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Why Do I Need Commercial Auto Insurance?

Food truck drivers use commercially insured vehicles and so do dump and semi-truck drivers.  As the vehicles are commercial, they require commercial auto insurance.  However, if you need to use your personal vehicle for work, you DO need a commercial insurance policy.  There is no vehicle coverage for a car in private auto insurance, even if you use it for business.

Commercial coverage includes several coverage components that personal vehicle insurance excludes. Commercial auto insurance provides everything from liability coverage that protects you from vehicle damage, to collision coverage that protects the car itself.

If you’re still wondering, “Why do I need commercial auto insurance?” here is everything you need to know, including its benefits for you and your business.

What is Commercial Auto Insurance?

Typically, commercial auto insurance is a form of vehicle insurance for cars used for work or business purposes. The type of coverage includes many features that are same as a standard auto policy.  It comprises the components specific to people’s requirements using their trucks or cars for business purposes.

Like non-owned car coverage, commercial auto insurance policies also extend coverage when employees or staff use the cars for work.  For instance, if you’re a realtor or real estate agent and use your car to show properties to clients. Or, you’re a landscaper driving a truck with supplies and tools. In any case, you must have commercial auto insurance to protect you.

In general, commercial auto insurance comprises many types of coverage that include;

  • Liability coverage
  • Personal injury or medical payment coverage
  • Comprehensive coverage
  • Collision coverage
  • Uninsured motorist coverage

Why do You Need a Commercial Auto Insurance

It is essential to keep in mind that personal car insurance is meant for covering individuals, not businesses. If you have personal auto insurance, you know that it defines “insured” as an “entity” named in the declaration form and the person’s family members. 

Of course, terms like family members or spouse are not relevant for businesses. It doesn’t end here; personal auto insurance policies don’t include several businesses -related risks.  And, these exclusions explain why opting for commercial auto insurance is crucial for you.

Business Exclusions in Personal Insurance Policy

You need a commercial auto insurance policy mainly because of these exclusions in personal auto policies.

  • Commercial Vehicle Exclusion

Many personal insurance policies rule out vehicles’ used by employees or people engaged in the business other than ranching or farming. The exclusion is not for small pick up vans or passenger vehicles drivers use for delivering materials and goods.

Generally, it doesn’t apply to vehicles that are small or have a gross weight under 10,000 £.  So if your car is larger or heavier than 10,000 £, you need commercial car coverage.   You should also have this commercial insurance if you use a vehicle (any size) for transporting or delivery purposes.

  • Vehicle Business Exclusion

The exclusion is for vehicles used for repairing, parking, servicing, or storing services in a business.  Mainly, it is for a repair shop and a dealership business.  You must get commercial auto insurance for using cars or trucks in this business type.

  • Livery Exclusion

You won’t find any personal policy allowing you to use a car, truck, or auto to transport passengers or things. That is to say, the policy doesn’t cover your vehicle if you’re a taxi driver or deliver packages or pizza. The exclusion in personal policy also applies to cars used for rideshare businesses like Lyft and Uber.

These commercial vehicle exclusions reduce the relevance of personal auto insurance if you want to use it for work. Even if you use your SUV for hauling tools or making deliveries to a site, it is better to consider buying a commercial auto policy.

What Else!

Several other components of a personal auto policy make it unsuitable or incongruous when it comes to insuring them for a business.  Some of them are;

·        No Auto Coverage

With a personal auto policy, you don’t get insurance coverage for any vehicle enlisted in a schedule.     The policy has limited coverage for cars you buy or use during the insurance period. But it is different from a business auto policy that automatically covers any vehicle you obtain or buy during the insurance period.

·        Limited Coverage for Hired Auto

A typical personal car policy covers rental vehicles for physical damage if you purchase physical damage coverage for cars you own.  A commercial auto policy, however, allows you to buy physical damage coverage for autos you hire. It also covers your transportation expenses. Many personal policies do not provide this coverage.

Summing Up

All in all, a personal car policy is not as flexible as commercial auto insurance that allows vehicles to facilitate businesses. You can tailor a business policy to meet the requirements through auto endorsements and symbols.

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