Laura Berry is a former State Farm insurance producer and insurance expert.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 18, 2021

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Here's what you need to know...

  • If you are a business owner, you will be required under the laws of your state to carry some amount of coverage for the vehicles used for your business
  • The required amount of insurance for a typical business vehicle is liability insurance for bodily injury and property damage
  • The most common insurance contract for coverage for a business vehicle is a Business Auto Coverage Form (BACF)
  • If you or your employees have personal auto liability coverage, it will likely not provide protection if the vehicle in question is used primarily for a business purpose
  • When shopping around for different business vehicle insurance options, be sure to also speak with your insurance agent about ways to minimize the risk of accidents for vehicles used in your business

If you are a business owner that operates a vehicle for part of your business, then you should definitely look into a business auto insurance policy. Even if you have a general liability insurance policy for your business, this may not cover your operation of a vehicle.

It is probably not sufficient to rely on your personal auto liability coverage if the primary use of your vehicle is for a business purpose.

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What is a business auto policy?

Business vehicle insurance is a separate policy from the business owner’s policy that you may already have.

As opposed to a business vehicle insurance policy, a business owner’s policy typically includes:

  • property insurance
  • liability insurance
  • business interruption insurance for small to mid-sized businesses.

Just as you are required to maintain basic auto liability insurance for vehicles that you drive in your personal use under the laws of your state, the same applies for vehicles used for business purposes.

The required auto insurance coverage for vehicles used in business operations is typically liability insurance for bodily injury and property damage in the event of a car accident involving your business vehicle.

In addition to this required coverage, you may also be required to carry uninsured or underinsured motorists coverage and/or medical payments coverage (also known as Personal Injury Protection (PIP)).

When you are considering what is the right amount of coverage for your business, you may also want to think about adding physical damage coverage for any cars or trucks that your business owns or leases.

In general, the recommended amount of auto insurance coverage for your business vehicle is about $500,000. This is because the amount of damage caused in a typical car accident is usually well above whatever the state required minimums are for auto liability insurance.

This recommended minimum coverage amount applies regardless of how small your business may be because a single accident can result in significant damage alone.

When shopping around for different auto insurance quotes for your business be sure to ask about which discounts you may be eligible for.

If you use the same insurance company that you have for your general business owner’s policy you may be able to get a multi-policy discount on your rate for business vehicle insurance.

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Will my personal auto insurance policy cover me if I am in an accident while driving for work?

If you have a personal auto insurance policy, do not make the mistake of thinking that you are automatically covered for the use of your car for business purposes. This is especially true if the vehicle you are driving is used primarily for business purposes.

In addition, the coverage limits for your personal auto insurance may not be high enough in the event of an accident involving a work vehicle.

When you are applying for auto insurance coverage, it is important to be completely honest on the application. If the insurance company finds out that the information you provided was not accurate, they may choose to cancel or not renew your auto insurance policy.

This could also affect your ability to find reasonable auto insurance rates in the future.

If you have a vehicle that is titled and registered under the name of your business rather than under your personal name, your auto insurance company may not allow the insurance coverage for that vehicle to be under your name.

You should talk to your insurance agent specifically if you are interested in options for combining coverages or to understand how owning a vehicle for business will affect your personal auto insurance policy.

At that time, you can also ask about any ways that you could reduce your auto insurance premiums.

Minimizing Risks for Your Business Vehicles

While having the proper auto insurance coverage for a business vehicle can give you a certain peace of mind, it is also a good idea to try to reduce or manage your risk as a business owner in owning a vehicle for your business.

One of the best ways to do this is to invest some time in establishing protocols for employee use of vehicles.

Some of the absolute rules that you should have a written company policy regarding include following all traffic laws, always wearing a seatbelt, prohibiting cell phone use while driving and having zero tolerance for any impaired driving.

It may be a good idea to have employees sign off that they have read and understand these policies before allowing them to drive for company purposes or operate a company vehicle.

In addition, it may also be prudent for your company to have a policy in place that limits the non-business use of vehicles.

If you limit the use of vehicles for only work-related travel, this can help prevent headaches down the line regarding coverage disputes if one of your employees is injured in an accident in a work vehicle.

Another good thing to have in place before allowing employees to use business vehicles is a procedure for responding to a potential accident.

Employees should know the exact process they should go through for informing the police, supervisor and insurance company about the auto accident. This will make the notification process for any claims in the future much more streamlined.

If you or your employees operate vehicles in the course of your business operations, you should look into whether you are carrying the required business vehicle insurance.

Even if you already have a general business owner’s insurance policy, business vehicle insurance is still a necessity in the event that someone is involved in an auto accident involving one of your business vehicles.

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