Today, I want to talk about a former client of mine, a small business owner. He had a construction company, and while he was going from one job to the next, he was involved in an automobile accident. 

A Nasty Surprise

He was shocked when his automobile insurance carrier refused to cover the loss. They based it on the fact that he should have had a commercial as opposed to an ordinary automobile insurance policy. 

There are many small businesses out there, and I believe that small business owners are the backbone of our country. So I thought this information might be helpful. 

Commercial Vs. Ordinary Insurance Policy

So how do you determine whether you need a commercial auto insurance policy versus an ordinary one? It’s pretty much determined by whether or not you’re involved in a particular type of work and how much you drive. 

Insurance companies have what’s called “underwriters and actuaries”. They assess risk, and the amount of risk they’re undertaking will be reflected in the premium. So, for example, the more risk they undertake, the higher the premium will be. 

And what is one of the biggest factors in determining risk? It’s how many miles you drive in a year. That’s because the more you’re on the road, the greater the chance that you might be involved in an accident for which you could be held to be at fault. 

When Do You Need A Commercial Policy?

So if you’re a small business owner, consider how much you drive in a given year. If you’re going back and forth across the lake or drive to Baton Rouge a lot, for example, and you put 15,000 or 20,000 miles on your car, then you should probably have a commercial policy. 

In addition, there are some specific exclusions in automobile insurance policies that I’ve read over the years and they pertain mostly to the type of career you have. Let’s say you’re in a livery service — meaning that you drive a limousine or a taxi cab or a rideshare service like Uber or Lift. 

In that case you need to have a commercial policy because you’re going to be on the road a lot because that’s how you’re making your money. And the more you’re on the road and the greater your chance of being involved in an accident, the greater the possibility that you need to have a commercial policy.

I hope this information is helpful to you. If you have any questions about this, please give me a call or email me at [email protected].