When personal auto insurance becomes commercial – The Grey Area

BY ANDREW STEWART

Today’s topic is about how we will take look at the similarities and differences between commercial auto and personal auto insurance coverage, and how to know which type of policy to have for your situation. The differences between commercial and personal auto insurance are many, but the main distinctions lie in extent and purpose of coverage.

At a high level, commercial and personal car insurance policies do the same thing, they provide you with protection against common threats and risks. They offer financial protection and provide you with resources to recover if you need to file an insurance claim. Personal insurance car coverage is catered to things that are personal. Commercial car insurance policies are customized to offer coverage for all types of businesses and business vehicle functions. If you own a fleet of vehicles or run a business that involves using vehicles for business activities, it’s pretty clear you need a commercial auto policy. But if you were using your personal vehicle for business purposes and were involved in a car accident, your claim could be denied. Car insurance companies consider commercial auto insurance and personal car insurance to be two very different types of policies due to the differences in liability and risk.

Where things can become confusing is some personal auto insurance policies can cover some business use. Knowing whether or not you need commercial auto insurance coverage or personal car insurance comes down to why you are driving. Take for example Uber and other rideshare services. There is no question they have changed the way people hail a cab. But they have also had a significant impact on car insurance. Until 2016 personal auto insurance policies excluded the risk of “Carrying Passengers for Hire.” If you said “ridesharing” ten years ago, most people would have likely looked at you like you were crazy. If you drive for Uber in Ontario or Alberta, you’re automatically covered by a basic commercial car insurance policy through Intact Financial Corp. This coverage is provided by Uber, which means Uber pays the premium. The Intact Insurance covers rideshare drivers from the moment they log into the app until the moment a rider exits their vehicle.

Business use of personal vehicle insurance – are you at risk?
If you use your personal vehicle for business use, such as making deliveries, driving to meet clients, transporting goods, etc. you need to have a business car insurance policy in place. If you were to get into an accident while using your personal vehicle for business, you risk having your claim denied and not having coverage. If you plan to use your personal vehicle for work, contact your insurer and let them know you use your vehicle for business. They can help you choose an insurance policy endorsement, or add on coverage, or help you choose the appropriate business car insurance coverage to ensure you are covered when using your personal car for work.

A claim denied
Imagine a pizza delivery guy, a realtor, and an independent landscaping contractor are all involved in a three-car accident. One by one, they pull out their phones to call their insurance companies. Their claims representatives ask them to detail the accident and, upon hearing the answer, each representative murmurs “sorry, your personal car insurance won’t cover this.”

Why?

• The pizza deliverer’s claim is denied because he transports commercial goods.
• The realtor because she transports people as part of her business.
• The landscaper because his truck features ladder racks and permanent toolboxes he uses for work.

So, depending on the nature of your business and your car insurance company’s policies, you might need to buy commercial car insurance or have the proper endorsement.