What does business insurance cover on a car?

Business auto insurance covers employee-driven vehicles while making deliveries to customers. The average cost of business coverage is $304.83/mo.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 16, 2021

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Here's what you need to know...

  • Personal vehicles are not typically covered for business use so that a dedicated policy may be required
  • The business plan can be customized to suit your particular needs
  • Be sure to name the business as the principal insured

As a business owner, you’re always looking for ways to save money while also limiting potential liabilities. One way is by finding the right business insurance. You need a plan that will cover your vehicle, personal property, cargo, and tools.

When you take the time to shop around, you can find a plan that fits your budget while giving you the peace of mind that you need. Enter your zip code into our FREE tool above to get started!

When to Add Commercial Insurance Coverage to a Car


As a general rule, you should have a dedicated business policy on your car if it is used primarily in business. According to the Insurance Information Institute, your personal insurance plan will not be able to cover any car that is owned by a business.

A commercial plan will cover certain vehicles, specifically those that are owned, leased, or hired by your business. Additionally, you can cover those vehicles that are not owned by the business, but that are used primarily as part of the business.

The owner of the vehicle may need to be listed in the declarations as the main insured person. As with personal auto insurance, you may find lower rates or more attractive features by shopping around with different companies.

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Understanding the Definition of Business Use

When cars are used for business and pleasure, deciding on the right insurance coverage can be a little tricky. However, there are ways that make it easier for you to determine the right coverage.

If you do any of these tasks with your personal car, then you should look into getting commercial coverage:

  • Carry equipment that will be used on jobs, including ladders, tools, and other supplies
  • Move hazardous or flammable materials
  • Transport the cleaning equipment that will be used
  • Provide rides or towing to customers
  • Deliver goods related to the business, including rural newspapers

However, there are some exceptions to these rules. As a general guideline, home-based selling businesses like Mary Kay and Tupperware are covered under a personal policy.

Real estate agents, attorneys, and doctors who meet with clients outside of the office can usually rely on their personal policy, as well as home healthcare workers.

Be prepared to answer questions about your company and the role your car might play in daily operations so that you can find an accurate and attractive rate.

Premiums Determined in Part by Business Type

When it comes to premiums, insurance companies look at a wide range of factors. In the case of a business, the type of industry you’re in will play a role in your rates.

The fact is that being self-employed and going with a commercial plan will not necessarily result in higher rates.

If you primarily work from home and won’t be on the road very often, then your car insurance will naturally be lower.

However, your rates can rise if you spend a good deal of time on the road or transporting valuable items. Additionally, your rates may be significantly higher if you regularly transport passengers.

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The Types of Protection

Like a personal insurance plan, commercial policies offer different types of coverage. For example, a trucking company may need to have coverage for their cargo and vehicles in addition to the liability plan mandated by law.

These are three of the most basic protections that you may need to take advantage of as a business owner:

  • Basic – With collision and comprehensive insurance, you’ll be able to cover damage to your own and other vehicles in the event of an accident.
  • Specialized – This provides you with the protection you need for your specific business. One example is commercial auto liability coverage to protect you against damages to cargo you move that belongs to another party.
  • Non-Trucking – Business owners invest in this type of plan to protect their personal property that’s in a company vehicle, and it may also cover the occasional personal use of a company vehicle.

Go with a company that can handle all of your specific needs so that you can negotiate a better price and save money throughout the year.

Before you start shopping, you may want to make a comprehensive list of your potential liabilities, which might include transporting cargo, driving passengers, driving employees to jobs, and your personal property that may be in the vehicle at any given time.

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Transporting Passengers Usually Requires Additional Coverage


If you routinely drive people around town, then you should speak with your agent to ensure that you have the right coverage.

Companies like Uber and Lyft provide people with an alternative to traditional taxis, but drivers need to protect themselves by investing in the right policy.

It’s important to read the fine print in your auto policy. Some specifically prohibit driving for hire or simply will not cover vehicles who are involved in an accident when they are being used as a for-hire service.

Whenever you transport people in exchange for money, you are considered a commercial driver and vehicle, so it may be in your best interest to get a commercial policy.

Otherwise, your current company can refuse to cover any accident that occurs when you are driving to pick up a client or actively transporting a passenger.

Protection through Principal Insured

Small business owners appreciate the importance of keeping their private assets separate from the business.

That separation is one way they protect their homes and other personal property from seizure in the event of a major lawsuit.

If you do have a company car, make sure that the business name appears as the principal insured on the policy. Doing so will help avoid any confusion if you’re filing a claim or one is filed against you.

No Coverage for Personal errands

Your business policy may not cover certain accidents, such as when someone not named on the policy is driving, or if an employee is using the company car on a personal errand.

With Extended Non-Owned Coverage for specific individuals, you will always have the coverage that you need. This special protection is used to cover named individuals who sometimes drive a car for non-company purposes.

This protection is usually automatically granted to the policyholder and spouse. However, you should speak to your agent to be sure that it also extends to any employees who drive the vehicle during or outside of company hours.

You need to protect your company assets and shield yourself from lawsuits, and that means taking a close look at your vehicle protection. If you’re using a private car to operate a business, then you may not have the protections that you expect.

By shopping around, you may be able to lower your commercial auto insurance expense, and you can look for the special options that you need for your business. Enter your zip code right now to start comparison shopping!

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