Do You Need Commercial Car Insurance For Your Home-Based Business?

If you are one of the millions of people who have established a home-based business, or work as a freelancer or independent contractor, you may need to consider changing to a commercial car insurance policy to protect your personal and business assets.  While you might assume that it’s “safe” to continue driving under your personal policy, in the event of an accident, you may run into more trouble than you’ve bargained for, especially if your insurance company believes that you’ve misrepresented the car’s usage.  If that happens, your claims against your policy will likely be denied.

Your first move should be to call your current insurance provider, and discuss with them your individual and business requirements.  You may be fortunate and learn that your limited business use is covered by your personal policy.  If not, your agent will be able to tell you if a rider to your existing policy is available, or if a commercial car insurance policy should be purchased. 

The deciding factor which will determine whether or not you need to get a commercial car insurance plan, or purchase a rider that adds business coverage to your personal auto insurance is the vehicle’s primary usage.  In general, insurance companies classify usage into three categories:  Commuter, Pleasure, and Business.  If the car is in use for business or commercial purposes more than 50% of the time, then that is the usage determination.  Driving around making sales calls for part of the day may be alright, but if you derive “direct” compensation, i.e. use it for deliveries or as a livery service, then you’ll need commercial coverage.

Commercial car insurance isn’t much different than regular personal car insurance, basic coverage includes liability, comprehensive and collision, bodily injury and medical payments coverage, as well as cover for uninsured and underinsured motorists.  Some commercial policies also include extras such as rental car reimbursement and towing.  The price differential isn’t that tremendous, either; commercial insurance typically ranges between 10% and 20% higher than private auto insurance, depending on the kind and amount of driving that you do.

Bear in mind, commercial car insurance premiums will vary in price depending on the provider, so do your homework and shop around for the best price and best service.  For the small additional cost of a commercial policy or commercial rider to your personal coverage, you’ll have gained a great deal of peace of mind, while you’re driving around on business.