K.E.M. Strategic Partners LLC | 35 Village Road, Suite 100 | Middleton MA 01949 | P. 978-560-3404  |  F. 978.560.1623

 
 

Caring  |   Independent   |   Practical
Financial Services

Insurance Read Time: 3 min

When Does Your Personal Car Become a Commercial Vehicle?

For small business owners, the line between the personal and their business can be a bit hazy at times.  Yet, when it comes to a vehicle that may be used for personal and business-related reasons, it’s important to know how your auto insurer is expected to define what constitutes commercial use.

If you own a car and cover it under a personal auto insurance policy, an insurance company may not pay claims for any damages you incur if the insurance company deems that it was used as a commercial vehicle. For example, if your car is used for rideshare purposes, it may be considered a commercial vehicle when it’s in use.

Not being on the same page with your insurance carrier may result in financial losses, so it pays to ask yourself important questions about your vehicle’s use in order to select the right policy for your car.1

The key distinction for determining if a personally owned car may need commercial auto insurance coverage is whether the vehicle is used for any business-related purpose.

Defining Business-Related Purpose

Your auto may be defined as a commercial vehicle if you use your vehicle to:

  • pick up or deliver any goods,
  • provide a service for a fee,
  • travel to a remote work location or between work locations, or
  • visit client locations.

Additional conditions under which your car may be defined as a commercial vehicle include:

  • the owner named on the vehicle title is a business—incorporated, unincorporated or LLC,
  • the vehicle is rented or leased by others,
  • the vehicle is equipped with a snow plow, has an altered suspension system or other equipment or modification, or
  • the vehicle is driven by you or your employees for both business and personal use on a consistent basis.

If you use your personal vehicle for business reasons only occasionally, it may be covered under your personal policy, but you may need to indicate that on your application for auto insurance.

The wisest course of action is to describe how you expect to use your vehicle for personal and business purposes and let your insurance agent guide you to the most appropriate policy for your situation.

  1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

 

Related Content

Tax Freedom Day

Tax Freedom Day

Assess how many days you'll work to pay your federal tax liability.

Should You Invest in Exchange Traded Funds?

Should You Invest in Exchange Traded Funds?

There are thousands of ETFs available. Should you invest in them?

FIRE Retirement

FIRE Retirement

This short, informative article teaches the basics of the FIRE movement.

 

Have A Question About This Topic?







Thank you! Oops!

Making a Charitable Contribution

There are benefits and limitations when you decide to donate stock.

Your Emergency Fund: How Much Is Enough?

Having an emergency fund may help alleviate the stress and worry associated with a financial crisis.

Protection Against Uninsured Drivers

You’re hit by an uninsured driver. Now what? Are you protected against financial losses?

View all articles

Federal Income Tax

Use this calculator to estimate your income tax liability along with average and marginal tax rates.

Disability Income

This calculator estimates your chances of becoming disabled and your potential need for disability insurance.

Paying Off a Credit Card

Enter various payment options and determine how long it may take to pay off a credit card.

View all calculators

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

View all presentations

The Power of Compound Interest

Learn how to harness the power of compound interest for your investments.

The Cycle of Investing

Understanding the cycle of investing may help you avoid easy pitfalls.

Where Is the Market Headed?

We all know the stock market can be unpredictable. We all want to know, “What’s next for the financial markets?”

View all videos