If you use your truck for your contracting business, you may assume your personal auto policy has you covered. This is a common and costly assumption. For most service-area contractors in Texas, a personal policy is not enough.
Personal vs. Commercial Auto Policies
A personal auto policy is designed to cover you for personal, non-business activities. This includes commuting to a single place of work. It is not designed for the risks of commercial activities, and nearly all personal policies contain an exclusion for business use. A commercial auto policy is designed to fill this gap.
The primary differences come down to a few key areas:
- Liability Limits: General contractors you work for will often require you to carry $1 million in liability coverage. Commercial auto policies are designed to offer these higher limits. Personal policies have much lower limits, which are not adequate for business liability.
- Vehicle Use: A personal policy covers your commute. A commercial policy covers driving between multiple job sites, hauling tools and materials, and transporting crew members.
- Covered Vehicles and Equipment: Commercial policies can cover work trucks, vans, and trailers. They can also be endorsed to cover the value of permanently attached equipment, like ladder racks or custom toolboxes.
- Covered Drivers: A commercial policy can cover all your employees who may drive a business vehicle, not just the family members listed on a personal policy.
Do You Need a Commercial Auto Policy?
If you are a plumber, electrician, HVAC technician, landscaper, painter, or any other contractor who drives a vehicle for business purposes, you need a commercial auto policy. The moment you are driving to a client's location, picking up materials for a job, or visiting a supply house, you are performing a commercial activity.
Imagine you are a painter from Katy driving into Houston for a job. You cause a minor fender-bender on I-10. If the other driver's insurance company or attorney finds out you were driving for a paid job, your personal insurer has grounds to deny the entire claim. You would then be personally responsible for the damages to both vehicles and any potential injuries.
Key Coverages to Consider
Beyond the basic liability, a good commercial auto policy should be tailored to your specific operation. Here are a few coverages that are essential for most contractors:
- Hired and Non-Owned Auto Liability: This is critical. If you send an employee to a supply house in their own car, or if you rent a truck for a large job, this coverage protects your business if they cause an accident. Without it, your business is exposed.
- Physical Damage: This is collision and comprehensive coverage for your own vehicles. It pays to repair or replace your truck or van if it is damaged, regardless of fault.
- Uninsured/Underinsured Motorist: Just like with a personal policy, this protects you if you are hit by a driver who has no insurance or not enough insurance to cover your damages. Given the number of uninsured drivers in Texas, this is not a coverage to skip.
- Permanently Attached Equipment: If you have a custom flatbed, tool storage system, or ladder rack, this ensures its value is included in the vehicle's coverage.
A vehicle accident is one of the most common and expensive claims a small business can face. Do not leave your business exposed by relying on the wrong policy. If you are unsure whether your current insurance is adequate, contact our office for a straightforward review of your policy.
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