6 Common Myths About Commercial Auto Insurance

Commercial auto insurance is an insurance policy consisting of physical damage, liability, and other optional coverage to protect a business from loss while operating a vehicle in the course of conducting business.

It is important for business owners to understand the difference between a personal auto policy and a commercial auto policy. It stands to reason that your business will involve some kind of transportation, whether it involves traveling to a work site or simply commuting to and from the office, but it’s easy to confuse where the line is.

Of course, rented or hired vehicles are a completely different story. But if your company owns one or more vehicles, or if your employees use their own vehicles to conduct business, read on.

There are some misconceptions surrounding commercial auto insurance, including:

MYTH:  I make deliveries, so my personal auto policy protects my personal vehicle.

TRUTH:  Your personal auto policy provides insurance protection while you are driving for leisure, commuting to and from work, or other personal reasons. Personal auto insurance does not protect you if you are self-employed and using your personal vehicle for business purposes.

If your vehicle is involved in an accident while making a delivery, your personal insurance company will most likely deny the claim. Some auto insurance companies allow you to include business-use coverage, but more than likely, you will need a commercial auto policy.

The best way to understand auto insurance is to determine how a vehicle is primarily used. If you use your car primarily for business purposes like hauling supplies or meeting with clients and only occasionally for personal use, it will likely require commercial auto insurance. If you use it mostly for personal use and only occasionally for a business errand, personal auto insurance could be enough.

MYTH:  I operate a seasonal business, so there is no need to maintain my commercial auto policy while my business is not in operation.

TRUTH:  There are two reasons for not canceling your commercial auto policy during temporary downtime. The first reason is that by not canceling the policy, your insurance premium will probably be lower than if you cancel and start up again later. Secondly, by canceling the policy, you will have absolutely no insurance coverage on your stored vehicles.

It is best to consider a comprehensive-only policy during downtime to continue to protect your business vehicles against theft, vandalism, or fire.

MYTH:  My employees are insured when they drive my commercial vehicles.

TRUTH:  This isn’t always true, since some insurance companies require any drivers of commercial vehicles to be named in the policy. If your commercial auto policy includes coverage for “permissive use”, drivers will be covered if they have your permission to operate the vehicle. It is very important to understand this provision of your commercial auto policy, so get in touch with your agent to make sure.

MYTH:  My equipment and tools left in a commercial vehicle are covered.

TRUTH:  Equipment permanently attached to the vehicle will usually be covered.  Loose tools, toolboxes, equipment, and supplies will not be covered unless specific coverage for items in transit has been added.

MYTH:  I am not self-employed but use my personal auto for on-the-job duties. My personal auto policy will cover any losses.

TRUTH:  Probably not. If you use your vehicle for any purpose other than personal use, you either need to extend your auto coverage to include business use of your vehicle or you should purchase a commercial auto policy.

MYTH:  I work from home and don’t need commercial auto insurance.

TRUTH:  The location of your business operations really doesn’t matter. If you drive your vehicle for business-related reasons, your personal auto policy will not cover losses due to business use, unless business-use coverage has been added to your policy. If this additional coverage isn’t available, you need to purchase a commercial auto policy.

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