What type of insurance should I have if I have to use my car for work?

Many people use their personal car for work purposes, and they get reimbursed mileage and wear and tear. However, many employees do not realize that when they drive their car for work, (especially when they have other people in their vehicle), they need to have special car insurance.  This type of car insurance protects them from being sued by any passengers (coworkers for example), and it generally requires higher limits of liability if needed for their protection.

Executive assistants are also under no obligation to do so, but most reputable companies do ensure their employees are reimbursed for having to purchase higher limits of car insurance for work purposes.

Here are some tips for using your personal car at work:

1. Ask your boss if there are required amounts of liability insurance you are expected to have

   Before you drive your personal car for work purposes, find out if there are required amounts of liability insurance you are expected to have on your vehicle. If there is a required limit and you are currently insured for less, ask your manager or boss if your employer will pay the difference to increase your insurance limits. Tell them that your expectations are to get the policy for reimbursement in writing so there is no confusion.

   Liability insurance protects you if you hurt, kill, or injure another driver or passenger in your car.  The reason some companies want you to have a higher limit of car insurance is to make sure they don’t have to pay out anything if something were to happen while you are driving your vehicle for work purposes.

2. Ask if you should have medical payments

   Furthermore, ask your boss if you should have medical payments. (In some states this is called Personal Injury Protection). If so, find out how much coverage you should have. This is usually purchased in increments of $1000, $5000, or $10,000. Both of these coverages provide cash payments to you (the driver), and all passengers in the vehicle if they are injured, regardless of who’s at fault. Depending on what state you’re in, personal injury protection, also called ‘PIP’ will be a tax free payout for medical expenses and will cover lost wages in case a person cannot work due to injury.

3. Call your insurance agent and ask them what your current limits are

   Once you’ve found out if there is a required amount of liability insurance needed to use your vehicle for work, and whether or not you need medical payments, call your insurance agent and ask them what your current limits are. For example, in Kansas, you may have coverage of 25/50. This means that if you were to hurt, kill, or injure another driver or a passenger, the insurance company would pay out a bodily injury amount of $25,000 per person and $50,000 per incident.

   If your employer wants you to increase your limits to 100/300, you will see an increase in your car insurance premium. Immediately let your employer know what the difference will be and ask them to pay that difference if you have lower coverage than what they want. Also ask if you have medical payment or personal injury protection coverage. If you do not have this, but you need to add this coverage, be sure to have your insurance agent tell you what the cost will be. Provide your manager with a copy of your current car insurance bill, and a quote for the higher coverage limits so the difference is clearly stated.

4. Tell your insurance company that you may be using your car for work

   They may need to further protect you by adding a ‘business use’ endorsement to your vehicle. Like the increase in liability Insurance, be sure to keep track of any increases you incur for ‘business use’ and let your manager know. The increase/difference will show up on your insurance bill. If your insurance agent asks you if you are going to be using your vehicle for ‘livery purposes,’ this means you will be transporting people for money, like taxi drivers. You can tell them that you will NOT be using your vehicle for livery, but just general work purposes. They may ask you if you will have a sign or logo on your car as well. You can tell them that you will not. (They want to know if you will be using your vehicle for delivery, like for pizzas, which poses a much higher risk than using your car for occasional business reasons.)

5. Ask your boss how they want you to keep track of mileage

   You will likely have to fill out a form with the date of the trip, the reason for the trip, and how many miles were driven. Also, you’ll probably have to give a receipt for any tolls or gas you had to pay for. Normally, an employer will pay an employee a certain amount for each mile driven on a work related errand or trip. The amount is normally more than what you’d pay for just gas as most employers pay for wear and tear. The current rate for 2019 suggested by the IRS is 58 cents per mile driven. If a company reimburses an employee for mileage, the amount is not taxable as it isn’t considered a type of wage.

   You do not have to use your vehicle for work if you are not comfortable doing so.  Be sure that you are comfortable with the amount you are being paid to use your car for work purposes.

6. Do not use your car for work if your company won’t pay for extra car insurance

   If you work for a small company and your manager has no idea about how much insurance you should have if you use your car for work, it would be best to not use your car for work at all. Don’t put yourself in a position to be at risk for your company if you aren’t properly protected.