Is Personal Use Covered by a Commercial Auto Insurance Policy?

Any vehicles used for business-related purposes need to be covered by commercial auto insurance, and traditional insurance is needed for personal vehicles. But it’s not always easy to entirely separate business and personal tasks involving a need to drive. For this reason, it can be helpful to gain some insight into commercial auto insurance and when it may or may not apply to personal vehicle use.

How Commercial Auto Insurance Works

The best way to answer the question about commercial auto insurance coverage and whether or not it applies to personal use is to briefly explain how this type of coverage works. Business or commercial auto insurance applies to the insured vehicle and the driver, just like standard insurance, but it’s obtained by a business owner. However, commercial auto insurance differs from personal vehicle insurance in that limits are usually higher. This is because the loss of a car or truck used for business-related operations often has a greater financial impact on a business.

Commercial vehicle insurance may apply to:

• Delivery vans or other vehicles owned by a business and only used for business-related purposes
• Vehicles a business provides to employees for business and personal use
• Personal vehicles owned solely by employees and primarily used for business-related tasks

Standard Vehicle Insurance Limitations

The main reason commercial auto insurance sometimes applies to vehicles also driven for personal use is because of the limitations of standard vehicle insurance. Standard auto insurance doesn’t apply to vehicles owned by a business or ones driven for business-related purposes. In other words, a standard auto insurance policy wouldn’t cover a commercial vehicle.

Vehicles Owned by a Business

If a vehicle is owned by a business, the business owner is responsible for purchasing insurance. This would be commercial auto insurance. It’s common for such policies to cover “permissive use,” referring to times when an employee has the vehicle owner’s consent to also use the vehicle when the employee isn’t on the clock. Therefore, if an accident occurs outside work, the auto insurance policy would likely cover related expenses.

Personal Use Vehicles

Personal use vehicles are ones an employer allows an employee to use for business and personal use. In this case, the stipulation may be that you’ll need permission from your boss before using the car for certain purposes, like taking a weekend trip with your family.

Personally Owned Vehicles

In this instance, the vehicle is owned solely by the employee. Therefore, you may not be covered by a commercial auto insurance policy if an accident occurs while driving on your own time. With a situation like this, you would likely benefit more from standard auto insurance coverage. That said, you may be able to get sufficient coverage with a commercial policy if you primarily use your own car for business-related purposes, as may be the case if you run a business out of your home. This could also apply if one car you own is mostly used for business and another vehicle is used for personal driving. 

If you aren’t sure exactly what your commercial auto insurance covers, make sure to call your insurance agent so you don’t encounter any unwelcome surprises. For the highest-quality auto, motorcycle, homeowners, and renters insurance, San Diego residents rely on the experienced team from Altra Insurance Services. Give one of our friendly agents a call today at (800) 719-9972.