Know the Rules for Business Use vs. Commercial Use vs. Pleasure Use Insurance?

Up for a challenge? Let's test your understanding of different requirements relevant to personal, business, and commercial vehicle insurance. The questions and answers are provided by CarData, which handles the process of verifying that employees have business use coverage. 

Question: Does your personal car insurance policy cover the vehicle you own if you use it regularly to do your job?

Answer: Employees who use their personal vehicle for business on a regular and recurring basis need to have a "business use" designation on their vehicle insurance policy. Typically, business use means that the driver owns the car and depends on their vehicle to visit prospects or customers in multiple locations.

Insurance companies will add a business use endorsement to the driver's personal auto insurance policy for an additional premium, it's an expense worth taking on. A business use designation reduces risk for the company and the employee. Drivers should be compensated for the additional premium through their vehicle reimbursement program. On a CarData FAVR program insurance costs, including the business use premium, fall under the fixed reimbursement category.

Question: Does the business use designation cover vehicles used to tow a trailer, transport people, or have the company name on it?

Answer: When a vehicle is used to transport goods or people for a fee, or if you use your vehicle to perform a service, a Commercial use auto insurance policy may be required, which is higher than a business use premium. Commercial use designation is associated with telephone company, furnace repair or plumbing franchise vans, trucks and taxis.

Also, if the vehicle is branded with the company name, that is a good way to being thinking the vehicle may need to be covered by a commercial use policy. Ride sharing services have added a twist to the situation. People who use their personal vehicle to "drive-for-hire" need to check with their insurance company to make sure they are adequately protected.

Question: Does a driver need business or commercial use coverage if they commute each day for work?

Answer: Employees who use their vehicle to commute and for "pleasure use" do not require a business sse designation.