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Using Your Personal Vehicle for Business Purposes? Make Sure You’re Covered!

It may not seem like a big deal for a small business owner to use their personal car or truck to perform some of their work duties. But if that small business owner causes an accident in the process, it can lead to significant expenses.

Depending on whether the small business owner’s personal auto insurance policy contains a “business-use” exclusion, his or her liability insurance may not cover the accident and they may be personally liable for damages to anyone who was injured in the accident.

The reason is because “business-use” exclusions, which are included in most personal auto policies, allow the auto insurance company to deny liability coverage for accidents caused by the insured while using his or her personal car or truck for business purposes.

As such, the failure to be aware of and comply with the provisions of a “business-use” exclusion can be financially devastating for the small business owner who uses their personal auto to take care of professional business.

Business-Use Exclusion In Michigan

Under Michigan law, an automobile insurance company can set its premium rates based on whether an insured intends to use her vehicle for business purposes, i.e., “for transportation of passengers for hire, for rental purposes, or commercial purposes.” (MCL 500.2118(2)(f))

If an insured reveals that she plans to or may use her vehicle for “business purposes,” then her insurer may charge a higher premium on her personal auto insurance policy:

On the other hand, if an insured states she plans to use her personal car only for personal matters, then her auto insurance premium will likely be lower, reflecting the insured’s anticipated, limited use.

The ‘Business-Use’ Exclusion ‘At Work’

Below are three examples of how Michigan courts have interpreted the “business-use” exclusion to deny liability coverage to otherwise properly insured drivers.

Below are a few real life examples of how “business-use” exclusions operate and how clear-cut their effect is:

The “business-use” exclusion in a man’s personal auto policy denied him liability coverage when he, while driving his employer’s uninsured truck, killed a motorcyclist. (Michigan Supreme Court, April 27, 1999)

The “business-use” exclusion in a rental car contract denied liability coverage to a man after he collided with another car while he was delivering pizzas for his employer, Hungry Howie’s. (Michigan Court of Appeals, July 22, 2003)

The “business-use” exclusion in a mother’s personal auto insurance policy denied liability coverage after she struck and injured a man while he was delivering pizzas for his employer, Pizza Czars. (Michigan Court of Appeals, May 4, 2004)

Protect Your Business

Here's the bottom line on "business-use" exclusions:

If you plan to or if there is even the slightest chance you may use your personal vehicle for business purposes, then contact your insurance agent to make sure you are not bound by any "business-use" exclusions in your personal auto insurance policy. And, if you are, make arrangements with your agent to modify your policy to have any potentially disastrous "business-use" exclusion removed."

To learn more about protecting you and your business, visit the Grand Rapids Auto Accident Attorneys website, where you can find valuable local tools including an auto accident checklist, Kent County accident statistics and how to file a police report in the area.

Published by:
Steven Gursten, Partner
Michigan Auto Law

Michigan Auto Law is a third-generation law firm specializing in helping people who have been seriously injured or killed in car, truck and motorcycle accidents throughout Michigan. The firm’s Grand Rapids office is located at 220 Lyon St NW in downtown Grand Rapids.


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