amount of driving you do goes up along with the likelihood of you getting into an accident. Therefore, when using a car to provide a service, you would need to have a business auto coverage policy.

Driving A Personal Car For Business

Additionally, business owners may still want to buy a commercial auto policy even if they are using a personal vehicle. When driven for business purposes, such as door to door sales or business travel, a commercial policy could cover any incidents that happen on these trips. As long as the personal vehicle is being used for business purposes regularly, you may want to consider the additional coverage so that you do not have to pay out of pocket in case anything happens. When driving a personal vehicle for business purposes, buy a commercial auto policy for the added protection.

When do you need a commercial auto insurance policy for a vehicle? Think about why the vehicle is being used. If it is for business purposes, then odds are that you will need a commercial auto insurance policy. In other cases, you may need a commercial policy when a separate legal business entity owns the vehicle, employees are operating the vehicle or equipment gets transported. Moreover, you might need business auto insurance when using the car to provide a service or to do regular full-time business activities. In all of these situations, business owners should make sure they have the right coverage for their vehicles used in business.

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