Do I Need to Buy Commercial Auto Insurance?

Commercial Auto Insurance vs. Personal Auto Insurance

This is a very common question for the business owner, “should I buy commercial auto insurance? Many of you are out there right now using your private passenger auto policy in a commercial auto insurance capacity.

In many cases this is a very simple answer, for example, if you drive a tow truck, box truck, or stake-bed truck while conducting your business, then logically you are in the market for commercial auto insurance.  However, if you don’t drive an “obviously” commercial use vehicle, but do use your vehicle in the normal operation of your business, it may not be as easy see that you need a commercial auto insurance policy.

In these cases it is best to consult an insurance agent, because you may in fact need a commercial auto insurance policy because your private passenger auto may have an exclusion for the type of commercial use you perform.

If you’re unsure about the vehicle you drive or if the use of your use would be defined as “commercial” or “business”, you need to speak with your insurance agent immediately. It is best to know what your insurance policy covers … and what it doesn’t before you have a claim.

What is commonly commercial use?

When considering purchasing commercial auto insurance you should understand that insurance carriers typically define “commercial use” as the transporting of goods or people for compensation. Another definition for you to consider is by the Federal Motor Carrier Safety Administration:

Any self-propelled or towed motor vehicle used on a highway in interstate commerce to transport passengers or property when the vehicle—

1. Has a gross vehicle weight rating or gross combination weight rating of 10,001 pounds or more
2. Is designed or used to transport more than 8 passengers (including the driver) for compensation
3. Is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation
4. Is used in transporting material found by the Secretary of Transportation to be hazardous…and transported in a quantity requiring placarding under regulations prescribed by the Secretary.

Regardless of the definitions, however, you may still need to purchase commercial auto insurance coverage if:

• The vehicle in question is owned by a business.
• You haul tools or equipment weighing more than 500 pounds.
• You deliver goods (i.e., flowers, pizza, newspapers).
• You pick up and deliver people.
• You use farming equipment.
• You conduct door-to-door services requiring use of your vehicle.
• Other persons, excluding resident relatives, (i.e., employees or coworkers) operate the vehicle.

Exact definitions of commercial vehicles vary from insurer to insurer, so it is important that you speak with an insurance agent to determine if your vehicle qualifies for commercial auto coverage. IronPoint Insurance Services provides commercial auto insurance as well as other commercial insurance products, and we can assist you in making the right decision and getting the best coverage for the right value.

Give us a call at (877) 334-7646, or request an online commercial auto quote.