Are you wondering if you need a Personal Auto Policy (PAP) or a Business Auto Policy (BAP)? Discuss your needs & use of your vehicle with your agent to determine which is best for you.
Frequently, in instances where a business owner uses one or two vehicles for their business, the business owner may want to insure the vehicle under their Personal Auto Policy (PAP). This can be acceptable as certain personal auto insurance carriers offer business use classifications and/or allow incidental use of a personal vehicle for business purposes.
In order for the PAP to accommodate a vehicle used in business, it is necessary to know how the vehicle is titled and registered or if the vehicle will be operated by an employee of the business. If the business is a sole proprietorship, and the vehicles are personally owned and there is no chance an employee would operate any vehicle, a PAP may be an option.
Even when a business is added to the PAP as an “additional interest,” this serves only to include its interest in the physical damage of the insured vehicle and does not bind the insurance company to protect the business in the event the business is named in a lawsuit involving the vehicle.
However, if the registered owner of the vehicle is the business, a BAP is required in order to properly protect the business as well as the vehicle operators in the event of a loss.
In order to protect a business and its employees as vehicle operators, under an auto policy a BAP is necessary. There are also multitudes of options available under a BAP to provide additional protection for a business. Be sure to ask your agent how you can benefit from these options and which ones may be needed to best address your situation.
It all boils down to the “named insured.” Under a PAP, the named insured is an individual and therefore the “business” entity is not afforded protection under the policy.