A large number of businesses start within the homeowner’s house. Operating from inside your home at the start of a business is convenient and inexpensive when revenue is slow.
Despite operating from inside of the home, new business owners still have to make time to search for work from home insurance, business auto insurance, or any other type of insurance that is specific to their operation.
Even if your home or personal vehicle is already insured, you may not be completely covered if a mishap happens while your property is being used for work. Insurance, specifically business car insurance, covers your vehicle if you use it for work.
Regular car insurance policies do not cover business use, so ask if your car is insured at all times when starting your new home business. Click here to find affordable and reliable auto insurance policies.
The Difference Between Personal and Business Auto Insurance
Personal and business auto insurance policies all provide basic coverage and administer rates in a similar way. If your home-based business is in a high-traffic area instead of a low-traffic area, your business auto rate will be higher just like your personal auto insurance rate would be.
The biggest difference between both types of policies is they are used for different reasons. Personal auto insurance only covers accidents that happen when your vehicle is being used for personal reasons.
Commuting to and from work and for travel are personal reasons because they are unrelated to your work duties.
A business auto insurance policy and a commercial auto insurance policy both cover a company’s use of cars, vans, trucks, and other vehicles when being used for business purposes. This type of coverage extends to vehicles leased and owned by the company and to employee-owned vehicles used for business purposes.
Business insurance helps pay for property damage, lawsuits, business income loss, and any other losses that happen because of an automobile accident that occurs with a business vehicle while performing tasks for the company.
Most personal auto insurance policies do not have enough coverage to pay for business income loss or lawsuits. So insurance providers avoid covering accidents that happen in a personal vehicle while performing duties for a business.
Here are thorough explanations of each vehicle usage term:
- Commute: Commute usage is designated for vehicles that are driven regularly to and from school or work and for other personal reasons like going to the grocery store or social activities. To classify as a commuter vehicle, the car has to be driven to and from one work site a day and not several locations throughout the day.
- Pleasure usage: When the car is driven strictly for social and recreational purposes or to run quick errands, insurers identify the vehicle within the pleasure class. This class is the least expensive because the vehicle is used solely for pleasure or social reasons and not for commuting to and from work.
- Business: When your vehicle is assigned to a business class, it means it is driven to multiple locations in one day to make occasional deliveries or visit clients. Using your car to drive to an office supply store once in a blue moon is not a good enough reason for your car to be labeled in the business class.
Types of Businesses Excluded from Personal Auto Insurance
When picking a profitable niche for your business, you probably didn’t consider the fact that certain business operations are automatically excluded from personal auto insurance policies.
When registering your vehicle for auto insurance, you may only be offered commercial or business auto insurance policies when you mention the purpose of your business. Even when your vehicle is driven for personal and business purposes, you become ineligible for personal insurance if:
- Your automobile is used to transport people (similar to a taxi service)
- Your automobile is driven by various employees regularly
- You rent or lease the automobile to others
- You deliver goods and supplies in the automobile
Types of Vehicles Excluded from Personal Auto Insurance
To even get a personal auto insurance policy, you have to be covering a private passenger vehicle. These vehicles are sedans, coupes, wagons, minivans, and other compact cars.
Similar to how certain business operations make it difficult for you to gain a personal auto insurance policy, getting personal auto insurance on certain vehicles is challenging. Vehicles that have to be covered by a business insurance policy are vehicles that have:
- Altered suspension lifts or racing equipment
- Special equipment attached to it
- A load capacity of at least 2,000 pounds
- Gross vehicle weight of at least 10,000 pounds and is a truck, van, or utility vehicle
- Permanent toolboxes or ladder racks attached to it
Do I need business auto insurance?
You can’t file a claim if you get into an accident while using your car for business if you haven’t bought a business auto policy. You may even be committing a crime for operating your vehicle without proper insurance coverage.
Therefore, when you use your car for business, you need to purchase business car insurance. Regular car insurance only covers you when your car is being used for social and personal use, like visiting a friend or driving to work.
If your new home-based business does not require you to use your vehicle to occasionally deliver products or visit clients, then you will not need to buy a business auto insurance policy. Making a trip to your local business supply store now and then or using your car to buy lunch in between working is not actually considered using your car for business purposes.
Car insurance for business use differs from commercial car insurance. Commercial car insurance is used for those who use their car as the principal part of their company, like a taxi driver, trucker, or delivery driver.
Business auto insurance is for when you use your car for business purposes but your vehicle is not an integral part of their job.
How do I buy business auto insurance?
Business auto insurance is not always cheap, but there are various discounts offered that you can inquire about when searching for the perfect policy. Buying a business auto policy is pretty similar to purchasing a personal one.
You provide the insurance representative with your name, age, location, and the reasons you are operating your vehicle. From there, they will tell you which policy types are ideal for your specific needs.
Sometimes, you can use your personal policy if you use your car for business and personal reasons and the car is registered under your name. Doing so will require you to inform your insurer how you use the vehicle occasionally for business reasons.
