How Using Your Own Car for Business Travel Can Affect Your Insurance

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How Using Your Own Car for Business Travel Can Affect Your Insurance

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Business owners are always on the lookout for ways to cut expenses. Using their personal vehicles for business purposes, or allowing employees to do so, may be one of those ways. While this can help save money and provide tax benefits, there are some insurance issues of which business owners should be aware.

Possible issues when using a personal vehicle for business

The practice of having employees use their personal vehicles on company time can be complicated to understand at times.

* An employee’s personal auto insurance policy will normally provide protection to that employee even if they are using their vehicle for business purposes. There are some exceptions to this, however, including when carrying people or goods for a fee.

This includes package delivery services, such as pizza and flower delivery, but would not include visiting customers, picking up supplies and attending seminars.

* Coverage would not be endangered by sharing mileage reimbursement or other expenses.

* The employee should be sure to check with their insurance agent to make clear what will be covered under certain situations. Explain to the agent how the car will be used. Full disclosure will help to eliminate coverage problems later if a claim is necessary.

*While most insurance companies will not raise premiums for a car that is also used on company time, salespeople using their personal vehicle for work may find theirs increased.

* The company will be required to insure any vehicles that it owns and allows employees to use, including the owner. A business auto policy may still be necessary for the company even if employees are using their own vehicles.

* The business policy is designed to protect the company, not the employee, in the event of an accident. Business owners are responsible for the actions of their employees, so an insurance policy for non-owned or hired cars will be necessary when employees drive their vehicles on company time.

The business policy will protect the company from a lawsuit, but will not extend that coverage to the employee. Most insurers will allow employees to be added to a policy as “additional insured” for a marginal extra premium.

* Any accident caused by an employee while using their own vehicle will first be covered by that person’s insurance since that is the primary policy. If that policy doesn’t provide enough coverage, then the business auto policy will kick in for the company.

* A company may offer to provide employees with a larger mileage reimbursement to help offset their risks for using their own vehicle for business errands. Also, the company should provide a written explanation to employees what can be expected if an incident occurs.

Insurance issues can be complicated, and this certainly applies to using a personal vehicle for business travel. It may not seem fair, but this does put a certain amount of risk on the owner of the car. The business should cover itself, but it should also consider adding employees for the risk and clearly outlining the policy.

This is a guest post from Claire Atkinson, who writes for

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