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Klampe Law Firm
Southern Minnesota’s injury law firm Serving the Community Since 1972

Insurance coverage concerns: business use of a personal auto

Auto insurance is required for all Minnesota car owners. Most people pay for a standard personal lines auto insurance policy and do not think of it again until the policy is up for renewal or a claim is made.

Most people do not consider that the personal auto policy often will not pay a claim if the car is being used for a commercial or business purpose. For that, most insurers require the car owner to acquire (and pay for) a commercial use rider.

Types of business use of autos

This comes up a lot of ways, that most people do not consider. Examples include:

  • Driving a personal car for Lyft or Uber
  • Delivering a newspaper route
  • Delivering online orders such as groceries and prescriptions
  • Doing an informal “ride for hire” where someone pays you to bring them somewhere

Even worse, many companies that hire drivers to do this driving work characterize the drivers as “independent contractors” not employees. That way the hiring company does not have to pay compensation benefits if their driver is hurt. The company also is not responsible for injuries to others in a crash because it was not their “employee” who caused the harm.

This business use exclusion can be a problem even in collisions where no one is hurt. For Instance:

  • People driving their own car for business purposes who cause a crash may not have coverage to pay for the other car’s damage.
  • Many insurers will decline to pay for the insured car’s damage or replacement if the car was being used for hire.

Parents, keep in mind that in Minnesota, the owner of a car is responsible for all damages caused by the negligence of anyone using that car with permission. Parents, spouses, friends – be reluctant to let your car be used by others for these delivery activities. If a crash happens, you may find you have no insurance coverage for your car, and might owe damages to someone your car hit, even if you were not the driver.

The best ways to solve this problem is either 1) do not use or let your car be used for commercial hire or deliveries; or 2) buy a commercial use rider (add on coverage under your auto policy). The price for this will vary by insurance company, age and accident history of all drivers, and the type of driving activity.

For Uber and Lyft drivers, be careful not to rely fully on the insurance these businesses promise if you drive for them. Yes, usually Uber or Lyft will cover damage to other people whose cars or bodies are injured in a crash caused by an Uber or Lyft driver. But that insurance usually will not protect the Uber or Lyft driver’s injuries, or repair or replace the Uber or Lyft driver’s car.

If you have been injured in a vehicle collision, feel free to call Klampe Law Firm. There is no charge to discuss injury cases.

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