Does your business need commercial auto coverage? Like many small business owners, you may assume that your personal auto policy affords all the coverage you need. You may also believe that your policy will protect you if you are involved in an accident while driving a vehicle you use for business. As this article will explain, you could find out the hard way that your assumptions are wrong.
Not Designed for Businesses
A personal auto policy is designed to cover individuals, not business entities.
It typically defines insured as the individual named in the declarations and that person's spouse and family members. Obviously, the terms spouse and family members are not relevant to a business entity other than a sole proprietorship. Note that if your business is a sole proprietorship, you can insure your family members under a business policy via the It typically defines insured as the individual named in the declarations and that person's spouse and family members. Obviously, the terms spouse and family members are not relevant to a business entity other than a sole proprietorship. Note that if your business is a sole proprietorship, you can insure your family members under a business policy via the Named Individual Insured Endorsement.
Another problem with personal auto policies is that they exclude business-related risks. Here are some exclusions that are commonly found in personal auto policies:
- Commercial Auto Exclusion Many policies exclude the use of a vehicle by someone employed or engaged in a business other than farming or ranching. This exclusion doesn't apply to a private passenger vehicle or to a small pickup or van not used for delivering or transporting goods and materials. Generally, a truck or van is "small" if it has a gross vehicle weight under 10,000 pounds. The upshot of this exclusion is that you need commercial auto coverage if you own a vehicle larger than 10,000 pounds. You also need this coverage if you use any size vehicle for delivery purposes or for transporting property.
- Auto Business Exclusion This exclusion applies to autos used in a business that involves selling, repairing, parking, storing or servicing autos. Examples are a dealership and a repair shop. If you use any vehicles is this type of business, you need commercial auto insurance.
- Livery Exclusion Virtually all personal policies exclude the use of an auto (truck or private passenger type) for transporting people or property for a charge. Examples are taxis and autos used to deliver pizza or packages. This exclusion also applies to vehicles used in rideshare businesses like Uber and Lyft.
Read full article here https://www.thebalance.com/do-i-need-commercial-auto-coverage-462413
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