Personal auto or commercial auto? That's the insurance question.

As a business person, if you drive your car to appointments or write off the mileage for taxes, you could be carrying the wrong insurance policy.  If you're like most people, you probably grabbed your insurance cards and tossed the remaining documents in a drawer or file until renewal.  

 Like most small businesses an individual families, you probably have never read your auto insurance policy.   What about your business?  Are you properly covered properly covered?  Regardless of your profession, odds are that if you use your car for a tax write off, then you may want to get a commercial auto policy for your business.

…But my agent told me My personal policy was rated for business use

Unfortunately, I'm going to prove your agent wrong.  If you use your vehicle for business use every day, you need a commercial auto policy.  

Even if your agent told you your policy was rated for business use, most personal auto policy only use that terminology to determine your rate.  In the old days of auto insurance before insurance credit scoring, your usage was broken down into the following mileage categories: 

N -Pleasure Usage or   Commuting less than 4 miles a day or under 20 mils per week
L – Low Commute,  commuting 21- 100 miles per week
M- Medium commute, commuting 101 – 200 miles per week
B -Business use, or commuting 201 or more miles per week.
F- Farm use, for vehicles primarily kept on andy farm

This is important to understand because, even though you have the business usage box checked and you're rated that way, you could have a large week spot in your insurance protection.  More importantly, do you want to be in a position of putting your personal and pofessional assets and reputation in place?

What does this mean to me?  First, grab your auto insurance policy and read the definitions first.

The definitions section of a policy is where the insurance describes words specific to the policy.  Here, you find out what a company means when they say, "coverd auto" or "exclusions".  In many cases where the definitions create exclusions that could potentially cause gaps in coverage.  

The following is an example from a personal auto policy under the definition of  "covered auto":

1. Any vehicle shown in the declarations
2. a.  Any newly acquired vehicle, whether operational or not, on the date you become the owner, subject to conditions.

Skip down a few lines in is section, and the definition of a covered auto states the following:

"is not used for delivery or transportation of goods and materials unless such use is:
…incidental to your business of installing, maintaining or repairing furnishings or equipment; or for farming or ranching."

With this personal auto policy, even if the policy is rated for business use, it only covers incidental business use.   As a result, the definition covered auto creates an exclusion for lots of occupations like realtors, lawyers, salesmen, trade contractors like plumbers and electricians.  All because of one word, "Incidental".

Dictionary definition of "incidental".
In`cin*den"tal, a. Happening, as an occasional event, without regularity; coming without design; casual; accidental; hence, not of prime concern ; 

Did you get that one?  What does your auto policy say?  Does your insurance policy have a word like this? 

In this case,  if you use your car or pickup every day, you may consider a commercial auto policy.  Now for the person that works in a call center that sells scented candles on the weekend, you may be able to get by with incidental business use.  If you're a full time realtor, lawyer, consultant or counselor, plumber, electrician and especially a delivery driver, then you probably need a commercial auto policy.

I think you get my point.  Instead of a personal insurance policy, you need a commercial auto policy.

The first step is or remain calm and contact an insurance agent that understands personal and commercial insurance clients.  Unfortunately, your call center agent will probably fall short .  So, an experienced independent agent is probably your best bet.

So , if you no longer fit into the incidental category, grab you policy and insurance declarations pages and call an independent insurance agent.  That way, you and your business  can get increased insurance coverage with broader protection, and usually at comparable prices.  Besides, your tax advisor may find another write off as well.  Who knows?

When was the last time you read your auto policy?  We haven't gotten to the exclusions yet.  What are your thoughts?  I'd love to hear from you.