As a business owner, trying to decide if you need a commercial vehicle for work purposes or if a personal vehicle will do, is not as easy as you might imagine. While one vehicle is roughly as good as the next from a practical standpoint, there are significant differences between these classifications that could cause problems in the course of business use of a vehicle, particularly if an accident occurs. Before you decide which option is right for you and your business, here are a few things you should know about the differences between personal and commercial vehicles.
Auto Insurance Coverage
All things being equal, the main difference you'll encounter when it comes to personal versus business vehicles is how they are covered by insurance. By and large, you should expect that a vehicle will not be covered by your personal auto insurance if an accident or damage occurs in the course of business use.
If the vehicle is used for commuting, for example, that wouldn't count as business use since you're not on the clock. If you're making deliveries to customers during work hours, this clearly falls under business use, which isn't covered by typical, personal auto insurance policies. There are also gray areas, such as transporting tools or business supplies as part of your daily commute, which could be argued to be business use.
The point is, business use of a vehicle generally requires commercial auto insurance to guarantee coverage in the event of an accident. Whether you're driving or you have employees driving for business purposes, you want to make sure that you have a suitable insurance policy in place to cover damage, medical bills, and legal costs. Simply put: It's your responsibility as an employer.
Who's Using the Vehicle
Does it make a difference who owns the vehicle and who's driving? As a matter of fact, it does. If you provide a vehicle for employees to use in the course of their work, you are required to obtain commercial auto insurance in most states. This will cover activities like driving clients or paid passengers, transporting goods or hauling work-related equipment, performing paid services, and so on.
What if an employee uses their own vehicle for work purposes? In this case, the employee may be responsible for upgrading their personal policy to include commercial use. As an employer, you may want to cover this expense for the simple reason that a failure to obtain appropriate coverage could lead to accident expenses falling back on you, if you're deemed responsible.
The best course of action when it comes to commercial vehicles is to obtain commercial coverage. As a business owner, you are obligated to do so in most states, and it's the best way to protect yourself from personal liability. To help stem potentially-costly vehicle repairs, you should also consider a vehicle warranty, such as a Mopar Vehicle Warranty or a Ford Extended Service Plan.