There are over 240 million registered motor vehicles in the United States, according to the Census Bureau. At any given time, as many as one-third of those are on the American roadways, and it is estimated that one-fourth of those are being used in the course of work.
Running errands, making deliveries, visiting customers – we all use a car for a variety of reasons. Even for those whose employment is not based on driving, it’s fair to say that your vehicle is an essential part of your employment.
This presents an important question: If you are involved in an accident in the course of employment, are you covered by your personal auto insurance policy? Like most insurance questions, the answer depends on circumstance. For example, what kind of car are you driving? Does the car belong to you or someone else? What type of business are you in?
Consider the language found in the typical personal auto policy. At a glance, the policy appears to exclude coverage for the use of any vehicle in the course of business other than farming or ranching. However, a very broad exception to this exclusion allows coverage for the business use of a vehicle provided it is one of three types:
1) a private passenger auto
2) a pickup or van
3) a trailer while used with the aforementioned
This exception suggests that as long as the vehicle is one of these three types, coverage remains intact after the accident.
But policyholders should proceed with caution, since some policies are not as generous. For example, some versions may be more restrictive towards pickups or vans, possibly including a gross vehicle weight (GVW) limitation or a clause that restricts coverage to owned pickups or vans only. Before driving any pickup or van for work, call us to confirm your coverage.
Further, policyholders should understand that any coverage permitted for business use of personal vehicles by the personal auto policy is not intended for these three vehicle categories:
Commercial-type vehicles
The policy restricts business use to private passenger autos, pickups and vans. While they can be purchased personally, box trucks, tractor trailers, shuttle busses and other commercial-type vehicles do not fit this description. These vehicles require a commercial auto policy.
Furnished or available for regular use
Often called the “company car” exclusion, this provision is dangerous and must be remedied if the exposure exists. The reason is that a typical personal auto policy will exclude coverage for a vehicle that is regularly available to the policyholder, but is not specifically insured under the policy.
For example, if you are furnished a company car as a benefit to your employment, make certain that you are covered by your employer’s auto insurance policy. If not, specific action is required to extend coverage under your personal policy; it will not do so automatically. The good news is that this coverage change is usually inexpensive and can be done easily. While the definition of furnished or available for regular use varies by case, err on the side of caution. Don’t assume that because you don’t take it home with you each night or that you only drive it occasionally you’re in the clear.
Regardless, a vehicle owned by your employer could be considered available for your regular use. This exclusion presents a potential gap that is too risky to ignore. Contact us so we can help you take the appropriate steps to close it.
Vehicles that “are the business”
A personal auto policy will not cover your vehicle if you use it to carry people for a fee, such as a taxi, limo or shuttle, or Uber. The only exception is a share-the-expense car pool. And if you’re planning to make a few extra bucks delivering pizzas, auto parts, newspapers or other goods, proceed with caution. Many personal auto policies also remove coverage for vehicles that are used to deliver food or other types of property for a fee.
While in most cases the personal auto policy will cover you for business use of a personal vehicle, there are situations where it will not. Such situations are not uncommon and, if not remedied, could result in significant financial detriment for you and your family.
Consult The Turner Agency Inc. for advice on how to close potentially devastating gaps in your coverage today. www.turneragencyinc.com.
