Why Your Personal Car Insurance May Not Cover Your Business Driving

Driving a personal vehicle for a commercial reason may leave you liable in the event of an accident. This is especially important for small business owners.

Most car insurance policies assume that you are driving your car in a personal capacity, and not for business.

This means that your auto insurance policy may not cover you if you’re involved in an accident while driving a personal car for a commercial reason.

In this article, we’ll talk about why your personal insurance policy probably won’t cover you at work.

We’ll also briefly go over what happens when you get into an accident while driving a work vehicle.

Will My Personal Car Insurance Cover a Business Accident?

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The short answer is “maybe,” since it really depends on the fine print of your specific auto insurance policy, as well as the expectations and policies of your employer.

For example, most personal car insurance policies will cover you if you have an accident on the way to work, but not if you’re in a car accident at work.

That’s because driving to work is considered a “personal use” of your vehicle, while driving your vehicle on the job counts as “commercial use.”

Further, if your work involves driving regularly, there’s a good chance your employer already has commercial vehicle insurance, sometimes called “business auto coverage.”

This commercial insurance policy may cover your business driving (even if you’re using a personal vehicle).

However, the specifics will often depend on the terms of the policy and your employer’s guidelines.

For this reason, it’s important to understand that your employer’s commercial insurance policy may not protect you in every scenario.

So, What Do I Need to Know?

Defining the boundaries between business and personal liability is a task too large for an article of this size.

In fact, there are entire legal textbooks on this subject, and business insurance law is a whole sub-practice area all unto itself.

However, what you need to know generally boils down to the following points:

  • There exists a grey area between personal and commercial use where you may not carry full auto insurance coverage. The extent of this grey area depends on your specific insurer and policy, as well as your employer’s vehicle usage guidelines.
  • In this way, if you are involved in an accident while using your personal car for business reasons, your personal insurance policy may not cover the accident. The deciding factors will be why and how you were using the vehicle.
  • Similarly, using a business car for personal reasons may also leave you liable for an accident, depending on a large number of similar factors.
  • If you are a small business owner who is wondering if your business can be held liable for an accident caused by an employee, you need to understand the term Respondeat Superior.”

How to Protect Yourself from Personal Liability

There are several solutions and steps you should consider as a means to remedy these situations:

  • If you are using your personal vehicle for commercial reasons, contact your insurance company to ensure you’re covered in all situations. Your insurer may require that you purchase additional coverage for commercial use. You may also find that your specific use is already covered by your current policy.
  • Likewise, if you’re using a business vehicle for business or personal reasons, ask your employer for a document stating the terms of this use in writing so that you know your responsibilities and the limits of your employer’s coverage (i.e. so you know when you’ll be liable).
  • Finally, if you are a small business owner, make sure to clearly define, in writing, your expectations for how your employees use their vehicles. Also, read over your business auto coverage policy with both the insurance agent and your attorney. Doing so can save you headaches down the road.

Is My Vehicle Use “Commercial”?

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The most important factor to this entire discussion is whether or not your vehicle use is “commercial” in nature.

As mentioned above, your personal auto insurance is unlikely to cover you if you get into an accident while driving commercially.

However, it’s not always obvious what “commercial use” of a vehicle entails.

For this reason, we’ll provide a few examples to help you better understand this term.

Driving to or from Work

For most people, driving to or from work is not a commercial use of a vehicle.

However, if your employer pays you to commute, it may be a whole different situation entirely.

For example, employers may be required to pay employees for travel expenses if they are called-in during their off hours.

In that case, the employer (and the employer’s insurance policy) may be responsible if the employee gets into an accident.

Driving a Personal Vehicle for Your Small Business

Many small business owners use their personal vehicles for work-related purposes, such as delivering supplies or running errands.

Under Virginia law, these all count as commercial use.

For this reason, a personal insurance policy is unlikely to cover you if you get into an accident while driving for your small business.

In general, you’ll want to either (1) purchase commercial use coverage for your personal car insurance plan, or (2) purchase coverage for your business that applies to your personal car.

Independent Contractors

Under Virginia law, an employer cannot be held responsible if an independent contractor they hire gets into an accident.

Likewise, the employer’s insurance will not pay for any of the independent contractor’s expenses.

If you are an independent contractor who uses your vehicle for work, you need commercial insurance. There’s just no getting around this fact.

If you don’t have commercial car insurance, you will be personally on the hook for repairs, medical bills, and any lawsuits that follow an accident.

Rideshare Companies

Many rideshare services, such as Uber and Lyft, require that their “employees” use their own personal vehicles.

While the major rideshare companies provide compensation if you get into an accident while working, this comes with a number of conditions.

For example, Uber’s uninsured motorist coverage can change based on whether you’re en route to pick up a client or actually driving someone around.

Major rideshare services often partner with insurance companies to offer expanded coverage to their drivers at a reduced cost.

While these insurance plans are often economical, they also come with important conditions and exceptions.

Always make sure you completely understand the policy before you agree to sign up.

Conclusion

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In Virginia and most other states, your personal insurance is unlikely to cover any business-related driving.

Instead, you will have to either rely on your employer for coverage or take out an insurance policy that includes coverage for commercial use of your vehicle.

If you have been involved in an accident while at work, consider contacting a personal injury lawyer.

A good personal injury lawyer can help you understand your situation, and what legal options you have.

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