You know you need auto insurance for your vehicle – but do you need personal or commercial coverage? Sometimes the answer is clear.

  • If the vehicle is owned by or registered to the business, you need commercial auto insurance.
  • If you own the vehicle and you don’t use it for business purposes other than commuting, you need personal auto insurance.

Other times, however, the answer is less clear, especially to people who aren’t familiar with the ins and outs of car insurance. If you’re situation isn’t covered by either of the two extremes described above, you may need commercial auto insurance for a personal vehicle.

Scenario One: You Use Your Personal Vehicle for Your Business.

If you regularly use your vehicle for business purposes, you probably need commercial insurance.  This is true even for small business owners and sole proprietors.

For example, if any of the following statements are true, you should talk to your insurer about a commercial policy.

  • You use your vehicle to transport materials, goods, and equipment for work.
  • You’ve installed equipment in your vehicle.
  • Your vehicle is larger or heavy than normal personal vehicles.
  • Your employees drive your car.
  • You need higher limits than those typically found in personal auto insurance policies.

Scenario Two: Your Employees Use Their Personal Vehicles for Business.

If you own a business where employees regularly use their personal vehicle for business purposes – like delivering goods or transporting clients – don’t assume that your employee’s personal auto insurance will be enough.

For example, what if an employee is responsible for a crash with damages that exceed their limits? The injured parties will likely sue your business for the difference.

It’s also possible that your employee’s insurer will deny coverage for commercial use. Once again, the injured party will likely turn to your company for compensation.

If your company uses vehicles that it does not own, including those that are rented or owned by employees, talk to your insurer about hired and non-owned coverage.

Scenario Three: You Use Your Vehicle for Business Use as an Employee.

Commuting to and from work is considered normal personal use. Delivering pizza to paying customers is not.

If you use your personal vehicle for your job, your personal auto insurance may not cover you. Talk to your employer to see what insurance they provide for you. Also talk to your insurer about getting the right coverage type.

Scenario Four: You Use Your Vehicle to Participate in the Gig Economy.

The gig economy has blurred the line between personal and business use – and the resulting confusion can leave drivers without the coverage they need.

Many app-based gigs involve the worker’s car, including the following:

  • Ride-sharing services like Uber and Lyft
  • Car-sharing services like Turo
  • Delivery services like Shipt and DoorDash

If you use your personal car for gig work, your personal car insurance may not cover you. Check with the company to see what insurance is available to contract workers. Pay attention to limits as well as any gaps in coverage. For example, are you covered when you’re on your way to pick up a passenger, or only when the passenger is in your car? Then talk to your insurer about getting the right coverage.

Why Is the Distinction Important?

Personal auto insurance policies are not meant to cover commercial use, which often involves different risks and requires higher limits. If you use your personal insurance for commercial purposes and get into a crash, your claim could be denied. That means you could be on the hook for the damages – putting yourself and your business at risk. Don’t take the chance. Get the commercial auto insurance coverage you need.

Have you heard? Jupiter Auto now offers commercial auto coverage through our partnership with Progressive.

Get a Commercial Auto Insurance Quote