Should You purchase a Business/Commercial Auto Insurance Policy... or a Personal Auto Insurance Policy?

Serving Denver, Golden, Lakewood, Littleton, Arvada, Morrison, Evergreen Highlands Ranch and Summit County

In Colorado, coverage on a commercial auto insurance policy is similar to a personal lines auto policy. Most clients understand the need to purchase a personal auto insurance policy, but they are not sure if they need to purchase commercial auto policy.

There are 3 factors to consider in determining which policy to buy

• Ownership of the vehicle and
• Use of the vehicle and
• Type and weight of the vehicle

In general, if the vehicle is titled in the name of the company, you will need to purchase a commercial auto policy as personal lines carriers will not issue a personal auto policy for a ‘company owned’ vehicle. If the vehicle is used for the business operations, you will also need to purchase commercial insurance. The type and weight of the vehicle will dictate which policy to purchase. If a vehicle is heavy or has attached equipment such as a snowplow, crane or hoist you will need to purchase commercial insurance.

Will A Carrier Allow Commercial Use on a Personal Lines Auto Insurance Policy?

Some personal lines carriers will allow you to endorse (add) a ‘business use’ endorsement onto a personal lines policy, but only for limited ‘business’ uses such as a realtor or salesperson. Personal lines carriers want ‘personal’ use on the vehicles they insure and if you read their insurance contract, most will ‘exclude’ coverage for business and/or commercial or business use.

Benefits of Purchasing a Commercial Auto Insurance Policy

Higher Liability Limits Are Available

Commercial auto insurance policies also offer higher limits of liability insurance. In Colorado, almost all commercial auto insurance carriers offer $1 million in liability coverage, whereas the most liability coverage you can get on a personal lines auto policy is $500,000.  Carrying higher liability limits will help protect the business equity from being forfeited in a liability lawsuit.

Make Sure Your Claim is Covered

If you or your employees are found to be 'at fault' in an accident you want your claim to be covered by your insurance policy.... right? Well make sure you've purchased the correct policy type in order to ensure your claim is paid. Claims adjusters have the right to ask to see the registration card and validate the vehicle ownership. If the vehicle is registered a business, but the insurance policy is a 'personal lines' policy, you most likely will not have coverage. Don't let this happen to you!

For more information and help with choosing the correct policy type to place on the vehicles used in your business Email Us or call us at 303-960-5290.
One of our Colorado licensed insurance agents can discuss your needs and determine the best policy type for you or your commercial business!