Why Personal Auto Insurance Doesn't Cover Business Driving

Most personal car insurance policies don't cover business driving because…

  • It's riskier than personal driving. If you spend a lot of time behind the wheel for work, you have a greater risk of accidents and vehicle damage.
  • It might violate the terms of your personal auto policy. Your contract with your insurance provider covers your car for private use and your policy was priced accordingly.

If you use your personal vehicle for work, you take on more risk – risk that your insurance company didn't agree to cover when it wrote your policy. As a result, many insurance companies can deny a claim if the accident occurred while using the vehicle for business. Some insurers might even drop you as a customer. Ouch.

If you frequently use your personal vehicle for work, you may want to consider purchasing a separate business car insurance policy.

How Do I Know if I Need Business Auto Insurance?

Your personal auto policy can cover your vehicle for some business driving, such as a quick commute to meet a client. To be on the safe side, though, consider informing your insurance company that you use your car for this purpose. Your insurer may add a designation to your policy to address this type of driving.

However, if you often drive your own vehicle to travel between work sites, to transport people or products, or to make sales, you might need some type of car insurance for business use, such as Commercial Auto Insurance or Hired and Non-Owned Auto Insurance.

What Kind of Business Car Insurance Do I Need?

Think of Commercial Auto Insurance as business vehicle insurance. Basically, you might need this policy to cover your car if…

  • Your business owns the vehicle.
  • You frequently use your personal vehicle for work.

For example, let's say you own a marketing consulting firm. Business is good, but you don't have the budget to purchase a business vehicle. Instead, you often use your trusty PT Cruiser for door-to-door sales. A commercial car policy might be a good fit if you don't want to pay out of pocket for accidents or damages that happen along the way.

Hired and Non-Owned Auto Insurance can cover vehicles that are used for your business, but that your business doesn't own, including…

  • Employee-owned cars used to run business errands.
  • Vehicles that you rent for business use.

Say, for example, you own a computer repair business. You send your assistant out to pick up a power cord and some coffee for the office. She takes her own vehicle for the trip. If she gets into an accident while running these errands, your company can be liable for the damages. A Hired and Non-Owned Auto policy can help cover these costs.

For more information on business auto insurance, check out the article "What Does Commercial Auto Insurance Cover?"

Commercial Auto Insurance: Further Reading