I now own a 2018 GMC Sierra and am considering starting a business with it.
I currently have a Geico personal auto policy of $971 for six months.
I recently received a COMMERCIAL policy from Progressive for $1,127 for 12 months with the same coverage.
After receiving the commercial quote, I went to Progressive’s personal auto policy quote, which is $975 (about equivalent to Geico).
Is there any reason not to proceed with the commercial policy even if I do not start producing money from the business? I will start a sole proprietorship any way. My vehicle’s registration fee will increase every two years, but it will not exceed $800 per year.
Congrats on your new GMC Sierra and your decision to start a business with it. It sounds like you’ve done your homework on the insurance policies, which is great.
Here are a few points to consider when deciding between a personal and a commercial auto policy:
Coverage Differences: Commercial policies typically offer more extensive coverage, especially for business-related activities. If you’re using your truck for business purposes, even occasionally, having a commercial policy might be safer and more compliant with insurance regulations.
Claims Process: If you ever need to file a claim for an incident that occurs during business use, having a commercial policy will ensure you’re covered. A personal policy might deny the claim if they find out the vehicle was being used for business at the time.
Peace of Mind: Even if you’re not generating income from your business yet, knowing that you have the right coverage can give you peace of mind.
The difference in cost between the commercial and personal policies isn’t too significant in your case, especially considering the potential risks.
Tax Deductions: Depending on your business structure and how you use the vehicle, you might be able to deduct the cost of your commercial auto insurance as a business expense.
Future Business Needs: If you plan to expand your business activities, a commercial policy might better accommodate these needs without requiring frequent policy adjustments.
If the commercial policy from Progressive covers everything you need and the price difference is manageable, it seems like a sensible option, especially for a business vehicle. However, you might want to double-check with both Geico and Progressive about any specifics related to business use on a personal policy, just to make sure you’re fully informed.
If you’re using your truck for work, your personal insurance might not cover accidents when you’re on the job. It’s better to have business insurance since it’s tax deductible. That means if you’re in a higher tax bracket, you save about 30% on premiums. Plus, all truck expenses like maintenance and fuel become deductible if it’s exclusively for work. If it’s mixed use, it gets a bit more complicated but still worth sorting out.
Progressive offers this in some states: you can adjust a commercial insurance policy to cover personal use. Usually, people think about adjusting personal policies for business use, but you can do the opposite.
Just selecting ‘personal use’ on the application doesn’t guarantee coverage for personal use. The company’s agent or service representative must confirm this based on the policy terms.
So, be cautious because you might not have personal coverage unless you specifically endorse it.