What does car insurance cover?

You ask. We explain.

“Do you have a car you can drive?”

As your new employer asked the question, the answer seemed so simple. You figured you’d deliver a few sub sandwiches. Courier some important deliveries across town. Pick up some part-time work providing limousine services.

But, then the follow-up questions came to mind: What does my car insurance cover? Do I need commercial car insurance?

These are important questions to ask when considering whether your car insurance will cover you when you are driving for work. Many insurance companies may not cover you if you are in an accident while using your vehicle for business. In fact, driving others as a volunteer may fall into the same insurance coverage gap. That’s why it’s important to understand what your insurance policy covers.

Do I need commercial auto insurance?

Not all business-related activities require commercial auto insurance. But, it’s a fine line. Some insurance companies will provide coverage if you use your vehicle for business, but you don’t make money directly from driving it. One example: If you drive to appointments to sell a product, your personal auto insurance may provide coverage. Check with your insurance company to be sure.

By contrast, if you make deliveries or transport passengers for pay, many insurance companies will not cover you for those activities because you are making money while driving. This can be true whether you are delivering sub sandwiches or providing taxi-type, ride-share services for a company like Uber® or Lyft®. In each of these cases, you may need to get a commercial auto insurance policy. Review your insurance policy for details.

This may even be true if you are volunteering. For example, perhaps you volunteered to drive students to a field trip. Or, maybe you’ve volunteered to take seniors to medical appointments. In cases like this, some insurance companies will see this volunteerism as work.  Again, check in with your company before you hit the road.

What happens if I don’t have insurance?

Because it may be costly to purchase commercial insurance coverage, some drivers may be tempted not to mention they are using their car for business when filling out an insurance application. Though this may save you money, it also puts you at great financial risk in the event of an accident. With many insurance companies, if you have an accident while using your car for business, you may need to pay for injuries to another person or damage to property out of your own pocket.

Whether you use your car for work every day or only a few times a year, it’s important to understand what car insurance covers. Ask your insurance agent whether your car insurance policy will cover you in the event of an accident. That answer represents an important first step in making sure your auto insurance policy covers you, however you use your car.