I had a prospective customer recently from Neenah, WI who was looking for a quote on a home and auto package. While in the course of gathering the necessary information for an insurance quote, I learned that one of the vehicles insured on his current personal auto insurance policy was actually a business leased vehicle through a business (S-Corp) which he also owned. I then expressed my concern that a business owned or business leased vehicle may not be adequately covered under a personal car insurance policy. For one, thing, you can’t insure something that doesn’t belong to you. In this case, the individual had no insurable interest, because the car was owned by the company not the individual. This gives the company a reason to decline a loss for three reasons; ownership, misrepresentation or fraud on the application, and vehicle not being used for the stated use on the application. If his current insurance provider had known the car was a business leased vehicle, chances are they would have denied coverage on the initial application for insurance.
Insurance companies also tend to exclude coverages in certain policies where another policy would provide more adequate coverage. For example, many personal auto policies have language that excludes liability coverage when the vehicle is used for “public or livery conveyance.” You can endorse a personal auto policy for certain types of business use. However, in this case, a business auto policy would be more appropriate, providing better insurance coverage for a business owned or business leased vehicle.
If you have questions regarding insurance coverage for a business owned auto, or any other type of insurance, don’t hesitate to contact Lauer Insurance.