If you do any commercial jobs, you will find that their insurance requirements often stipulate that you need owned, non-owned & hired*1 auto or ( “any” auto) coverage at $1,000,000 limits. This is because they have risk managers that put together their insurance requirements and those risk managers know that there are claims situations that cross over between general liability and auto liability – due to unloading your truck.*2

To have a business auto policy in the name of the company, the company needs to have an insurable interest in the truck or van. To create an insurable interest you need to either sell your truck to your company (in which case you go to the DMV and re-title the truck) OR you need to lease your truck/van to your company (We have a leased equipment form you can use).

If you lease your truck/van to your company – you, the individual, sign as the lessor and you, the member or officer of the company, sign as the lessee. The company needs to pay you something for the use of your truck/van and that is income, but not wages (income taxed but not Social Security or Medicare taxed). Then everything to do with that truck/van is an expense of the company – gas, maintenance, lease payments, insurance etc., even when you use it for non-business because it is on a policy in the name of the company. Then if you ever want to make that truck your own personal asset again – you just cancel the lease!

This does not apply to sole proprietors as they and their company are one and the same.

If you have an LLC or Inc and your truck/van is on a personal auto policy rated as business use and you cause an accident where there is bodily injury and the people sue your company – your business has no coverage under that policy – only you, the person, because you are the named insured.

If you have a business auto policy in the name of the company then both the company and you are covered for the loss. Lawyers always look for deep pockets!

*1 non-owned auto is your employees using their truck/van in your business and hired auto is when the job is too big for your truck to handle so you rent a truck for the job.

*2 claim example would be …if you took the ladder off your truck and swung it around and knocked over the 3 year old who lives there – auto liability claim. Another example is unloading a stack of tiles onto a dolly and wheeling them into the room you are re-doing – any bodily injury or property damage done along the way is an auto liability claim.

For more information on whether or not a Business Auto policy is right for your company Contact Us today!!