Why Do I Need Commercial Auto Insurance if I Work at Home?

The global pandemic has forced many businesses to operate remotely, leading one to think that commercial auto insurance isn’t necessary. If you run a home-based company that requires rare occasions of business-related travel, it’s understandable you would make this assumption.

However, you might find it surprising that you probably still need commercial auto insurance, even if you’re relying on a drop-ship business model or only conducting client meetings online.

What Makes Commercial Auto Insurance So Important?

You probably already know that commercial vehicle coverage protects you, your passengers, the business goods and tools being transported, and those on the road around you. So how does this figure into remote work? Let’s look at a prime example:

Let’s say you operate a writing business and are on your way to a conference to network and promote your services. This is one of those rare occasions where you are actually traveling for business, but you figure no big deal. Sure enough, you’re about thirty miles from your destination, and another vehicle sideswipes you when changing lanes. The subsequent crash totals your car, your work laptop is irreparably damaged, and ruins the three boxes filled with recent printings of your book. We won’t even discuss the injuries you likely covered in this scenario.

Will your personal car insurance policy cover the replacement of your damaged commercial property? Probably not. Your private coverage is meant for activities you do during your personal time, not your work life. A commercial policy is what you need to ensure your damaged computer, vehicle, and books are fixed/replaced.

How Commercial Auto Insurance Protects Your Business

When you purchase a commercial policy for your vehicle(s), it can protect your business and property in several ways:

  • Covers losses sustained by you and other parties involved in the accident. This includes the vehicle, personal, and company property. You’re covered even if you were using your vehicle for personal reasons when the accident occurred.
  • It’s not just damaged vehicle contents that commercial auto insurance protects. For example, if your vehicle is broken into and products, tools, or equipment gets stolen, this loss may be covered too.
  • Policies that include property and collision coverage extend additional protections in situations where a fire, falling trees, hail, and other perils damage your vehicles.

As you can see, while it’s nice to assume a short trip to meet a client couldn’t go wrong, you’ll get better peace of mind knowing you are properly insured against these incidents. I

Commercial Auto Policy Options for Remote Workers

With nearly 6 million car accidents occurring across the United States every year, the true cost of commercial auto insurance to keep in mind isn’t the cost of premiums but the potential savings on claim payouts. Without adequate coverage, a car accident involving you and another party could easily result in over $200,000 in damages when you account for injuries, car repairs, property damages, and associated legal fees defending your good name.

But, it’s understandable that you may not want a commercial policy just to drive a handful of times each year for business matters. Instead, you might be able to find an insurer that offers a pay-per-mile coverage option. These policies typically require a base rate payment plus a driven mileage fee. 

The only issue is if you don’t plan to stay working from home for very long. If you plan to expand into a traditional workspace or facility, it makes more sense to go ahead and invest in a standard commercial auto insurance policy.

If I’m Not Driving at All, Why Not Cancel My Policy?

If you absolutely don’t drive for business whatsoever, not even to the post office or the bank to make deposits, you may consider canceling your commercial policy altogether. The only issue with this line of thought is that many states require registered cars to carry insurance.

For home business owners that live in a state that doesn’t have this requirement, you still need to consider what could happen to your car. If in the driveway, it could take storm damage. Even parked in the garage risks it being totaled by a house fire. So, it still makes sense to insure your vehicle and not worry about being liable for the entire repair or replacement cost.

The Takeaway

The bottom line is that if you work from home, you will likely need to use your vehicle at some point to conduct business or run errands related to your operations. In addition, emergencies can crop up out of nowhere and require you to hurry to a local print shop or shipping store to send out last-minute product replacements.

What happens if, in your rush to the post office, you rear-end the car in front of you at a stop light? Unfortunately, your personal insurance isn’t designed to cover business-related activities. This means you could be out-of-pocket for all the incurred damages for yourself and the other driver. 

You also risk hurting your credit with insurers if you have a history of uninsured periods (coverage gaps). These instances can lead to higher premiums the next time you purchase a policy. So instead, avoid this hassle and buy commercial auto coverage for your business.

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