September 07, 2017 | Posted in:

When Doesn’t Auto Insurance Work at All?

We are all required to have automobile liability insurance, and there are various coverage and deductible levels acceptable to the state governments. However, there may be situations in which your insurance doesn’t cover anything at all.
Many personal auto insurance policies cover only personal driving needs. Delivering pizza, driving for Uber, or going to the post office for your employer may not be covered. Using your car to earn money can be considered using it for a commercial purpose. Many insurance companies may deny a claim for damage or injury caused while operating the car for commercial purposes. In fact, failing to inform the insurance company about the commercial use may invalidate the policy entirely, even for the personal use.

Is there any way to be covered for the commercial use?

You could always purchase a commercial insurance policy for your personal vehicle, but this will likely cost more than a personal policy.
While an employer’s insurance probably only covers employees while they operate company-owned vehicles, “non-owned and hired” automobile coverage will kick in if there is an accident and the company is found legally liable. The employee’s personal insurance is the primary insurance, but the company policy would supplement if the charges exceeded the employee’s policy limit. Ask if your employer has this type of coverage.

What about Uber?

Uber and other ride-sharing apps may offer some protection. When a driver is not accepting rides, his personal insurance is primary. When a passenger is picked up, the ride-sharing service’s policy is the primary policy until the end of the ride. When the driver has turned the app on, but has not yet accepted a ride, the service may offer contingent liability coverage.
Check with your insurance carrier to make sure you have the coverage you need. Finding out that you don’t after a claim is denied might be financially devastating.


Thank you to The Barclay Group for contributing to this article.
The full information with respect to using personal cars for commercial purposes has been published below. Contact your insurance agent for clarification on your policy coverage.

[PDF] Hired and Non-Owned Liability Insurance


[PDF] The Dangers of Uber and Other Ride-sharing Apps




David J. Leff
The Barclay Group


Julie Strohlein CPA

Associate Partner
Julie has over 20 years of experience in public and private accounting, representing varied clientele including the medical, legal, and real estate industries and trusts.
View Julie's Bio →