7/13/2018 By Agent Ken CobbBy Agent Ken Cobb
Many people use their own vehicle to transport customers in a variety of situations. The most common these days is certainly Uber and Lyft, but there are many other scenarios where this occurs. Will your personal auto policy cover transportation of clients, or will you need some kind of commercial insurance coverage?
Most personal auto policies exclude coverage while you are a Uber or Lyft driver (with some policies offering an option purchase partial coverage for this activity). But what about all the other situations in which a person might transport a client in their vehicle?
Usually the big issue is whether or not you are being compensated for the transportation of your client. If you in a line of work that has nothing to do with human transportation and give a client a ride as an incidental favor, you are probably fine. However, if a primary part of your job is the transportation of clients, your personal auto policy likely isn’t covering you or your vehicle during these trips.
Coverage may be less black and white when your primary job is not transporting customers but you find yourself sometimes doing so, if you are “on the clock” and/or receiving mileage reimbursement for the trips. Whether this is covered may depend on how your personal auto policy is worded; some policies might clearly exclude this, while others might be a little too vague to be sure.
Some people assume that they don’t need to worry about their own policy coverage when transporting clients, because their employer is covering customer during the ride. But even if that is the case, if you are transporting a client in your own car and cause an accident that totals vehicle and injures a driver in another car, your auto insurance policy could potentially deny the entire claim, not paying for your vehicle and not defending you when you are sued by the other driver – all because the purpose of your trip was giving a customer a ride. It is unlikely that your employer’s insurance is protecting you against all of these aspects.
And it’s not just an issue of your personal auto coverage “turning off” during client transportation trips. If you use your vehicle this way, you might not be eligible for the policy at all. Personal auto carriers want to know how you use your vehicle. If you use it for business, then they will want to know exactly what you do. If they find that you transport customers, it’s quite likely that they will decline to insure you at all.
If you are considering using your vehicle to transport customers, you should first carefully read your insurance policy. Every personal auto policy will feature some kind of public or client transportation exclusion, and this exclusion may show up in several different parts of the policy. Find each instance of this exclusion and carefully review the wording.
Next, call your insurance agent to get their input on whether your activity is covered and also whether you are still eligible for the type of policy that you are carrying. In many cases, your agent may suggest that you replace your current personal auto policy with a commercial auto policy to avoid the restrictions that personal auto policies place on client transportation.
About the Author
Agent Ken Cobb
Ken is the owner and principal agent at Pine Country Insurance in Bemidji. Active in the insurance industry since 2000,Ken uses his years of personal insurance knowledge and experience to assist clients in customizing insurance coverage to fit their needs. Ken considers himself a "farmer" rather than a "hunter"; rather than focusing on writing a lot of new policies as quickly as possible, he works on cultivating long term relationships based on trust with his clients. When writing new policies and meeting for annual reviews, Ken spends time with his clients explaining and helping them understand their insurance, and he is also pleased to share his knowledge with his blogging audience as well.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.