Business Use and Your Car

As employers try to find ways to keep their businesses in the black, many are moving away from company cars and opting for employee vehicle stipends, gas cards, and other types of expense reimbursement plans to offer employees who use their vehicles in the course of their work. This is a great money saving feature for employers because they no longer have to worry about car payments, maintenance, and other financial pitfalls that come with owning a vehicle. They simply pay a little extra to the employee so that they use their own vehicle. The employer is no longer stuck with owning and caring for vehicles, and the employee gets a little perk like a gas card or a boost in pay to compensate for using their own vehicle. Although this can be a win-win for everyone involved, it is imperative that the employee notify their insurance carrier or agent of their change in vehicle usage.

Many insurance carriers classify vehicles according to how they are used. Pleasure use is for those people who use their vehicle for primarily personal reasons. They commute to work, go out to dinner at night, take a road trip, etc. These types of people do not typically drive anywhere for business-related reasons and their vehicles remain primarily immobile for most of the day.

People who use their vehicle during the course of business, such as driving to and from appointments, taking clients to meetings, driving to different job sites all day, etc. must use a different classification on their policy to ensure that their auto policy will cover them regardless of how their vehicle is being used.

The personal auto policy was designed for individuals who own vehicles for their own personal use to be able to insure them against damage to the vehicle as well as damage the driver may cause to other people or property. Commercial auto insurance is designed for vehicles that are owned by businesses and used for business purposes, such as a fleet of trucks owned by a corporation, or other vehicles owned in the name of a business which are used primarily for business purposes. The personal insurance policy’s business use classification is designed to bridge the gap between the two types of policies, providing coverage for an individual’s personal vehicle even when it is used to do business-related activities.

In Massachusetts, the definition of Business Use is classified as follows:

“The operator has been licensed at least six years and the automobile is used in the occupation, profession, or business of the insured. Going to or from the principal place of the occupation, profession or business of the insured is not considered business use.”

There are many professions where employees use their own vehicle to drive around during the course of their job. Primary examples include real estate agents, home healthcare workers or travelling nurses, tradesmen such as carpenters, electricians, etc. who use their own vehicles to drive to multiple jobs everyday

Do you use your vehicle in the course of business? Call your insurance carrier or agent to discuss whether or not you need to classify your vehicle as business use.