By Tyler Hunter, Licensed Producing Agent, MBG Insurance – Oak Grove, MO
I have this conversation almost every week with landscapers, lawn care operators, painters, handymen, and other small contractors. It usually goes something like this:
“I’m a one- or two-man operation. The truck is mine. I already have it insured. Why would I pay more for commercial auto?”
It’s a fair question. Commercial auto usually does cost more than a personal auto policy. But the real question isn’t which policy is cheaper. It’s which policy will actually pay when your truck, your trailer, and your business are involved in a claim. For a lot of small contractors, the honest answer is that the personal policy may not.
What does a personal auto policy exclude for business use?
Personal auto policies are built and priced for personal driving: commuting, errands, and the occasional road trip. When a vehicle becomes part of how you earn a living, the policy starts running into exclusions and limitations. The details vary by carrier, but these are the common problem areas for contractors:
- Business use exclusions. Many personal auto policies exclude or restrict coverage when a vehicle is used in the course of a business. Some carriers carve out limited exceptions, but you don’t want to find out which side of that line you’re on after an accident.
- Carrying goods or equipment for business. Personal policies commonly restrict vehicles used to deliver or transport goods and materials. A truck that hauls mowers, mulch, lumber, or tools to job sites every day looks a lot more like a work vehicle than a personal one.
- Vehicles owned by your business. If your truck is titled to your LLC, a personal auto policy written in your individual name is a mismatch. Your LLC is the owner, and the LLC is who gets sued. Many personal carriers won’t write a business-owned vehicle at all.
- Heavier trucks. Personal policies typically limit pickups and vans by gross vehicle weight. Once contractors step up to heavier-duty trucks, they can fall outside what a personal policy was designed to cover.
- Misrepresented use. If you told your carrier the truck is for “pleasure and commuting” and it’s pulling a trailer to job sites five days a week, that’s a material difference in risk. A carrier discovering that after a claim can create serious coverage problems.
Here’s a scenario I see play out: A landscaper is pulling an enclosed trailer loaded with two zero-turn mowers and rear-ends a car at a stoplight. There are injuries in the other vehicle. The adjuster asks where he was headed. He says, “To a mowing job.” That one answer can turn a routine claim into a coverage fight.
Why does it matter that my business is an LLC?
You formed an LLC for a reason: to keep business liability separate from your personal assets. Insuring your business vehicle on a personal policy works against that.
When your employee or your business vehicle causes an accident on the job, the injured party’s attorney isn’t going to stop at you. They’re going to name the LLC. A personal auto policy is written to protect you as an individual driver, not your company. A commercial auto policy names the business as the insured and is designed to defend it.
Your LLC is a risk management tool. Don’t go around it with the wrong insurance.
Are employees covered when they drive your truck for work?
This is one of the biggest gaps I see with small contractors, and it comes down to one exclusion most people have never heard of: regular use.
Personal auto policies usually extend some coverage when you occasionally borrow someone else’s car. If your neighbor lends you his truck for a weekend, your own policy can often follow you. But that coverage typically excludes any vehicle furnished or available for your regular use. The logic is simple: a car you drive every day isn’t borrowed. It’s a car you have regular access to, and the insurance company expects it to be insured on its own policy.
Here’s how that plays out for a small contractor. Your crew member drives your pickup to job sites every day. In his mind, he’s just borrowing the boss’s truck. But because the truck is available for his regular use, his own personal auto policy will likely exclude it. That leaves your personal policy as the only one in the picture, and it has its own business-use problems. You could end up with two policies and little or no coverage.
The same issue applies if your LLC provides a truck that an employee takes home or drives daily. That isn’t occasional borrowing, and a personal policy wasn’t built to cover it.
Your general liability policy won’t help either, because general liability excludes auto accidents. The fix is a commercial auto policy that lists your business vehicles and covers your employees as permissive drivers while they’re working for you. If employees also use their own vehicles for errands like picking up materials, add hired and non-owned auto (HNOA) coverage to protect your business in those situations too.
Why does commercial auto cost more?
Because it’s priced for the risk you actually have. Contractor vehicles tend to:
- Drive more miles, often on tight schedules
- Carry heavier loads and pull trailers
- Have more than one driver, including employees
- Carry higher liability limits, commonly $1,000,000
That higher premium buys coverage designed for how you actually use your truck, instead of coverage that might fall apart when you need it most.
What does commercial auto do for contractors that personal auto can’t?
Beyond covering the claim itself, commercial auto helps your business grow:
- Certificates of insurance. General contractors, property managers, and commercial clients usually require proof of commercial auto with your business as the named insured. A personal auto declarations page won’t satisfy most contracts.
- Higher limits. Commercial policies commonly offer $1,000,000 combined single limits, which many contracts require.
- Umbrella coordination. If you carry a commercial umbrella, the carrier will typically want a commercial auto policy underneath it. Personal auto often won’t qualify.
- Employee drivers. Your crew is covered as permissive drivers in your business vehicles, with no regular-use gap.
- Hired and non-owned auto. Protection when employees run errands in their own vehicles or you rent a truck for a job.
- Coverage built for your equipment and trailers. Your mowers, tools, and equipment should also be on an inland marine or contractor’s equipment policy. We’ll make sure your auto and equipment coverage work together without gaps.
You can see a full breakdown of what’s included on our Commercial Auto Insurance page for Missouri and Arkansas.
Quick FAQ
I only use my truck for work sometimes. Do I still need commercial auto?
If you regularly haul tools, equipment, or materials, or drive between job sites, you should talk to an agent. “Sometimes” tends to become “every day” once a business gets going, and a claim is the worst time to find out your policy doesn’t agree with how you’ve been using it.
Can I keep my truck titled in my name and still get commercial auto?
In many cases, yes. Commercial auto can often be written on a vehicle titled to the owner and used in the business. We’ll look at how your vehicles are titled and how your business is set up, then match the policy to it.
I don’t own any work vehicles. Do I need anything?
If employees ever drive their own vehicles for your business, or you rent a truck for a job, hired and non-owned auto coverage should be on your radar. It’s usually affordable and fills a gap your general liability policy won’t.
Let’s Make Sure You’re Actually Covered
At MBG Insurance, we work with contractors, landscapers, and small trade businesses across Missouri and Arkansas. As an independent agency, we shop multiple carriers to find commercial auto coverage that fits your operation and your budget. If you’re not sure whether your current setup would hold up after a claim, bring in your policy and we’ll review it with you.
Call our Oak Grove office at (816) 690-2640, Springfield at (417) 773-7822, or Bentonville at (479) 350-6862, or start a quote online.