Do You Need Business Car Insurance If You Use Personal Vehicles For Work In Illinois?

Many business owners and employees use their personal vehicles for work-related tasks, such as making deliveries, transporting equipment, or meeting clients. While this may seem convenient, standard personal auto insurance policies often do not cover accidents that occur while using a vehicle for business purposes. This gap in coverage can expose businesses to significant financial and legal risks.

Under Illinois law (625 ILCS 5/7-601), all drivers must carry minimum liability insurance. However, this requirement applies only to personal use and does not extend to business-related driving. If an accident occurs while using a personal vehicle for work, an insurance provider may deny a claim, leaving the driver and the business financially responsible for damages.

To avoid unexpected liability, business owners should consider whether they need business auto insurance or hired and non-owned auto insurance (HNOA) to protect their company from lawsuits, medical expenses, and repair costs.

When Does A Business Need Commercial Auto Insurance?

A business should consider commercial auto insurance when:

• Employees regularly drive their personal vehicles for work (excluding commuting).
• Company-owned vehicles are used for deliveries, transportation, or client visits.
• Employees transport products, equipment, or passengers for business purposes.
• A vehicle is registered under a business name.

Even if an employee owns the vehicle, a personal policy may not cover work-related accidents. Business auto insurance ensures that both the business and the driver are protected in case of an accident.

The Risks Of Relying On Personal Auto Insurance

Many businesses assume that personal auto insurance is sufficient, but this can be a costly mistake. Standard personal policies exclude business-related accidents, which means:

• Claims may be denied, leaving the driver responsible for medical bills and vehicle repairs.
• The business could be sued if an employee causes an accident while working.
• Employees might be personally liable for injuries, damages, and lawsuits.

Without proper coverage, business owners risk financial loss, legal liability, and reputational damage.

Hired And Non-Owned Auto Insurance: An Alternative Solution

For businesses that do not own company vehicles but rely on personal cars for work, Hired and Non-Owned Auto Insurance (HNOA) can provide essential coverage. HNOA applies when:

• Employees use personal vehicles for work-related tasks.
• The business rents or leases vehicles for temporary use.
• Independent contractors drive their own cars for company business.

HNOA does not replace personal auto insurance, but it provides additional coverage for legal expenses, property damage, and medical costs when an employee is at fault in an accident while working.

Does Business Auto Insurance Cost More?

Many business owners worry about the cost of commercial auto insurance, but the price varies based on factors such as:

• The number of vehicles covered
• The type of business and industry risk
• The driving records of employees
• Coverage limits and deductibles

While commercial policies can cost more than personal auto insurance, they offer far greater protection and prevent unexpected out-of-pocket expenses in the event of a work-related accident.

How To Determine If Your Business Needs Commercial Auto Coverage

To assess whether commercial auto insurance or HNOA is necessary, business owners should consider the following:

• How often employees use personal vehicles for work.
• Whether employees transport goods, clients, or business equipment.
• If the business could be held liable for accidents involving personal vehicles.

If work-related driving occurs regularly, investing in the right insurance policy can prevent costly legal battles and financial loss.

Business Vehicle Insurance FAQs

What Happens If An Employee Gets Into An Accident While Driving A Personal Vehicle For Work?

If an employee causes an accident while performing work duties, their personal auto insurance may deny the claim, leaving the business vulnerable to lawsuits. Commercial auto insurance or Hired and Non-Owned Auto Insurance (HNOA) can cover liability costs and protect the business.

Do Gig Workers And Independent Contractors Need Business Auto Insurance?

Yes. If an independent contractor uses a personal vehicle for business, such as food delivery, rideshare services, or transporting goods, they may need a commercial policy. Many personal insurance providers exclude coverage for business-related driving.

Does Business Auto Insurance Cover Employees Who Drive Their Own Vehicles?

No, business auto insurance applies to company-owned vehicles. Employees using their personal vehicles for work should have Hired and Non-Owned Auto Insurance (HNOA), which provides liability coverage for businesses when an employee causes an accident.

Can A Business Be Sued If An Employee Causes An Accident In A Personal Vehicle?

Yes. Employers can face vicarious liability if an employee causes an accident while driving for work. Businesses may be legally responsible for damages, medical expenses, and legal fees.

Is Hired And Non-Owned Auto Insurance Required By Law?

Illinois does not require HNOA, but it is highly recommended for businesses that rely on employee-owned vehicles for work. Without it, companies risk financial loss in the event of an accident.

Does Personal Auto Insurance Ever Cover Business-Related Accidents?

Most personal policies exclude coverage for work-related driving unless the policyholder has added a business-use endorsement. However, these endorsements do not offer the same level of protection as a commercial auto policy.

What Factors Determine The Cost Of Commercial Auto Insurance?

Premiums depend on several factors, including the type of business, the number of vehicles insured, industry risks, and employee driving records. Businesses can lower costs by hiring safe drivers and maintaining a good loss history.

How Can A Business Choose The Right Auto Insurance Policy?

Businesses should assess their vehicle usage, review policy exclusions, and compare coverage options. Working with an experienced insurance provider can help ensure the right level of protection.

Call SIA Insurance Group For A Free Consultation

If your business relies on personal vehicles for work, ensuring proper insurance coverage is essential. At SIA Insurance Group, we help businesses find the right commercial auto insurance and HNOA policies to protect their assets and employees. Call us today at 630-325-4000 to receive a quote and discuss custom commercial auto insurance solutions that fit your business needs. We proudly serve businesses throughout Illinois.