f you’re using your motor vehicle for a commercial purpose, you’ll need commercial auto insurance. Check your personal policy. Commercial use of your vehicle is excluded. That’s because commercial use of a vehicle is deemed to have different risks for insurance companies. Quite simply, commercial vehicles are on the road more often and participate in broader uses than personal vehicles.
Certain vehicle types and uses are excluded from coverage under personal auto policies. Commercial vehicles might be automobiles, vans, pickup trucks or any other type of truck. They might be used by contractors, repairmen, haulers or even the kid making deliveries.
Personal policies and commercial policies are written and rated differently. Although coverage between the two might be substantially similar, commercial policies are designed to address certain unique needs and circumstances. First, they cover employees in their use of the vehicles of the business. They also cover equipment and the loading and unloading of goods or products. Most importantly, commercial insurance covers a business should it be named as a defendant in a lawsuit resulting from the use of one of its commercial vehicles.
If you’re involved in an accident and engaged in commercial activity with a vehicle that’s insured with a personal policy, your auto insurer can deny coverage. A commercial policy would call on the insurer to defend the lawsuit and pay any damages awarded to the extent of your policy limits. That defense includes attorneys appointed by the insurer to defend you at no cost to you beyond your deductible. Denial of coverage would result in you being required to pay your own attorneys to defend the lawsuit and pay out-of-pocket for any settlement or verdict yourself. That can mean hundreds of thousands of dollars, putting you out of business. All of your assets could be seized and sold. Those could include your personal assets too.
Commercial vehicles are vital to your business and personal livelihood. Pay attention to the type of insurance you need. Even if you use only one vehicle in your business, you’ll want to make sure you have the right insurance.