Does My Auto Insurance Cover Business Use of a Personal Vehicle?

Whether you own a business or work for a company that keeps you on the go, now is the time to think about car insurance for the business use of a personal vehicle. Don’t wait until you get in an accident to find out if you’re covered. 

Your personal auto insurance policy will likely not cover your vehicle while you’re doing something related to work. That’s because people who drive all over for work are on the road more and therefore pose a greater risk to insure than people who only drive to and from one worksite every day. Because of the increased risk, vehicles used for business purposes cost more to insure. 

“Business use” for car insurance includes all sorts of errands you might run for your business or the company you work for, including but not limited to:

If you only run these sorts of errands in your personal vehicle every once in a while – we’re talking maybe a few times a year – you probably don’t need to worry about extra insurance coverage. But if you use your car for work regularly, you’ll want to make sure your employer has you covered in case your own insurance refuses to cover damages if you get in an accident while working. 

It’s also important that you disclose any business uses of your vehicle to your personal auto insurance company. If you don’t, your insurer could accuse you of misrepresentation and drop you. 

There’s a certain type of insurance policy that covers the use of a personal vehicle for business purposes, and that policy is called hired and non-owned auto insurance (HNOA for short). 

If you’re self-employed and you use your car for business errands, it’s your job to take out an HNOA policy on your own vehicle. But if you work for someone else, HNOA insurance is the responsibility of the company you work for since you’re technically a business liability while you’re acting as an employee. 

HNOA insurance provides liability coverage in case a business owner or employee gets in an accident while driving a personal vehicle, a rental car, or a leased vehicle for work purposes. This type of insurance isn’t comprehensive. It only covers:

HNOA does not cover damage to the vehicle the employee is driving or medical expenses if the employee is hurt in an accident. You would need a separate personal car insurance policy (if you’re an individual employee) or business car insurance policy (if you’re a business owner) to fill these gaps in coverage. 

The difference between personal and commercial auto insurance is pretty simple. 

Personal auto insurance is for vehicles owned by individuals and used for general life purposes, such as commuting to work, picking kids up from school, or going shopping. 

Commercial auto insurance is for vehicles owned by a company, such as company cars loaned out to employees or trucks used to transport equipment to job sites. 

Commercial or business car insurance never covers personally owned vehicles, and personal car insurance never covers company-owned vehicles. Neither covers employees using personal vehicles for work. That’s why HNOA is necessary to fill that gap. 

As a business owner who owns company vehicles and lets employees use their personal vehicles for work tasks, you’ll need both a commercial auto insurance policy and HNOA insurance.

As an employee who uses your own car for work, you’ll need to take out a personal auto policy and make sure your employer has HNOA insurance before you agree to use your car for work. HNOA doesn’t take the place of personal or commercial auto insurance – it works in tandem with them. 

Yes. If you own your own business and use the same vehicle for personal use and as a primary player in your business, HNOA coverage probably isn’t enough for you. Since you, the company owner, own the vehicle, you’ll need to take out a full-on commercial auto insurance policy. 

However, commercial auto insurance still won’t cover you while you’re using the vehicle for your personal life. In this case, you’ll need personal auto insurance and commercial auto insurance on the same vehicle. 

If your personal auto insurance policy includes a business use exclusion (and it probably does), that means business uses are excluded from coverage. Simply put, your insurance isn’t going to cover you if you get in an accident while using your car for business. 

In insurance, an endorsement is an add-on to your policy that increases your coverage in a specific area. So, motor insurance with a business use endorsement adds certain business uses to your personal auto insurance coverage. Talk to your insurer to find out if a business use endorsement is an option for you based on your policy and the types of errands you use your vehicle for. 

Yes, you can use your personal vehicle for business, but make sure you have the right insurance first. Before you start using your car for work, check with your insurer on whether or not your personal auto policy will cover you. If you find out it won’t, either make sure your employer has HNOA insurance or take out an individual commercial auto policy on your vehicle, depending on your situation. 

Are you in the market for new personal or business car insurance? Clovered is an independent insurance agency that can help you shop. We’ll match you with a policy from one of our top-notch providers, and we’ll do it all online.