When you drive your car for both business and personal reasons, knowing which type of insurance to buy is often confusing. You don't want to make the mistake of assuming you are covered and then receive a notice of a denied claim. This can happen when drivers get into an accident carrying out business duties while insuring their car under a personal policy. If you are in doubt about the type of policy you need, ask yourself if any of the following situations apply to you:
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People pay you to provide limousine or taxi services using your personal vehicle.
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You make deliveries for your business, such as office or medical supplies.
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You rent your car to individuals or private businesses.
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You previously registered your car in the name of your business or any type of corporation.
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You allow people who are not listed as drivers on your personal auto insurance policy to drive one or more of your cars. Typically, this would be your own employees or independent contractors who work for you.
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One or more of your vehicles has a high weight or towing capacity. If it has special attachments, such as snow plowing equipment in colder climates, it is definitely a work vehicle.
Why the Right Classification is Important
Personal and commercial auto insurance policies are rated very differently by insurance agents. The companies providing coverage must consider such things as how people drive when using their own vehicle versus factoring in financial protection for people who drive others' vehicles for work purposes. Not only are your rates different, but your benefits usually are as well.
When you are searching for car insurance, be certain to inform your independent insurance agent how you typically use the car. While you don't have to maintain separate vehicles for home and work, knowing the percentage of time you drive your car for the benefit of your business ensures that you buy the proper coverage.