Know the Rules for Business Use vs. Commercial Use vs. Pleasure Use Insurance
Up for a challenge? Let’s test your understanding of different requirements relevant to personal, business, and commercial vehicle insurance.
Question: Does your personal car insurance policy cover the vehicle you own if you use it regularly to do your job?
Answer: Employees who use their personal vehicle for business on a regular and recurring basis need to have a “Business Use” designation on their vehicle insurance policy. Typically, Business Use means that the driver owns the car and depends on their vehicle to visit prospects or customers in multiple locations.
Insurance companies will add a Business Use endorsement to the driver’s personal auto insurance policy for an additional premium, It’s an expense worth taking on. A Business Use designation reduces risk for the company and the employee. Drivers should be compensated for the additional premium through their Vehicle Reimbursement Program. On a CarData FAVR program insurance costs, including the business use premium, fall under the fixed reimbursement category.
Question: Does the Business Use designation cover vehicles used to tow a trailer, transport people, or have the company name on it?
Answer: When a vehicle is used to transport goods or people for a fee, or if you use your vehicle to perform a service, a Commercial Use auto insurance policy may be required, which is higher than a Business Use premium. Commercial Use designation is associated with telephone company, furnace repair or plumbing franchise vans, trucks and taxis.
Also, if the vehicle is branded with the company name, that is a good way to begin thinking the vehicle may need to be covered by a Commercial Use policy . Ride sharing services have added a twist to the situation. People who use their personal vehicle to “drive-for-hire” need to check with their insurance company to make sure they are adequately protected.
Question: Does a driver need Business or Commercial Use coverage if they commute each day for work?
Answer: Employees who use their vehicle to commute and for “pleasure use” do not require a Business Use designation.
Question: Can CarData sort all this out for my company?
Answer:That is what CarData does every day for our customers. We have a dedicated business unit – our Special Services Division – that manages insurance protocols, working hand-in-hand with the Client Service Associate assigned to your account. You can learn more about out Dedicated Service Teams here.
CarData handles the process of verifying that each employee has Business Use coverage, and we complete a 12-point verification including the liability coverage’s the client wants their drivers to have. Furthermore, with a CarData Fixed And Variable Rate (FAVR) program, CarData will handle all the reimbursement details, including making sure that drivers are fairly compensated for the premiums they need.
We welcome the opportunity to discuss your VRP and how we could help you move to a plan customized for your needs now and going forward. Just let us know at firstname.lastname@example.org, 866-550-5188 or on our site!
About CarData Consultants:
CarData provides precision vehicle reimbursement programs for the mobile workforce. CarData services save money, reduce risk, and remove administration. CarData programs are compliant with the IRS and the CRA procedures.