Most people are able to get sufficient coverage for their vehicles through personal auto insurance policies, but people who use vehicles for work need commercial policies. If you’re unsure whether the driving you do necessitates commercial auto insurance, consider these four questions to help you determine whether you need this type of policy.
1. Does a Business Hold the Vehicle’s Registration?
Vehicles are registered to either individuals or businesses, and the registrant sometimes dictates whether personal or commercial auto insurance is necessary.
If your vehicle is registered to you personally, you’ll have to continue on with the other questions before determining what type of coverage is required. Personally registered vehicles can be insured with personal policies in most cases, but certain situations call for insuring a personally registered vehicle with a commercial policy.
If your vehicle is registered to a business, you need a commercial auto policy for the vehicle. Business-owned vehicles are considered commercial vehicles even if they’re also driven for personal use, and so they can only be insured with commercial policies.
To find out who your vehicle is registered to, check the owner’s name on the vehicle’s state registration. The document will clearly state whether you or a business is responsible for the vehicle.
2. Do Employees Drive Your Vehicle?
If employees whom you aren’t immediately related to drive your vehicle, commercial auto insurance is required regardless of whether you have a personally or commercially registered vehicle.
Employees work and their driving is work-related. Personal policies aren’t meant to cover work-related driving, hence the need for a commercial policy.
Driving by immediate family members might qualify as an exception to this general rule. Even if your family members are employees of a family business, the driving they do might be personal driving since they’re part of your family. If they only use the vehicle to run errands for the family, a personal policy is likely fine. If they drive for work, you still need a commercial one.
3. Do You Drive Your Vehicle for Work?
If you regularly drive your vehicle or work, a commercial policy is again required. What constitutes work-related driving, however, depends on the type of business you run. Endless possibilities exist, but a few examples show just how diverse work-classified driving can be. All of the following are considered work:
- Driving to meet clients at their locations
- Towing equipment or bringing supplies to job sites
- Plowing driveways during winter
- Delivering newspapers or ordered products
- Providing rideshare services via a third-party platform
Even if this type of driving accounts for only a portion of your vehicle use, you need a commercial policy. Commercial policies can cover personal driving, but the reverse isn’t true.
Importantly, commuting to and from your place of work isn’t considered work-related driving. Going between a main office and satellite locations is, but getting from home to your work location isn’t. This is personal driving that most people must do, and it’s covered by personal policies.
4. Do You Claim Mileage Deductions When Filing Taxes?
Occasionally, figuring out whether your driving classifies as personal or work-related is challenging. One clear way to determine whether it’s work-related is to look at your tax return.
If you claim a mileage deduction for your taxes, the driving was classified as work-related for the purposes of taxes. The same reason it was classified as work-related then holds true when selecting insurance, so a commercial policy should be purchased.
If any of these questions lead you to believe that you need commercial auto insurance, contact our team at Metropolitan Insurance Service Consultants, Inc, about purchasing a policy.