It seems like no big deal. You decide to take a part-time job delivering pizzas, and you’ve got to use your personal car for work. You’ve got car insurance that exceeds California’s legal liability minimums, so everything should be fine, right? What’s the worst that can happen?
If you get into an accident, your insurance company can deny your claim altogether — leaving you on the hook financially for any damage and injuries that occurred!
Using your personal car for work is a tricky situation. Even if you don’t use it all the time, big problems can arise if you get into an accident. Unfortunately, though, most drivers don’t know that. They assume that because they’ve got insurance, they’ll be covered if anything goes wrong.
Here’s why that’s not necessarily true…
Using your personal car for work — aside from actually commuting to and from the office every day — opens your insurance company up to a whole lot more risk. After all, as a private citizen, you probably don’t drive all that much. On a daily basis, you may run a few errands, take the kids to soccer practice, and meet a friend for coffee — none of which is all that uncommon or excessively risky. But if you’re also using your car to deliver pizzas, haul tools to your job site, or to run to the grocery store to pick up a few things for your restaurant, there’s a higher risk that you’re going to get into an accident simply because you’re on the road more often. And guess what? No insurance company is going to assume more risk without making you pay for it!
Unfortunately, there’s not a one-size-fits-all standard that insurance companies use to explain when you’re covered on the clock and when you’re not. Some companies will cover you if you’re using your personal car for work, as long as you aren’t directly profiting from the driving you’re doing. For example, if you’re a salesman who has to drive across town to pitch a product to a client, you may make some money — but it would be for the product, not for the driving you’re doing. But if you use your personal car as a taxi service — like so many people are doing with Uber and Lyft these days — you’re making money directly from the driving itself, so you wouldn’t be covered if something goes wrong.
Even if you’re not making ANY money, you could run into some insurance problems. For example, some policies may not cover you if you’re volunteering — like if you’ve volunteered to drive senior citizens to their doctors’ appointments, for example — because they consider volunteering a form of work.
Of course, you’ll need to read the fine print in your specific policy to see exactly what’s covered and what’s excluded. For example, you may see that a financial advisor who drives to various customers’ locations for meetings is covered, while a messenger using his personal car to make deliveries isn’t covered. (And if the fine print in your policy seems a little confusing, ask your agent to clarify it for you. After all, that’s what he’s here for!)
What if you don’t have coverage? What can you do to make sure you’re protected?
You’ve got a couple of options. Start by talking to your insurance agent about adding a special premium to your policy that covers your business use. That’s the easiest solution because you wouldn’t need a separate business policy. You’d simply pay your insurance company a little more every month in exchange for them assuming the additional risk that comes with you using your car on the clock.
If that won’t work, talk to your agent about getting a separate commercial auto insurance policy. Some insurance companies have strict rules about commercial policies, so it may be your only option. For example, if you use your car more than 50% of the time for business, you may be required to get a commercial policy. Commercial policies are written totally differently, and they’re designed to cover people who have business responsibilities like yours. Personal car insurance policies are written with the average citizen’s needs in mind. On the other hand, commercial car insurance policies are written to address the specific needs your business has.
No matter what your specific situation is, make sure your insurance agent has all of the details. Don’t hold anything back, even if it seems like the most trivial of details. Even if you only use your car for work once in a blue moon, you need to tell your agent about it. That way, he can get you a policy that meets all of your needs. More importantly, you won’t have to worry about your insurance company denying your claim later because you didn’t tell them the whole story in the beginning!
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