Do I need Business Auto Insurance?

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Many times, we encounter customers that think they can use their vehicle in business and cover it with a personal auto policy. That is only sometimes true, depending on the particular type of business.

Differences between Personal and Business Auto Insurance

Some personal auto policies expressly exclude coverage for “business use” of vehicles. This might seem to be unfair from the standpoint that a car is a car and it shouldn’t matter why one is driving the car. However, again depending on the business, how you use that vehicle could make a big difference in the likelyhood that you will have an accident.


Delivery drivers contend with multiple stops and tight schedules. This dramatically increases the odds of an accident and is clearly the job for a business auto policy.

Specialized Equipmenttruck-utility

Vehicles that have specialized equipment, such as utility beds for tool storage, are more likely to be excluded from a personal auto policy.



If you have employees, a Business Auto policy would definitely be required.


Multiple Vehiclestruck-fleet1

Other concerns might be the number of vehicles in use by the business. If there are multiple vehicles a business auto policy may be a better choice. For businesses that have a lot of vehicles a business auto policy can be written on a blanket (All Autos) basis to simplify things.

real-estate-signIncidental Uses

At the other end of the spectrum would be a real estate agent using their car to drive potential customers to see homes. This is also a business use however on some policies that would be acceptable as an “incidental business use”.


The cost of a business auto policy is not always as big a problem as people fear. Often times, we are surprised at how close the pricing of a business auto policy is to the personal auto policy it is replacing.

The best option is to discuss with us your particular business and how it uses vehicles and, if needed, have us provide a business auto quote to compare.

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Contractors, Bonding and Insurance

by Steve Bennett on FlickrIf you look at most of the advertisements for contracting services, the words “Licensed and Bonded” are frequently used. The intent is to give you, the consumer, a feeling of comfort. After all, if something does go wrong they are bonded, right? Not so! The bond that contractors have is called a Contractors License Bond. It allows the license board to more easily collect any fine they might issue to a contractor. It does absolutely nothing for the consumer who hired him.

So if the contractor you hire leaves debris around and someone trips and falls, who is liable? If that contractor has employees and one gets injured, who is liable? I’m not an attorney but I do know that property owners are typically responsible for what happens on their property.

So, what should you do? Use only contractors that are insured.

You should insist on getting a certificate of insurance from that contractor’s agent or broker. Have the certificate sent to you directly by that agent or broker. We’ve seen some contractors actually alter an old copy of their certificate to look like their insurance was still in force.

Look for General Liability coverage and, if the contractor has other workers, Workers Compensation coverage. Both should have limits of $1,000,000 or more.

If the project is going to take a while, consider requesting a new certificate from the agent or broker to make sure the coverage is active.

Multi-Agency Taskforce Checking Jobsites for Licensing, Insurance and Safety

/images/Seal_of_California.svg.160x160.pngThe California Department of Insurance recently released a statement regarding a program to check contractors for licensing, insurance and safety. Essentially, individual cars with employees from 4 different agencies (DOI, CSLB, EDD, OSHA) are checking job sites, including individual homeowners, to confirm that the contractors working there are licensed, have insurance, are filing their payroll taxes, and are conducting their work safely. On one day at the end of August, they issued over $136,000 in fines.

Bottom line(s):

  1. Homeowners should be aware they can be held responsible for any injuries that occur on their premises, even if the injured person is an employee of the contractor.
  2. Contractors that have been avoiding the expense of insurance might want to reconsider since it looks like “going without” is going to become much more expensive.

Uninsured Contractors Being Targeted in Sweep

The California Department of Insurance, along with the Contractors State License Board, Division of Occupational Safety and Health, and theEmployment Development Department are conducting a sweep of residential job sites. They are trying to address the underground economy, which hurts everyone:

  • No General Liability insurance.
  • No Workers Compensation insurance.
  • No license.
  • No control over safety.
  • Undercutting the pricing of legitimate contractors.

Press Release

Is that Worker an Independent Contractor or an Employee?

The question of whether or not a particular worker is an Independent Contractor or an Employee is one that we frequently discuss with our clients. Unfortunately, there are no pat answers. The checklist below can help give you a better idea where you stand.

This is because there are several agencies that you have to deal with and because they don’t publish hard and fast rules, only guidelines. There are many factors involved and a wide variety of contracting situations.

That being said, there certainly are factors to consider. Keep in mind that not meeting any one item isn’t necessarily going to be the deciding factor. The table that follows comes from information in the IRS 20-factor test. The more statements that are true in one column or another regarding your relationship with the worker indicates whether the relationship leans towards Employment or Sub-contracting from the IRS point-of-view. From the perspective of the CA Contractors State Licensing Board (CSLB), item #13 is of particular importance. In general, the more weight you have on one side the stronger your case will be.

An Employee usually A Contractor usually
1 has to follow your instructions as to when, where and how they work can get the job done as he sees fit based on the contract
2 is trained by you is already qualified to do the work
3 does the same work as your business often is used to do specialized work you don’t normally do
4 can’t subcontract out work can hire sub’s as needed
5 doesn’t hire assistants can hire employees as needed
6 works for you over long or regular periods of time does work for you sporadically
7 works for you at the hours you set can set his own hours
8 is required to work full time can work for whomever and whenever he wishes
9 works at your premises or at place you designate usually has their own place of business
10 has to do their work in the order or sequence you specify can decide sequence for themselves for the desired result
11 has to provide reports does not have to account for themselves
12 is paid by the hour, week, or month is paid by the job
13 doesn’t have to pay business and travel expenses pays his own business and travel expenses
14 is provided tools, materials, or equipment provides his own tools, materials and equipment
15 has little or no investment in his own tools and equipment has a significant investment in tools and equipment
16 cannot suffer a loss has the risk of a possible loss instead of a profit
17 works for you only works for multiple customers, including you
18 doesn’t offer his services outside of your employ offers his services out to the general public
19 can be fired at any time during a job have limitations on firing per their contract
20 can quit work at any time without any liability cannot walk away from a job without a financial risk