When you own your own business and operate it from your home, it can be easy for the lines between businesses and personal to cross and to confuse how you handle certain aspects of your operation. And with all the different IRS guidelines and home business ordinances, it is definitely easy to become confused about what is business-related within your humble abode and what is personal.
Personal Auto Insurance: The Basics
Personal auto insurance is not so much a product chosen based on the ownership of the vehicle in question as it is a product chosen based on the use of the vehicle being covered. When you talk about personal auto insurance, you are talking about a policy that covers the expenses and liabilities that arise from an accident that occurs when a vehicle is being operated for personal purposes. This could mean that it was going to or from the grocery store, dance recitals, the library and all manner of personal errands.
Personal coverage includes all the basic options you are used to, like collision, bodily injury liability, personal property liability, comprehensive and more. When you have personal auto insurance, you may be asked to provide information about where you work, what you do for a living, and how often you drive each week, but your home business has no bearing on your rates other than it may reduce some of your risk since you drive less and, therefore, create a lower premium for you.
Where Commercial Auto Insurance Fits
We now know that personal auto insurance refers not to the ownership of the vehicle, but to the usage of the vehicle. As a home based business owner, you may be more likely to use your vehicle for business purposes than an employee at a regular 9 to 5. Why? Well, unless you order all your office supplies online and have them delivered, you almost definitely use your vehicle for business purposes. In addition, if you need to pick up a client or client property, pick up stock, shop for items to resell, travel to meetings or drive to a coffee shop to work for the day, your travel may be considered business-related in the insurance company’s eyes.
No matter how small the errand is or how little time it takes you to run each week, if you use your vehicle for any business purpose, and an accident occurs while you are out, your insurance company may deny the claim if you have nothing more than personal auto insurance. From their point of view, you have asked them to insure your vehicle based on a certain kind of usage-personal. Adding in business usage changes the insurance contract because it takes away their ability to accurately assess your risk based on your actual exposure.
Commercial auto insurance offers many of the same coverage options as personal insurance, but it is appropriate for the commercial or business use of your vehicle. There are even some ways to design a policy so that it can cover multiple drivers and multiple purposes, so you can get personal and commercial coverage that is adequate for your actual usage, all in one policy.
Like personal insurance, commercial auto insurance offers you the opportunity to choose deductibles and limits that create premiums you can afford. Be sure to watch your deductibles-these must be paid out for every accident and can become financially burdensome if they are too high. Additionally, low limits may create inexpensive premiums but they also expose you to much more financial risk than you may be reasonable able to take on.
If you are a home based business owner, it’s a good idea to take an objective look at your driving habits. When you do, you might be surprised at first how often you utilize your personal vehicle for business errands. But being surprised before you have an accident is a good thing, because it gives you the time you need to get the right insurance coverage to protect your business, your family, and your financial future.