What do you use your vehicle for?
Do you use it primarily for running errands? Do you drive it to and from work each day? Or, do you use it for business as well as personal use?
This question may not seem like a big deal, but not properly disclosing how you use your vehicle can have serious insurance repercussions. For example, if you drive your car to work, you will pay more for auto insurance than if you take public transit. In fact, the further you have to drive to work, the more you will pay.
Are You Committing Insurance Fraud?
Insurance fraud may sound like a serious crime that you couldn’t possibly be committing. However, if you drive to work and tell your insurance company you don’t, you are basically committed fraud. Resist this temptation, even if it might save you a few dollars. It’s not worth the risk.
You’re driving to work and get into an accident. To make matters worse, you told your insurance company you don’t drive to work. Your insurer could argue that it is not obligated to provide coverage because your dishonest application provides grounds to cancel your policy!
Honesty is always the best policy when it comes to insurance.
Insurance fraud is a huge problem in North America, and Ontario is no exception. Insurance claims are frequently padded with nonexistent damages, accidents are staged, and injuries are even faked.
It is estimated that insurance fraud accounts for as much as 25 cents to 30 cents of every auto insurance premium dollar.
The financial losses due to fraud really add up, and they have to be paid by someone. Guess who is paying? If insurance fraud was reduced by half, you would pay 12% to 15% less for your next policy. YOU are being penalized when insurance fraud occurs.
Mixing Business with Pleasure
Do you ever use your personal car for business? Do you have access to a company car that you may use for personal trips, even short ones?
If the answer to either question is YES, you could have potential coverage gaps in your insurance.
Using Your Personal Car for Business
If you use your personal car for business purposes, you could be at risk even if your employer provides you with commercial coverage. Why? In most cases, the coverage offered by your employer include liability only. Furthermore, it’s likely that a commercial auto policy won’t kick in until the limits on your personal auto policy are exhausted.
You heard that right: YOUR insurance is used first, then the commercial insurance takes over. This is known as “excess” coverage.
If you are in this situation, speak to your employer about what, if any, coverage is available to you through the company’s commercial auto policy. That way, if you have an accident while on company business, you know which insurance company to call first.
The next obvious question is, “Does your personal insurance policy offer enough coverage?”
It really depends on the type of policy you have and the type of business you are using your vehicle for. For example, if you use your personal car for non-revenue-generating purposes such as going on business trips by car or visiting clients, your personal auto policy will probably provide enough coverage.
But, as soon as you use your vehicle to directly earn revenue, such as making deliveries for your work, you will likely need a commercial auto policy in addition to your personal policy.
Don’t overlook this seemingly minor difference in business use of your personal vehicle. Say you have an accident while delivering a product, your personal auto insurer may deny your claim. Again, talk to your broker to make sure you have coverage for all the business activities for which you use your car.
Driving a Company Car for Personal Use
If you use a company car for business and pleasure, make sure you are adequately covered for both uses.
This is particularly true if you don’t have a car of your own because you likely won’t have a personal auto insurance policy. In this case, you should have what is called a “Non-Owned Personal Auto Policy” that covers you personally even though don’t own a car.
Don’t assume that your company’s auto insurance policy will have you covered at all times.
A non-owned personal auto policy can also come in handy when you rent a vehicle. Your policy will cover you and your rental car if you have an accident. This type of coverage can be much more affordable than purchasing insurance from the vehicle rental center.
You can have coverage gaps even if you have a personal auto policy and use a company car for pleasure. The same goes for your spouse or children who may drive the car from your workplace. Find out from your employer the extent of coverage that is available for your corporate car, then talk to your insurance provider to make sure all gaps are adequately covered.