Gianetta Palmer is a writer for CarInsurance101.com, copywriter, and essayist. Her work has appeared in EverydayHealth.com, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

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Melanie Musson is the fourth generation in her family to work in the insurance industry. She grew up with insurance talk as part of her everyday conversation and has studied to gain an in-depth knowledge of state-specific car insurance laws and dynamics as well as a broad understanding of how insurance fits into every person’s life, from budgets to coverage levels. She also specializes in automa...

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Reviewed by Melanie Musson
Published Insurance Expert

UPDATED: Mar 13, 2020

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For most people, a private auto insurance policy is sufficient. Some individuals, however, may be in a position that cannot be covered by private insurance, and they may not know it. If you get into an accident while engaging in commercial behaviors, your auto insurer may deny the claim, and you will be responsible for paying your own repairs and the cost of any other damages you cause. It’s important to understand in advance how your policy will interact with your job, and purchase appropriate insurance to cover your needs.

Why Commercial Policies Are Different

Auto insurance companies establish their policies and set premiums based on a driver’s risk. People who drive their vehicles for pleasure or to commute to work have a lower risk than those who drive as part of their jobs. The more time a person spends behind the wheel, the greater the likelihood they will be in an accident.

Moreover, a driver’s liability increases when corporate interests are at stake. For example, you will need better liability insurance to cover possible injuries sustained by passengers in a taxi service than you would as a private individual. A lawsuit levied against your business can be much more serious than one against you as an individual.

Because insurance companies are not necessarily equipped to handle the risk posed by commercial driving, not all insurers offer these types of policies. Fortunately, some insurance companies do provide both commercial and private auto policies, and you may be able to get a very affordable rate on commercial auto insurance.

After a claim is filed, an insurance company will determine whether the accident was caused by actions that are within the policy’s guidelines. If you’re found to be using the vehicle in a way that’s inconsistent with the policy agreement, your claim will be denied and the policy may be terminated, which is why it’s so important to carry an appropriate level of insurance.

When Do You Need a Commercial Car Insurance Policy?

If you use your vehicle primarily for work, you may need a commercial policy. There are many reasons why private insurance may not be sufficient:

— You run a taxi service of any kind

If any part of your job requires you to ferry people in your car for money, you will need better insurance than a private policy will provide.

— You run a delivery service

Couriers, pizza delivery personnel and others all require additional insurance protection to cover the added risk of the extra hours spent on the road.

— You’re self-employed

Depending on the nature of the business, if you are self-employed and use your vehicle as part of your business, you may need to take out a commercial policy on the car. This is especially true if you get tax benefits as part of the business for the activities you do while in your vehicle.

— Many people in your company drive the car

If your vehicle will have multiple different employees using it to complete business purposes, your risk will be higher and the insurance coverage will need to be more thorough.

— Your vehicle is over-sized

Most insurance companies have size or weight restrictions. If you drive a large pickup, for example, it may be too big to cover under an individual insurance policy. The very large vehicle may have a higher risk, be too expensive to repair or be deemed not appropriate for pleasure driving.

If this or similar circumstances applies to you and your vehicle, you will need to discuss your options with the insurance company so that you can obtain the appropriate level of coverage. Depending on the situation, you may need to take out a separate policy with your insurer, or you might need to pursue a different company for commercial auto insurance.

If you do end up purchasing a commercial auto policy, be sure that you keep all of your commercial activities on the vehicle that’s covered under that policy. Even if the commercial vehicle is in the shop or otherwise disabled, do not give in to the temptation to drive your other auto in its place without the appropriate coverage. You run the risk of causing an auto accident that will be denied, leaving you with a substantial amount of damages to cover out of pocket.

Commercial auto policies can be purchased in the same way that a regular policy can, either online or through an agency. You may wish to ask your coworkers or other professionals in your field about their insurance recommendations. You can also search online for a quote and read reviews of insurance companies that provide commercial policies. By doing your research now, before you need the policy, you can ensure that you get the best possible price without sacrificing coverages.