Commercial auto insurance is typically more expensive than personal insurance. However, the decision on whether to buy commercial or personal coverage isn't entirely up to you. The insurance company has a range of factors it uses to determine which type of coverage each motorist should buy. Here are three examples of such factors:
The Primary Use of the Car
This is one of the primary issues that determine whether you are covered while using your personal car for business errands. When buying car insurance, you must specify its main use, and the car insurance company then classifies it as either a business or personal use. Of course, you are expected to be brutally honest when specifying your main use of the car.
If a car is primarily used for personal errands, then personal auto insurance cover will suffice even if you use it for business occasionally. For example, if you mainly use your car for driving the kids to school and going for shopping, then you don't have to worry about insurance coverage while using the car for a business trip once every few months.
The Type of The Vehicle
Some types of vehicles almost exclusively used for commercial purposes while others are considered personal means of transport. For example, no one buys a tractor trailer to use for personal errands. Therefore, it would be difficult to buy a personal insurance cover for a tractor trailer.
The Vehicle's Ownership
Another thing insurance companies consider is who owns the car. For example, it's clear that businesses buy cars for commercial and not personal use. Therefore, if an insurance agency or law firm buys a car and registers it in the business' name, it's safe to assume that the car will be put to commercial use. As such, expect the insurance company to treat the car as a business vehicle and expect the relevant insurance policy. However, if the owner/manager of an insurance agency or law firm buys a car and registers it in their personal name, then the car is covered by personal auto insurance. Just make sure you don't misrepresent a personal car as a business car, you will be jeopardizing your coverage since the insurance company can cancel your policy or decline to honor a claim demand if it learns of the fraud.
Buying the right coverage for your car isn't difficult if you provide the insurance company with the right information. Misrepresenting facts may help you in the short-term, but it is costlier to deal with in the long run: don't do it.
Contact Insure With U.S. or your local insurance provider for more information.