Will your policy cover your vehicle for business use?

Written by Penny Gusner on November 20, 2013 & Posted in Auto Insurance

Ever consider using your own vehicle to make money? Or perhaps your teenage son is thinking of applying for a job as a pizza delivery guy.

Be forewarned: Before using your vehicle for business of any kind, you should review your personal auto policy. It's very likely that delivering pizzas, packages or people for payment will void out your car insurance coverages.

Personal auto policies are for just that, personal use of your vehicle. Once you start operating your vehicle for any type of business use, you've changed the risks associated with your vehicle.

While some car insurance companies allow business use of your vehicle for artisans in exchange for higher premiums (due to a business-use surcharge), most personal auto insurance policies forbid transporting goods or people for a fee or conducting a service with your automobile.

Both the liability portion of your policy -- the part that covers those that you harm in an accident -- and physical damage coverages -- collision and comprehensive that cover damage to your vehicle -- typically have strict exclusions for incidents resulting from the operation of your vehicle for delivery or livery services.

If you're thinking of using your vehicle for a business venture, or just to deliver pizzas for the local pizzeria, look over your auto insurance policy, especially the exclusions. If you're still unsure if your policy will cover you for the use of the vehicle that you want, contact your agent for clarification.

More likely than not, your car insurance company will require you to convert your policy over to a business-use or commercial car insurance policy. You pose more risk as a driver that uses a car for business purposes and so need a policy that can cover that risk.

A commercial policy isn't all that different than a personal auto policy if you're just insuring your one vehicle and not a fleet of cars. Coverages you're used to carrying, such as bodily injury liability, property damage liability, collision, comprehensive and uninsured motorist, are normally coverages you can choose to place on your commercial auto insurance policy as well.

If you find you need a commercial policy, convert your policy over. Don't take a chance and use your personal vehicle for business purposes in hopes that you can get away with it under your personal policy.

If you're in an accident and your car insurance company determines you were operating your vehicle for commercial use under a personal auto policy, it can -- and will -- deny your claims and even cancel your policy.

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