Workmen’s Car Insurance

Workmen's car insurance, also known as commercial coverage, is a minimum liability policy required by the state. It's most commonly used by independent businessmen with one or two employees.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jul 22, 2021

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Here's what you need to know...

  • Commercial coverage is also known as workman’s auto insurance
  • In most states, liability is the minimum amount of car insurance coverage you can buy
  • The most common customer of the workmen’s policy is the independent businessman with just one or two employees

Small businesses that employ the use of personal or company vehicles have special insurance needs. Also known as workman’s insurance, commercial coverage is a minimum liability policy required by the state, or comprehensive enough to cover workers compensation issues, lost wages, and more.

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Types of Businesses That Use Workmen’s Insurance Policies

Believe it or not, the most common customer of the workmen’s policy is the independent businessman with just one or two employees. A good example of this would be the individual plumbing contractor who owns two trucks and employs his best friend from down the street.

He must carry standard liability insurance to cover his business activities, but that standard liability seldom will cover his vehicles. He will need workmen’s coverage to take care of that.

Regional or national companies that maintain very large fleets are not generally ones to use workmen’s auto insurance.

They are more likely to work underneath a comprehensive commercial car insurance policy which covers every aspect of their business.

This is especially true for companies like UPS, where their trucks and planes account for the vast majority of their business activities. The higher cost of insuring such large fleets usually requires customized insurance policies.

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What Workmen’s Policies Cover

At the very minimum, a workmen’s insurance policy must provide at least the liability coverage required in the state where the vehicle owner resides. Because the losses from business-related accidents can be very substantial, most small business owners purchase coverage far greater than what their state requires.

In all likelihood, a good workman’s car insurance policy will cover accident liability, collision, extra property damage, workers compensation, and lost wages.

Due to the potential of litigation and the risk of large jury awards, insurance companies are usually very specific about what their workmen’s policies cover; and they generally will not budge.

Personal Vehicles and Workmen’s Coverage

There are plenty of people who run their own home-based businesses and still use their personal vehicle, rather than a company car, for minor business purposes. For example, even though you work at home you may need to travel to the bank once a week to make deposits.

Technically this drive to the bank is considered a business activity, but most car insurance companies would not hold you to it if it were a once-a-week thing that you did in conjunction with running other errands.

As a general rule, if a personal vehicle is vital to the operation of your business, meaning you couldn’t conduct business without it, you will need a policy for workmen’s insurance.

If your personal vehicle is used for incidental business purposes, to the extent that you could still conduct business without it, you’re probably fine with your personal policy.

Since workman’s car insurance has so many variables, it’s advised that self-employed individuals consult their car insurance providers to determine what’s right for them. A workmen’s auto insurance policy may cost you a bit more money, but you’ll be glad you took out the policy if you ever have an accident in your business vehicle.

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