Business Auto Coverage

There are several tests you can apply to understand whether or not you need to purchase commercial auto coverage.  The first test is ownership.  If your business has a car titled in the business name you need a business auto policy.  You may consider avoiding this by having the car in your name.  Many small-business owners believe that if a car is in their name, commercial coverage is not necessary and their personal auto policy will provide coverage.  Generally, personal auto policies exclude from coverage the use of a vehicle for commercial purposes if the commercial use is substantial.  To protect your business’s assets, you want to be certain you have coverage in the event of an accident and the last thing you want to be doing after an accident is debating with your insurer whether your car is primarily used in business. If the vehicle in question is titled in the business name- there is no question, get a commercial auto policy.

A second important test is who is driving the car.  If your business has employees and they drive the car, you need business auto coverage.  Commercial policies allow you to list employees as drivers which allow the insurance company to properly underwrite the risk on the vehicle. So, if other employees at your company are driving the car, buy a business auto policy.

A third test has to do with your business activity.  If you are just using the vehicle to drive to and from work, you are commuting, not using your vehicle in business activity.  If you use the car or truck to travel to customer sites or to visit clients, you may need to consider commercial coverage based on how frequently you do this.  If you are regularly using your vehicle this way you would definitely want to consult your Washington auto insurance agent to talk about the need for a business auto policy.  A definite tipoff that you need coverage because of your business activity would be if you are involved in: 

* * Product or food delivery

* * Transporting business products to wholesalers or retailers

* * Retail product delivery to consumers

* * Carrying people for any distance

* * Picking up customer items for cleaning, repair, storage, etc.

All these are covered under commercial coverage and would not generally be covered under a personal auto policy. 

The activity issue is clouded by the fact that a few activities that appear business related may be covered by a personal auto policy.  For example, lawyers, accountants, clergy, doctors and some professions that carry clients on a regular basis such as real estate agents may be covered under a personal auto policy. Home health care workers can be covered under a personal auto policy if they do not transport people regularly.

A business auto policy offers liability coverage for physical injury to other persons or their property because of an accident, comprehensive coverage for losses other than collision and collision insurance.  Some business policies can be purchased at a lower cost with a named perils option on the comprehensive portion protecting against specific causes such as fire, lightening, explosion or vandalism

It is also worthwhile to consider a business auto policy if you need additional endorsements to your auto policy, such as coverage for additional insured’s – such as employees – waiver of subrogation, liability coverage for mobile equipment or hired or non-owned vehicles.

Commercial auto policies also build in coverage’s that may be attractive to the business owner such as towing and labor costs for moving disabled vehicles and loss of use if you damage a rental car. 

Commercial policies cover the vehicle itself – not the business it is engaged in, so expect exclusions for things such as responsibility for damage you assume under a contract or damage to property in your care and control. Oh, and don’t go racing with commercial auto coverage, it will not cover losses related to racing, demolition or stunts. 

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