Is your vehicle being insured correctly?
Personal Automobile Insurance vs. Commercial Automobile Insurance
Working on a lot of commercial automobile policies I come across some misconceptions when it comes to whether your vehicle needs to be insured on a personal automobile policy versus on a commercial automobile policy. If the vehicle is not being insured for its actual use it can leave you with a gap in coverage.
Many people believe that because the vehicle is not registered or owned by a Company that it does not need to be on a commercial policy, however that is incorrect. The vehicle needs to be insured based on what it is being used for regardless of who owns it. If you are using your own vehicle to do work for your employer your employer cannot extend coverage to cover your vehicle. You need to have your policy underwritten correctly and rated for the actual usage. If you are carrying tools and equipment and visiting various job sites through out the day then your vehicle should be insured on a commercial policy.
Within insurance we put vehicles into their different usages based on what we call a “class”, there are several different classes of vehicles, but I am going to review the most common types that are often misunderstood when it comes to smaller private passenger vehicles.
- Class 1 Vehicle – Pleasure Use – This is for someone that does not use their vehicle to go back and forth to work. This vehicle would be used for errands or pleasure use only. Often this is the case for someone who has a second vehicle, someone who is retired or someone who works from home.
- Class 2 Vehicle – Personal Use – This is for someone who uses their vehicle to go back and forth to work as well as pleasure use. For example, driving into your work (office, school, hospital etc.) and parking for the day and then driving home. This is the most common class of vehicle.
- Class 7 Vehicle – Business use – This is for someone who uses their vehicle to go back and forth to work and may also use the vehicle to go to various sales meeting or taking it to meet with clients. This class of vehicle is used for a business vehicle not carrying any significant business property. Examples would be a real estate agent, property manager or salesperson.
- Class 36– Business Use – This is for someone who uses their vehicle to carrying tools, equipment, supplies or business property to various job sites or different locations. Examples would be an electrician or a general contractor.
So, think about your vehicle, what do you use it for? Many people believe that if they switch their policy to commercial use it will end up costing them more money however a lot of the time a commercial policy is actually cheaper than a personal policy. Not to mention coverage can be denied in the event of a claim if your vehicle is not rated and insured on the proper policy. So please contact your broker if you are unsure of how it is rated, you may not even know that it is insured incorrectly.
Here at Peake & McInnis Ltd. we can can set you up with the proper coverage so you are insured properly. Give us a call at 902-566-5534, email firstname.lastname@example.org or visit us online Commercial Auto Insurance.